Agriculture sector badly hit by typhoons, TRAIN in 2018

The Department of Agriculture (DA) didn't have to wait for the official data from the Philippine Statistics Authority (PSA) to formally announce that the agriculture sector has failed to grow in 2018, at least compared to how much it went up in 2017.

It was that obvious. Not only did the sector was badly hit by several typhoons — one of which was Typhoon Ompong, the second strongest typhoon to hit the country since 2013 as far as the farm sector is concerned — it also had to endure the impact of the Tax Reform for Acceleration and Inclusion Law (TRAIN) law, which became effective in January.

"We're seeing a growth of 2.5 [this year] to 3.5 percent [next year]. We really have to make it up next year," said Agriculture Undersecretary for Policy and Planning Segfredo Serrano during the agency's year-end briefing.

The agriculture sector ended 2017 with an impressive growth of 4 percent. Three months into the implementation of TRAIN, it started to produce less and less. Food commodities, on the other hand, are getting costlier.

Based on a PSA data, farm output in the first quarter of the year went up to

billion, while the production actually slowed down to 1.47 percent compared to the growth of 5.28 percent it booked in the same period last year.

First it was just rice, then prices of other agriculture commodities such as sugar, vegetables, fish, pork and chicken also began rising. Some time in September, the price of red chili peppers or siling labuyo even skyrocketed to a kilo.

Agriculture stakeholders, led by Samahang Industriya sa Agrikultura (SINAG), were the first to point out that it's the TRAIN law that has been pushing the price of food commodities higher.

"They [economic managers] must eat their pride and admit that it's the TRAIN law that's causing this," SINAG Chairman Rosendo So said.

Under the less than one year old tax reform, the excise tax on gasoline went up from a liter to a liter. This was supposed to go up to a liter in 2019 and in 2020.

On diesel and bunker fuel, an excise tax rate of a liter was first imposed. This should further go up to in 2019 and in 2020.

Since January, or shortly after TRAIN took effect, pump prices for fuel and gasoline have increased almost non-stop.

The situation eventually eased some time in November when global oil prices started to go down, prompting the country's economic managers to recommend to President Rodrigo Duterte to push through with the second part of the excise tax hike by next year.

While Presidential Spokesman Salvador Panelo said the "oil excise tax increase is a negligible contributor to inflation," the government has repeatedly blamed the increase in the prices of goods to rising cost of food commodities. But the thing about food production, in rice for example, 30 percent of the farmer's production cost is spent on fuel.

It's even worst for the fisheries sector wherein fuel accounts for 60 percent of the fishermen's overall production cost.

"The agriculture sector is affected by inflation as much as everybody else," Agriculture Secretary Emmanuel Piñol said earlier.

"If the price of fuel stabilizes, the prices of [agriculture commodities] will also stabilize," he added.

Piñol, in his last media briefing for 2018, is convinced that imposing a cap or the so-called Suggested Retail Price (SRP) on rice and other agriculture commodities actually helped prices to ease towards the latter part of the year.

It was in June when Piñol signed the administrative circular that sets an SRP for eight agricultural commodities including rice, tilapia, bangus, galunggong, onion, and garlic.

According to him, the implementation of SRP has effectively ended hoarding and market speculation, two of the main causes of rising prices among the aforementioned products.

Rice, however, was also caught in entirely different set of issues. In September, National Food Authority (NFA) Administrator Jason Aquino has resigned, leaving behind him a crisis that stemmed from the shortfall of cheap and subsidized rice in the local market — a scenario that his agency's mandate vowed to never happen.

Aquino's resignation, which happened less than two years after being appointed, came at the time when calls for him to step down continued to intensify, with lawmakers agreeing that the rice crisis experienced by Filipinos was a result of his "gross mismanagement" at the NFA.

If this wasn't enough, one of the strongest agriculture lobby groups also sued Aquino for allegedly diverting food security funds for other purposes such as pay off his agency's debt.

Then, the Department of Finance (DOF) also told him to explain why his agency failed to procure palay from farmers last year and instead depend on importation.

Aquino did not respond to calls and text messages when sought for comment.

Around that time, NFA was being blamed for the rice crisis that happened in Zamboanga, the infestation of 330,000 bags of imported rice with weevils, as well as the continuous increase in the price of rice across the country.

Weeks later, prices eventually stabilized, thanks to the imported supply purchased by NFA.

On November 28, NFA concluded the series of rice importation it was supposed to conduct within the year as Thailand and Vietnam — the only countries with existing rice trade agreement with the Philippines — both qualified to sell the country with additional 203,000 metric tons (MT) of the staple food.

In total, the NFA imported a total amount of 1.25 million MT of rice, roughly half of which are still set to arrive.

With the passage of Rice Tariffication Bill and the guidelines for the 'Out Quota Importation' of the NFA Council, the highest policy making body of the NFA, the amount of imported rice that will enter the country in 2019 and the following years is now expected to shoot up.

The bill removes the Quantitative Restrictions (QR) on rice and replacing them with tariffs, while under the out quota importation, everyone can import rice if it has the financial, warehousing, retailing capacity to do so.

Still, Piñol argued that the country, home to 104 million people, can't always rely on importation. To boost the production, the DA will use the billion the Rice Competitiveness Enhancement Fund (RCEF) — which is the tariff set to be collected from rice importation.

When Typhoon Ompong hit the country, the DA chief also floated the idea of changing the country's planting calendar. He said that starting next year, the harvest season should no longer fall between October to December because it's when the typhoon normally occurs now.

He said that ideally, farmers should have already harvested their yield by July to September.

The combined value of damages and losses the agriculture sector incurred from typhoons this year amounted to more than billion.