Marcos vows to focus on food sufficiency

‘When America sneezes, the world catches a cold.” This phrase is often used to explain that what happens in the US affects the rest of the world. The prognosis is bad: US Inflation surged to 8.6 percent in May, a 40-year high, as the global supply chain crisis and the Ukraine war aggravated supply shortages.

Fed Chair Jerome Powell at first characterized surging consumer prices as merely a “transitory” problem, which is mainly the result of shipping delays and temporary shortages of supplies and workers as the US economy rebounded fast from the pandemic recession. Now, economists are saying that consumer inflation will remain elevated at least through this year, with demand outstripping supplies in many areas of the economy.

From the Associated Press: “Federal Reserve Chair Jerome Powell said there’s “no guarantee’’ the central bank can tame runaway inflation without hurting the job market. Speaking Wednesday at a European Central Bank forum in Sintra, Portugal, Powell repeated his hope that the Fed can achieve a so-called soft landing—raising interest rates just enough to slow the economy and rein in surging consumer prices without causing a recession and sharply raising the unemployment rate.”

As the world is shifting to a regime of higher inflation, economists warned in May that the US economy could be heading for a recession, or worse, stagflation: Former Fed chair Ben Bernanke warned that the country could be poised for “stagflation”—a slowing economy combined with high inflation. Lloyd Blankfein, former Goldman Sachs chief executive, warned of a “very, very high risk” of recession. Wells Fargo CEO Charlie Scharf said “there was no question that the US economy is heading toward a downturn.”

To fight inflation, the Fed is seen raising rates. The fallout of high Fed rates can be felt beyond America’s borders, hitting developing countries like the Philippines. The impacts on other countries range from higher borrowing costs to depreciating currencies, like what is happening to the peso. This will make it more expensive for us to pay for food imports and other products.

IMF Managing Director Kristalina Georgieva was worried enough last month to warn the Fed and other rate-hiking central banks to stay “mindful of the spillover risks to vulnerable emerging and developing economies.’’ She knows that as rates go up in the US, American government bonds will start looking more attractive to global investors. Then they start pulling money out of poor and middle-income countries and invest it in the US. This will drive up the US dollar and sink currencies in the developing world.

G-7 Statement on Global Food Security, June 28, 2022: “We note with grave concern that in 2022, according to the UN Global Crisis Response Group on Food, Energy and Finance, up to 323 million people globally will become acutely food insecure or are at high risk, marking a new record high. Multiple intertwined crises, including conflicts, the Covid-19-pandemic, the loss of biodiversity, climate change and ongoing global economic uncertainty around the globe result in this existential challenge. Russia’s war of aggression against Ukraine, including its blocking of export routes for Ukraine’s grain, is dramatically aggravating the hunger crisis; it has triggered disruptions of agricultural production, supply chains and trade that have driven world food and fertilizer prices to unprecedented levels for which Russia bears enormous responsibility. In our pursuit to ensure that all people can realize their right to adequate food, we reaffirm our goal to lift 500 million people out of hunger and malnutrition by 2030.”

The Philippines is not yet a food insecure country. But global food prices have reached record highs, threatening to exacerbate global food insecurity that could ultimately affect 110 million Filipinos.

We welcome President Ferdinand Marcos Jr.’s assurance in his inaugural speech that he will focus on food sufficiency. “The role of agriculture cries for urgent attention,” the President said. “An agriculture damaged and diminished by unfair competition will have a harder time, or will have no prospects at all of recovery.” The President knows the problems facing our farmers, which is why he appointed himself Agriculture secretary. “It’s important that the president takes that portfolio not only to make it clear to everyone what high priority we put to the agricultural sector, but also as a practical matter, so that things move quickly,” he said. We hope that the President will succeed in improving the country’s food output soon. This will help ease inflation pressures and stabilize food prices nationwide.