Importer

We have overtaken China as the world’s biggest rice importer. That was inevitable.

The signs were clear for years. Our agriculture was growing at much less than our population. No one bothered to do anything about it.

The structural solutions involved a horizon of many years. Our politics was trapped in short electoral cycles. Each new administration characteristically abandoned the programs of the preceding government. Our institutions of governance simply did not have the capacity to do what needed to be done to save our agriculture.

What suited our institutions was allocating annual budgets for “farm-to-market” roads. Our agricultural budget consisted mainly of patronage-driven stuff: free fertilizers, free farm implements and free irrigation. Those yielded the short-term results required for our short electoral cycle.

Then there were the various superstitions that trapped our national conversation about agriculture. One equated the breakup of land as a form of social justice. Another imagined protectionist policies will help our farms prosper. Both produced only yawning rural poverty that drove millions into urban slums and created a large army of migrant workers.

Our bankrupt agricultural policies did not yield food security for our people. Today we import everything we ought to be producing: rice, sugar, onions, garlic, chicken, pork and even fish. Our grocery shelves are full of better-quality fish sauce from Thailand.

Each time a decision to import is made, we found some transient problem to blame: a storm, a contagious disease that forced us to cull pigs and chicken or a period of drought. No one bothered to zoom out and declare that our entire agriculture sector was failing the nation.

Today, everything comes home to roost.

After weeks of denying that our rice buffer stocks were thinning, we are going all out to import whatever rice we could get our hands on. If the economists get their way, the disastrous rice price caps will be abandoned with as much finesse as is still possible and, instead, tariffs on imported rice will be cut.

Tariff cuts will deal a heavy blow to our fiscal stability – but it could not be worse than doling out remuneration to small rice retailers threatened with bankruptcy.

One senator called for a public inquiry into the inconsistencies of this administration’s rice policy. That misses the point. What we need is a public inquiry into why our agriculture is in free fall.

The Sugar Regulatory Administration just signaled that our sugar production will likely fall below expectation. Blame El Niño. Then import more.

The prices of vegetables are rising across the board, led by the lowly siling labuyo whose price more than tripled in a matter of days. Maybe we will import that, too.

As a response, the Department of Trade and Industry announced a meeting with manufacturers will be called. Our officials will cajole them into postponing price adjustments. That is another non-market response. We want our producers to defy the law of gravity – not just that suddenly controversial law of supply and demand.

There is more bad news on the horizon. Brent crude, the one we import, is now over $92 per barrel. As we move into the winter months in the northern industrial economies, demand for oil will rise even as supply is kept in check by the cartel. That can only mean one thing: oil will likely rise above $100 per barrel.

Again, we have a market-defying response for this. Government has begun distributing financial assistance to drivers of public transport. How far can we go doing this, throwing money at every aggrieved sector, without courting a fiscal disaster?

After months of decline, the inflation rate for August began rising again. We all expect a higher inflation rate for September. Faster inflation will cut into our final growth numbers for the year. Our economic managers are bravely foisting 6 to 7 percent GDP growth for the year. Most analysts I have talked to think we would be lucky to make 5 percent.

Because our agriculture is failing us, we will have to import more food. As it is, our gross international reserves fell below $100 billion. The adequacy of our reserves is based on how long it could fund our imports. At the rate our imports are rising, our reserves might soon be deemed insufficient. This invites speculation against our currency.

Our need to import more of the food we need, and throw cash at everyone to delay contending with the full market impact, ultimately tells on our fiscal stability. The debt load we bear, reflecting all the emergency spending during the pandemic, could soon be unsustainable.

Again, because of our short electoral cycle, the tendency of every administration is to postpone crises rather than take them by the horns. This tendency brought us to where we are today.

We are suffering a crisis of agricultural failure that diminishes public access to food. This failure will contaminate every other dimension of the national economy – including our fiscal and foreign exchange stability.

We need a comprehensive and imaginative strategy to wiggle out of this situation of unbridled inflation and shortages of everything. That does not seem to be forthcoming. Instead, our government chooses to sleepwalk through this critical episode, applying superficial solutions such as price caps to delay the onset of market reality.

Ordinary consumers, stretching their budgets to cope with the price spikes, sense a crisis building. But our officials would rather window-dress the situation by controlling prices rather than working on the archaic production structures that create shortages.