Targeted assistance program for the poor
Food-importing countries like the philippines can now be included among the casualties of the russian invasion of Ukraine. The export ban on wheat imposed by india and the decision of indonesia to limit the export of palm oil could only lead to higher food prices in the coming months. Flour-based products and other processed food products would become more expensive and would adversely affect the poor.
The Department of Trade and Industry (DTI) recently decided to increase the suggested retail prices of 82 basic necessities and prime commodities (See, “DTI okays SRP increase for 82 basic commodities and prime necessities,” in the Businessmirror, May 13, 2022). Among those that will see price adjustments are bread, canned fish, processed milk, manufactured instant noodles, flour, processed and canned pork and beef, and laundry soap. Of particular concern among the basic goods are instant noodles and canned fish as these are popular among poor consumers because they are affordable.
Food and fuel prices would continue to rise and put a strain on the budget of Filipino households if the war in Eastern Europe drags on. Consumers who earn just enough to meet both ends meet now need to tighten their belts some more and make some adjustments in their purchasing decisions, such as choosing cheaper products. The poor, particularly those earning below the minimum wage, do not have much option. Due to their limited income, these families are more concerned about hunger and are likely to choose food that is filling over what is high in nutrients.
Giving food assistance and selling cheaper food products are the most popular means of helping the poor cope with spiraling prices. The incoming administration would do well to carefully study programs aimed at assisting the poor given the government’s current fiscal situation. Assistance programs work well when they serve targeted beneficiaries, as opposed to a shotgun approach that could drain the national coffers.
Prior to the enactment of the rice trade liberalization law, the National Food Authority incurred billions of pesos in debt because of its policy of “buying high and selling low.” Our incoming economic managers can learn from policies that fundamentally failed to achieve intended goals. The NFA procurement program, for example, helped stabilize the retail price of rice, but the government had to foot the bill as the food agency had to take out commercial loans to carry out its functions (See, “NFA assets may be sold to pay P145-billion debts,” in the Businessmirror, February 20, 2019).
Making good of the campaign promise to make food prices affordable entails creative ways to formulate policies that would not put pressure on the government’s fiscal situation. The pandemic has drained the resources of the government and caused the Philippines to incur additional debts (See, “PHL may need to generate P326B to pay for pandemic debts—salceda,” in the Businessmirror, May 16, 2022). We hope that our incoming economic managers would be able to find the right strategies that would allow the government to strengthen the country’s food security and provide social safety nets that do not enfeeble our national economy.