‘AO 20 necessary for food security’
The newly issued administrative order (AO) seeking to remove non-tariff barriers on agricultural imports is a necessary measure for food security, the National Economic and Development Authority (NEDA) said yesterday amid concerns raised by stakeholders.
“We reassure the public that AO 20 is a strategic and necessary measure to ensure our people’s food security, particularly in terms of availability and affordability of food, and improve the overall welfare of Filipinos,” NEDA Secretary Arsenio Balisacan said.
Signed on April 18, AO 20 aims to streamline administrative procedures and policies and remove non-tariff barriers to importing agricultural products.
Balisacan said the Inter-Agency Committee on Inflation and Market Outlook, in coordination with other relevant government agencies of the Economic Development Group, recommended the issuance of AO 20 to help curb inflation by addressing its fundamental causes such as the shortages of food commodities due to inadequate and untimely importation.
Following the AO’s issuance, the Samahang Industriya ng Agrikultura said the problem with smuggling through misdeclaration may continue without 100 percent border inspection of all agricultural products as provided under the Food Safety Act of 2013 and the Anti-Agri Smuggling Law.
While the government recognizes the importance of sanitary and phytosanitary import clearances (SPSIC) and other import permits in ensuring food safety and preventing the spread of animal and plant diseases, Balisacan said recent experiences show that the inadequacy and untimely arrival of imported supplies, when clearances and permits are used as administrative, non-tariff barriers to importation, have led to price instability and faster inflation.
“As a policy aimed at promoting the ease of doing business toward ensuring food security, AO 20 seeks to enhance the transparency and predictability of the policy regime governing the importation of food commodities,” he said.
Through the AO, Balisacan said the aim is to reduce importation requirements, cut the processing time and remove non-tariff barriers that raise the cost of imports and limit import supplies.
“Provided that importers comply with all the necessary administrative requirements, all SPSIC applications that are not processed within the specified period shall be considered approved,” he said.
Balisacan said the country cannot rely mainly on local production of commodities like onion, refined sugar, rice and pork with local output not enough to meet the demand.
As the country continues to upgrade its logistics infrastructure, he also said AO 20 would help strengthen the government’s ability to monitor, enforce and ensure fair competition in the food supply chains.
He said the government’s goal is to enable a more efficient movement of food commodities from ports and storage facilities to retail markets and end consumers.
“In the face of shortages in local production, where supply cannot immediately meet demand at affordable prices, AO 20 serves as a strategic policy tool responsive to the needs of our economy,” he said.
He also emphasized that NEDA and the government do not favor importation, but must utilize various instruments in their arsenal of policy tools to stabilize prices.
“It would be irresponsible not to augment local supply during periods of acute shortages. Failing to do so would lead to highly elevated prices, adversely affecting everyone – even farmers who are also consumers of agricultural products and fall victim to higher food prices themselves,” he said.
He said failing to manage food prices would also impact the longterm development of children in the country and the government’s goal of significantly reducing poverty to single-digit levels by 2028.
This, as food insecurity can worsen the learning crisis, stunting and malnutrition currently faced by the country.
“AO 20 is not merely about importation; it is a strategic move to foster greater transparency and predictability in policies related to importation. This complements efforts to boost the domestic supply of key agricultural commodities (e.g., through productivity-enhancing interventions) and stabilize prices in the domestic market,” Balisacan said.
He said it is by creating an enabling and responsive policy environment that the country can achieve inclusive growth and durable poverty reduction.
Meanwhile, the World Bank said in its Commodity Markets Outlook report that while it is forecasting a three percent decline in global commodity prices this year and four percent dip next year if geopolitical tensions do not intensify, it expects commodity prices to be about 38 percent higher than they were on average in the five years before the pandemic.
“A key force for disinflation – falling commodity prices – has essentially hit a wall. That means interest rates could remain higher than currently expected this year and next. The world is at a vulnerable moment: a major energy shock could undermine much of the progress in reducing inflation over the past two years,” World Bank Group’s chief economist and senior vice president Indermit Gill said.
Amid elevated geopolitical tensions, World Bank deputy chief economist and director of the Prospects Group Ayhan Kose said central banks would need to remain alert about the inflationary implications of commodity-price spikes.