The latest report of the Food and Agriculture Organization of the United Nations may not have enumerated the East Asian and Southeast Asian countries that grappled with high food prices a year after Russia attacked Ukraine, but the Philippines surely felt its impact. In a report, FAO said the proportion of countries experiencing moderately to abnormally high food prices doubled on an annual basis in 2023, returning to the levels observed in 2020.
This change, FAO said, was driven by a jump in the number of countries with abnormally high food prices.
The Philippines was certainly one of those Southeast Asian nations that saw ‘moderately to abnormally high’ food prices in 2023. That year inflation accelerated to a level that was last seen in 2008, when the rate averaged 6.3 percent, mainly due to high rice prices. Nearly two decades ago, the decision of rice-exporting countries caused international rice prices to skyrocket to unprecedented levels, affecting importers like the Philippines which has become reliant on foreign sources for its rice requirements.
The 6 percent average inflation rate recorded in 2023 was even faster than the 5.8 percent posted in 2022. These figures highlighted the country’s vulnerability to international developments such as Russia’s attack on Ukraine and its reliance on other nations to plug the gap in its domestic food supply. Supply constraints put more pressure on food prices the following year, when rice, onions, sugar and pork carried a higher price tag.
International organization Asean+3 Macroeconomic Office (Amro) said the jump in prices of key food items was due to a shortage of domestic supply. To tame inflation, the Bangko Sentral ng Pilipinas had to tighten monetary policy aggressively, raising policy rate 10 times between May 2022 and end-2023. However, monetary measures can only do so much to make food more affordable, as these will not be able to address the problems hounding the agri-food sector.
Easing supply constraints and reducing the country’s vulnerability to geopolitical and trade tensions would require serious effort on the part of policymakers to remove obstacles to increasing the country’s food supply. Amro noted that only a strong agricultural sector and a more resilient food supply chain will eliminate price volatility and eventually enhance the country’s food security. A robust agricultural sector, however, would remain a pipe dream if local planters remain unable to profit from their produce.
The Department of Agriculture will be getting a higher budget for next year, thanks to the decision of lawmakers to reallocate a portion of the flood control projects to the sector. These funds should be used judiciously to hasten the delivery of interventions that planters need to improve their productivity. The money should also be used to bankroll ‘unpopular’ programs that would have enabled this administration to increase farm exports and create more jobs in rural areas.