The Department of Agriculture (DA) is optimistic the last tranche of fuel excise tax increase as well as the damage caused by the recent typhoons will not significantly affect food supply and prices this year.
The DA said it is addressing issues on the shortage of onions, the African swine fever (ASF) and local palay production to temper prices.
DA Secretary William Dar acknowledged that the implementation of the third and last tranche of fuel excise tax this year will definitely add up to the input of producing agricultural goods as it will affect both farmers and most especially fisher folks dependent on the use of fossil fuels.
Dar, however, assured programs under the Rice Competitiveness Enhancement Fund (RCEF) as well as ongoing efforts to put up solar-powered irrigation systems will stave off the negative effects of higher production costs.
DA undersecretary Rodolfo Vicerra said the increase in the cost of fuel will be manageable.
“It will have a minimal effect in the percentage of the production cost of most crops. Fuel is equivalent to 2 percent of the entire cost… However, its effects is a little bit bigger for fisherfolks since crude takes up more in their production cost but it will still not add up to 5 percent of the total cost,” Vicerra said.
The agency sees the positive effects of lesser labor costs under RCEF programs, wider farm mechanization efforts as well as the improved yield to an average of 6 metric tons (MT) per hectare (ha) from the previous average of 4 MT per ha. in offsetting higher production costs, if at all, caused by higher fuel prices.
Oil players are expected to announce today an increase in the retail prices of petroleum products effective tomorrow, January 7.
The increase will reflect the combined effects of the last tranche of fuel excise tax as well as the global crude market scare caused by the tensions between United States and Iran.
Damage to agri
The DA said damage brought by several weather disturbances including numerous typhoons, the El Niño phenomenon and various plant diseases had caused a total of P16.07 billion production loss last year.
Of that, over P6 billion worth of damage was sustained by Typhoons Tisoy and Ursula that struck last month.
Dar said 2019’s P16.07 billion damage is lower than the P34.5 billion recorded in 2018.
“Tisoy caused P3 billion losses while Ursula left another P3 billion. We had a good projection of a growth of 2 to 2.5 percent for the fourth quarter of 2019. Hopefully, we are still at that range,” Dar added.
The DA also said efforts are being exerted to maintain a high level of rice adequacy in the country which is now at 85 percent. The ambition is to hike it between 93 and 95 percent in six years.
DA assistant secretary for operations Andrew Villacorta said the target palay production for last year was 19 million MT but initial validations show it may only hit 18.4 million MT because of the typhoons that affected the Philippines and the negative growth in the crops subsector for the first three quarters of 2019.
“This year, the target is 19.6 million MT and we already factored in farmers who might shift to other crops. Programs under RCEF will really help in hitting the target especially with the type of seeds that we distributed and about to be given. That 19.6 million MT is actually a conservative estimate as we are targeting about 500,000 hectares planted for hybrid rice this year,” Villacorta said.
Red onion shortage
The DA has opened the importation of 35,000 MT of red onions until the middle of February.
“We need to consider the caveats. (Imports) can only be brought in until mid-February so that they will not be in competition with the start of local harvest by March. One of the possible sources of imported onions is China,” Dar said.
According to data from the PSA, as of Dec. 28, 2019, retail prices of red onions reached a high of P260 per kg., a low of P170 per kg. and a prevailing price of P180 per kg. The prevailing price is 125 percent higher compared to Dec. 29, 2018’s P80 per kg. at a high of P120 per kg. and a low of P60 per kg.
The high prices of red onions is attributed to historic low production of the crop.
The agency, however, said PSA projections show local onion production will be sufficient in the next 12 months. There are also plans to processed onions to powder form to prolong their shelf life.
The DA cannot declare the Philippines is free from ASF but noted its incidence in the country has tapered down.
The agency tagged as an isolated case the batch of pork products found positive of the disease being sold at a supermarket in Quezon City the DA said the supplier, North Star Meat Merchants Inc. has been sanctioned and that the Quezon City government has seized all meat products displayed in that supermarket.
Edwin Chen, president of the Pork Producers Federation of the Philippines Inc., expressed optimism demand for pork products will rebound this year.
Chen said last year, consumers shifted their demand to other tmeat products which left commercial farms with an excess inventory of hogs.
“There will still be a decline in production this year but it will not be that big. There will certainly be a dip in supply but it will easily be covered by pig commercial farms that are bio-secured,” he added.
But the group cited the big gap between the farm gate price of pork and its current retail price.
Chen said at present, farm gate price of pork is at P90 to P100 per kg. but its retail price is averaging at over P200 per kg.
“We have to bring down pork retail price to more manageable rates. Otherwise, consumers will find it too expensive… Normal retail prices should only be at the range of additional P80 per kg. from farm gate prices,” Chen explained.