January 25th, 2024
Rep. Joey Sarte Salceda
The figure aligns with my office’s earlier releases that inflation will decline to below the BSP’s target range of 2-4 percent by the end of the year. The annual average inflation of 6.0 percent also aligns exactly with our prediction last month (https://mb.com.ph/2023/12/6/let-s-zero-in-on-rice-says-salceda-as-ph-inflation-eases) that it would settle at 6.0 percent.
As I emphasized last month, the government must zero-in its efforts on rice, which has accelerated its inflation to 19.6 percent. All other commodity prices are under control. For example, the 12.2 percent inflation rate for fruits and nuts can be attributed to seasonal consumption during the Christmas season. The price increase on water supply, meanwhile, is subject to regulation is needed. All other commodity prices are either in single-digit or negative inflation.
Corn inflation, in particular is negative, and this has resulted in a mere 0.2 percent inflation for meat. Secretary Laurel has been at work on the corn price problem and its implications on nutrition and food security. Just last month, the DA launched new native corn varieties and released them for planting by local farmers. We can be optimistic that corn prices will continue to stabilize while improving local yields, making us less sensitive to fluctuations in the world market.
With rice, world prices are once again on the uptrend, we need to focus on import source diversification and increasing our domestic yield significantly. President Marcos has kept the tariff rates for non-ASEAN rice imports to 35 percent, from the usual 50 percent. This is a positive step.
We must engage in solutions both on the domestic and diplomatic fronts. India has maintained its export controls, and there are expectations of a moderate El Nino this 2024. Rice prices on the world stage will continue to be pricey.
One diplomatic solution is to call on multilateral institutions like the ADB – stationed in the Philippines – to provide India and other rice-producing countries financing assistance to bridge their food subsidy needs; so that there is less political and economic pressure to keep exports limited. Again, the cause of the rice export ban from India has less to do with global rice supply and more with local rice prices in India, which have increased due to their substitution with wheat, which has been affected by the Russia-Ukraine conflict. In the meantime, we must continue to explore other sources, such as conditionally negotiating Myanmar’s rice export ban to exempt us.
On the domestic front, we must achieve another bumper crop this year – and that includes anticipating El Nino. Drought-resistant varieties must be made available where El Nino is expected to affect climate conditions.
Rice accounts for as much as one-fifth of household budgets. Keeping its price stable has significant implications on wages and economic growth. If we can right the price of rice, 2024 will be a good year for the economy.