PH at risk of food security shocks

FOOD security risk in the Asia-Pacific (APAC) will remain elevated, Moody’s Investors Service said, with the Philippines demonstrating both higher exposure to shocks and lower resilience.

In a report on Wednesday, Moody’s said that several structural factors contribute to food security risks in the region.

These include severe climate shocks affecting food production, increasing global demand for food due to population growth, and geopolitical tensions disrupting agricultural production and trade flows, both regionally and globally.

Furthermore, it cautioned that climate-driven shocks will persistently raise food security worries.

The heightened occurrence and intensity of extreme weather events, such as floods and storminduced landslides, will keep affecting crop yields.

“This year, we expect the continuation of El Niño to impact crop yields in APAC, as well as in other regions such as Latin America,” Moody’s said.

It stated that although food prices have dropped overall since their peak in 2022, prices for certain crops, like rice, which is a staple in the area, are still high.

This is due to smaller-thananticipated rice harvests and an increase in export restrictions during the latter part of 2023, keeping prices high and raising worries about food security in the region.

High rice inflation in PH

In the case of the Philippines, inflation rose again last month to 3.4 percent due to elevated rice inflation. It accounted for 2.1 percentage points of overall inflation.

It rose to 23.7 percent last month from 22.6 percent in January, marking the highest level since February 2009, when it also reached 24.6 percent. It is also anticipated to stay elevated until July or August of this year.

Moody’s said that several rice-exporting nations, including India, China and Thailand, anticipate reduced crop yields for the 20232024 season due to dry weather associated with the El Niño.

With limited Indian rice exports, Thailand and Vietnam are expected to play a significant role in global rice shipments, making trade prices more susceptible to weather conditions in these countries shortly.

“The proportional rise in food security risk in Asia has been smaller than other emerging markets, and this slower pace of deterioration partly reflects APAC being a major producer for primary crops,’ Moody’s said.

“However, APAC is still home to some of the most populous economies, and as such still accounts for half the people facing moderate or severe food insecurity in the world,” it added.

It was mentioned that almost half of the area faces increased exposure to climate-related risks like water management issues.

Additionally, a considerable portion of the region is less capable of handling such shocks due to higher social and governance risks.

Countries facing both increased exposure to risks and lower resilience are primarily located in South Asia, like Bangladesh, Pakistan and Sri Lanka; the Pacific islands, such as the Solomon Islands; and Southeast Asia, including the Philippines and Laos.

“A large proportion of their populations are unable to afford a healthy diet... in comparison, a number of economies in Northeast Asia display lower exposure and higher resilience,” Moody’s said.

It cited that the Philippine government is initiating a food stamp program targeting the poorest households and providing financial aid to local farmers and small-scale retailers.

While these policies are in effect aimed at alleviating food security concerns, Moody’s stressed that they won’t completely eliminate them.

It was highlighted that 74 percent of Filipinos cannot afford a nutritious diet.

“Strong policy support will encourage new companies and financial institutions to enter agri-related sectors, which will support farm productivity and crop yields,” it said.

“The role of agri-related companies may also be elevated to a more strategic level in terms of their contribution to national food security...such as through the advancement of advanced agrochemical technologies and management of key grain reserves,” it added.

Moreover, it indicated that financial institutions involved in supporting this system, particularly in providing agricultural insurance, could also gain advantages due to robust government policy support.