MY TWO CENTS’: Taming inflation through food

My Two Cents by John Tria
My Two Cents by John Tria

Rice, fish, vegetables and meat among the highest contributors to the August inflation rate of 6.4 percent.

It is clear that we can no longer blame any other reason that our collective and historical inability to ramp up food production when we need more food.

A few specific reasons have been cited for this quick surge.

For one, our unemployment figures dropped to 5.4 from 5.6%. from July 2017 to July 2018. This drives up local demand for food and other commodities, making them scarce until the time that local farms can harvest enough to resupply local markets.

While waiting for harvests, prices will rise temporarily until new supply comes in to stabilize prices. The agriculture department has assured us that harvests will come by the end of the year.

Yet did a lower food supply cause inflation to rise?

To cite the example of Davao and Socksargen regions, they both have unemployment rates of 3%, 2.4 points better than the country’s, and their inflation rates are at 7%, also higher than the country’s. Did they buy more food because they had more money?

The variance in inflation rates across regions may indicate well some regions are more able to secure food supplies than others. Central Luzon comes to mind with its 3.6% inflation rate. Others, like some regions in the Visayas and Mindanao have regional information rates that have exceeded the country’s 6.4%.

Being the country’s rice belt and having the second best producer of pork and chicken, and at the doorstep of the vegetable bowls of the cordillera and Nueva Vizcaya, costs of transport to and from region 3 is cheaper when compared with sending the produce to Metro Manila’s markets. The lower cost makes for cheaper goods.

A strong agriculture and food policy ought to make sure everyone has food at roughly the same price at the same time. A policy mix of programs to assure regional food production and supply and the timely importation of stocks to plug supply gaps are necessary.

Nonetheless, parsing these issues should challenge students of economics. These are not easy questions to ask.  Unfortunately, we don’t usually discuss regional economic trends such as these as much as we should, or do we have adequate reference numbers to guide our analysis.

Perhaps it is time that regional offices of the National Economic Development Authority come up with deeper data which can allow other stakeholders to compel more discussion in bodies such as regional development councils.

It is also time for deep reforms in agriculture to solve these long standing production issues.

In a statement, Finance Secretary Carlos Dominguez said “reforms in agriculture will continuously be implemented to address the supply issues causing the rise in food prices.”

“A committed effort from government in the agriculture sector to boost supply of key products and introduce policy reforms will bring down prices for all Filipino families,” Dominguez said.

Solving these problems will be a lasting legacy of thr current government.

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