What’s next in menu of food supply concerns?

The latest blame-game in town involves the unbelievable 40 to 45 percent increase in the price of eggs, which had for a long time stayed steady within a comfortable short range.

With egg’s inflated prices, which had not been seen by most Filipinos in their lifetime, egg producers are keenly watching demand. This is turning out to be a test in the elasticity of consumers’ purchasing power and their patience in dealing with successive price surges of basic foods, starting with pork, beef, and chicken early last year to sugar and onions more recently.

Pinpointing the cause of higher prices for each of the food items has progressed from easy to hard. With pork, the unassailable reason was the African swine fever (ASF) contagion that started with outbreaks in small pig farms located in the province of Rizal in July 2019.

By September 2020, with the government’s inability to contain the virus, reports of ASF infections spread to 51 provinces. With widespread culling of pigs in tagged red areas where infections were reported, domestic supply significantly dropped causing price spikes.

In response to both supply and price abnormalities, the government allowed increased importations of pork under modified tariffs. While this did not bring down pork prices to pre-ASF levels, it did remove the supply and demand uncertainties that led to abnormally high pricing.

The Russian invasion of Ukraine in February last year brought a different kind of pressure on pork prices, including other livestock like chicken and beef. Globally, the cost of growing animals was affected by a grain shortage caused by Ukraine’s inability to ship out many agricultural products like wheat, soybeans and corn used as feed meal.

Chicken feed

To temper domestic chicken prices, mainly because of increased cost of inputs including corn, the government relaxed corn import tariffs from a high of 50 percent to just 15 percent during the second half of 2022, and further extended the lower tariff until the end of this year.

Like pork, chicken prices did not return to pre-pandemic levels as demand consumption increased, mainly because consumers shifted to chicken as their main protein source after pork prices became less affordable.

The main reason behind the elevated price of locally grown chicken last year was attributed to other inputs like high prices of oil that affected transportation and utilities costs and feeds. Lower tariffs on corn were not enough to compensate for the overall price increase of global corn, of which about half of local demand was dependent on importations. Thus, even if corn import tariffs were reduced to zero, the added cost on production would still have been significant.

While high price of grain in the world market had an aggravating effect on pork, it was more severe on chicken. Thankfully, with a slowly recovering local population of swine as controls on the spread of ASF were improved, the effect of high feed costs on pork were somehow mitigated so as not to affect market prices.

Import-phobia

The story behind the doubling of sugar prices can be traced to a legal squabble that delayed much-needed importations to augment local supply. The government’s response to the resulting supply-demand imbalance was to increase sugar importation outside the usual cycle.

Sugar prices have not returned to the old levels, and as other price issues involving onions and lately, eggs, have gripped the market, the gumption to find out why imports are not denting market prices is losing interest with lawmakers.

The foul odor emitted by the recent scarcity of both red and yellow onions in the domestic market, leading up exorbitant levels six or seven times higher, is another mystery. Like sugar, importations normally approved months before to augment local supply during months when local harvests are lean did not prosper.

Traders and middlemen are being blamed for the supply shortages, but more blame is now being heaped on the Department of Agriculture, which is headed by the President. A seemingly importation phobia is being aggravated by supposed incompetence.

Slow boil

We now move on to eggs. This time, the high prices are being blamed on the avian influenza, coupled with the costlier inputs of feeds and transportation. Some blame traders and middlemen again, and of course, the President as DA Secretary as well.

In reality, high egg prices today are a result of all the global supply chain upheavals that started last year, but like a slow boil, have really just been fully realized by egg producers in recent weeks.

The cost of feeds, for example, has not been significantly reduced as the price of imported feed ingredients remained high, even with reduced tariffs. Similarly, the cost of transportation and utilities has gone up with crude prices still at about $100 a barrel.

Importing eggs, of course, is not an option, and Filipinos will just have to resign themselves with higher egg prices until the world returns to the normal that we know before the pandemic and Russia’s invasion of Ukraine.

When this will happen is anybody’s guess. The threat of a global economic slowdown in the world’s biggest economies is already causing think tanks to review and recalculate their growth projections this year. The Philippines and the rest of Southeast Asia will not be spared.

The great upset caused by an almost standstill in global economic activities may take a longer time to smoothen back, and that’s even without the complications caused by geopolitical shifts and wars.

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