Ferdinand “Bongbong” Marcos Jr.’s decision to take on the agriculture portfolio was a bold move to tackle the looming food crisis. It is a global problem caused not only by shortages and supply chain due to the coronavirus pandemic and the raging conflict in Ukraine.
Domestically, it could be caused by the mismanagement of the departing administration of Rodrigo Duterte who prefers to continue collecting gasoline excise taxes and plow back the proceeds to the poor in form of subsidies and dole-outs.
The government’s tax collection system has a lot of loopholes. The Philippines’ tax collection efficiency is one of the lowest in the region and the “ayuda” system is not perfect because many of the poor people who are supposed to get cash aid have complained about not receiving them.
Many economists believe it is better for the government to pause the collection of excise taxes on petroleum products which will benefit not only rich motorists and also ordinary commuters who use public transport and consume basic goods.
Many consumer products also raised prices due to higher costs of manufacturing and transportation.
For instance, prices of diesel have risen more than 40 pesos this year while gasoline prices rose nearly 30 pesos, translating to higher consumer and food prices.
Prices of beef, pork, chicken, and fish have also risen as animal feed costs also rose due to global rise in prices of wheat caused by the war in Ukraine. Ukraine and Russia are global suppliers of wheat.
Although the Philippines imports wheat from Canada, the United States and Australia, prices were also elevated due to the Eastern European conflict.
Russia is also a major supplier of fertilizer. The cost of fertilizer has risen sharply, affecting local farmers who used fertilizer in growing rice, corn and other agricultural products.
There is high uncertainty in the Russia-Ukraine war. With no end in sight, the energy and food crises would continue until the end of 2022 and probably extend until next year.
It will be a litmus test for Marcos Jr.’s leadership on how he would bring down gas and food prices. He won a big majority of voters’ support when he promised during the campaign to bring down rice prices to 20 pesos per kilo.
It is a tough campaign promise, similar to what Duterte had vowed to do in six months—end corruption, criminality and the drug problem. After six years, the tough-talking Duterte did not deliver on his promises.
The promise of 20 pesos per kilo of rice could be Marcos Jr.’s waterloo. There are some people on social media who regretted voting for Marcos Jr., because food and fuel prices continued to rise, contrary to what he had promised before the elections.
Rice is an emotional issue, not only in the Philippines, but in Southeast Asia because it is the region’s staple. Major rice producers, like Thailand and Vietnam, are protecting grain exports like gold.
Sadly, the Philippines is one of the world’s top importers of rice. The Philippines’ rice production per hectare is one of the biggest in the world but it has very limited land, an annual bad weather that destroys the crop, and a bigger population than Thailand and Vietnam.
William Dar, the outgoing farm secretary, estimated that the Philippines needed to invest 245 billion pesos to have a more efficient rice production and to subsidize consumption to bring the price down to 20 pesos per kilo in the local market.
Forget the higher quality of Thai and Japanese rice in the market. It would be impossible for those high-quality rice varieties to be sold for 20 pesos per kilo even if there are government subsidies.
In one of his news conferences after Congress declared him winner of the presidential elections, Marcos Jr. tried to manage the people’s expectation of cheaper rice and food prices.
He said rice prices could further rise within the year. Duterte’s economic managers have predicted a further 3 pesos per kilo increase in the months ahead.
Marcos Jr.’s political fortunes may change in the months ahead if prices of fuel, and food, including rice, pork, chicken, canned goods, and other basic necessities, would continue to rise beyond the means of ordinary citizens.
But the energy and food costs are beyond Marcos Jr.’s control. There are external factors affecting the costs of fuel and food but there are certain things the Marcos government can do locally to cushion the high costs of fuel and food.
Suspending the excise tax and value-added tax for a certain period could help ease the burden of rising costs. Putting a brake on excessive importation of food products and helping local farmers through subsidies and low-interest loans may help increase local food production.
Traders are reaping huge profits in importation. There must be a way to dismantle traders’ cartels by directly helping farmers and fishermen.
Technology can help a lot in connecting consumers directly with producers. Organization of cooperatives and better farm management as well as mechanization, building of large-grain silos, better farm-to-market roads, and an efficient transport system could also improve the farm sector.
But these are not cheap investments. These should have been done decades ago. In some areas, there are still carabaos plowing non-irrigated fields. Government corruption remains high in the farm sector.
These are some of the challenges Marcos Jr. faces as agriculture secretary. He has to modernize the backward farm systems, put more resources into agriculture, which is one of the lowest contributors to the country’s gross domestic product even if the Philippines remains as an agricultural country.
Marcos Jr. has enormous political capital. He won the presidency with 31 million votes, nearly 60 percent of total votes cast on May 9, the first leader elected with a clear majority in a multi-party balloting.
He should not waste and squander it. There are so many low-hanging fruits he can pick to sustain the public support.
Filipinos have higher expectations that Marcos Jr. will improve their quality of life. But, at the same time, Filipinos also have little expectations of what he can do because they never heard big promises from him during the election campaign, except bring down the price of rice to 20 pesos per kilo.
In his first 100 days, Marcos Jr. can prove himself as a capable leader. That will be his first litmus test.