Economics before politics

Two weeks after the devastation wrought by typhoons Ondoy and later by Pepeng, it looks like we still have to brace for a much bigger calamity. Damages sustained from flashfloods spawned by the two typhoons to cars and houses could be charged to insurance claims, if owners have “acts of God” proviso. But we have no such insurance coverage to pay for the huge economic losses that our country would have to bear.

The estimated crop damages and the rest of the agriculture sector as well as irrigation and other public infrastructures destroyed by the two typhoons — as quantified in terms of peso figure —are disturbing, if not alarming.

Official pronouncements from Malacañang yesterday are obviously preparing already the mindset of Filipinos to expect for the worst before things can get any better.

In my brief chat last week with Finance Secretary Margarito Teves, he conceded the tough challenge of meeting the 0.8 percent economic growth for the year, much less even hitting the low end 0.5 percent target. As one of the economic managers of President Arroyo, Teves frankly admitted the typhoon damages have heavily chipped the resilience of the Philippine economy.

Our country’s economic fundamentals have largely absorbed the impact of the global financial crisis since last year, Teves cited. The Finance Secretary remains hopeful, though, that the government’s combined fiscal and monetary policies would still be able to cushion the destructive effects of the typhoons to the Philippine economy.

Reconstruction and rehabilitation efforts will take a long while before it could bring back normalcy to the lives of flashflood victims, especially those in Metro Manila, rich and poor alike. But most specifically for the poor families, like the informal settlers who used to occupy shanties that clogged waterways and floodgates in Metro Manila after Ondoy washed away their homes and little fortunes they had.

In the meantime, the other members of the economic team of the President have shifted to high gears to start the reconstruction and rehabilitation mode at the soonest possible time. Department of Agriculture Secretary Arthur Yap has the most difficult challenge ahead of him to mitigate the “big-ticket” damages to the country’s agriculture sector. According to Yap, the DA estimates that around 260,000 hectares of rice lands have been affected in regions 1, 2, 3, 4-a , 4-b, 5. From field reports, the DA Secretary has calculated that 375,000 metric tons of palay have been damaged by Pepeng.

At P17 per kilo of palay, damage is about P6.3 billion for farmers in terms of lost income. The government, Yap said, needs to give full subsidies to about 40,000 hectares of these rice lands that were totally damaged and with no chance of recovery. This amounts to about P220 million worth of seeds and basic farm inputs.

“We need to give planting materials so farmers can make up for the lost volume and try to recoup it by January to February 2010,” Yap pointed out. The DA Secretary underscored the necessity of timing so that the stable rice supply situation in the country will not be disrupted.

Then of course, there were also irrigation damages. Yap estimated as much as P900 million of irrigation canal and dikes and reservoirs for irrigation were destroyed. That directly affects 53,500 hectares, or a cost of about P16,850 per hectare.

This early, Yap expressed concern on the projections made by the Philippine Atmospheric Geophysical Astronomical Services Administration (Pagasa) of a possible mild case of “El Nino”, or long dry spell in the Philippines next year. Thus, there is an urgency to complete irrigation repair within the next four to five months so water delivery can be made efficient during the summer months next year.

Yap placed fishponds damaged needing infrastructure repair and tilapia and bangus fingerlings support at P24 million. Livestock distribution plus seeds for 2,400 hectares of destroyed vegetable production areas are placed at P25 million. For the entire agriculture sector, he added a grand total of P1.16 billion of economic losses due to Ondoy and Pepeng.

“The issue is not just the percentage of losses to agriculture but lost income for farmers who are debt-ridden as well. Hunger may increase in the rural sector for families who have been financially affected by the crop damage and definitely poverty incidence becomes an issue yet again,” Yap lamented.

He noted the DA estimates did not include yet the farm-to-market roads and other public infrastructure under the jurisdiction of the Department of Public Works and Highways. Fortunately, he said, Secretary Hermogenes Ebdane Jr. is on top of the situation.

As a civil engineer, Ebdane appropriately applied his skills to ensure that priority is given on infrastructure programs intended to mitigate the impact of disasters, such as floods, typhoons, landslides and other natural calamities that destroy the livelihood especially of our farmers in the countryside.

As a preventive measure, Ebdane vowed to finish work on major flood-mitigating projects such as the P4.12 billion Agno River Flood Control Project Phase II in Tarlac and Pangasinan. The substantial completion of the Laoag River Basin Flood Control and Sabo Dam projects in Ilocos Norte spared 16,000 families and 1,069 hectares of farmlands from Pepeng.

After Ondoy and Pepeng, the Camanava Flood Control Project reported that the flood in Caloocan, Malabon, Navotas and Valenzuela has gone down by about 70 percent as the initial phase of the P5.18 billion mega-dike project is apparently working already.

These reconstruction and rehabilitation works must be put in place at the soonest possible time to restore our counry’s economic well-being before politics set in. Yap, Ebdane and Teves are touted to enter into a career change by Nov. 30. They are among Arroyo Cabinet officials likely to file their certificates of candidacy for the coming May 2010 elections. And it has to be done before things get any worse because some of the Arroyo Cabinet officials are themselves running against each other.