FILIPINOS should brace for higher rice prices in the next five years, as more expensive oil could cause the price of production inputs such as fertilizer to go up, according to the World Bank.
In its latest report, titled Commodities Market Outlook, the World Bank estimated that rice prices in the international market could rise to $390 per metric ton (MT) by 2020, from $375 per
MT this year.
“Food-commodity prices are affected by energy prices through a number of channels, including fuel costs and chemicals, and indirectly through fertilizers [some fertilizers are made directly from natural gas],” the World Bank report read.
From an average price of $41 per barrel this year, crude oil is expected to become more expensive at $60 per barrel by 2020.
The World Bank said food and oil prices are linked, so much so that if oil prices drop 50 percent, there could be a 10-percent “permanent” decline in food prices over the longer term.
“Overall, agriculture has been estimated to be four to five times more energy-intensive than manufacturing,” the report read.
Apart from higher oil prices, the World Bank said weather phenomena, such as El Niño and La Niña, which could disrupt supply, could jack up food costs.
The report noted that trade policies, such as providing support to farmers, could also have a “significant” impact on food prices.
The onslaught of the El Niño in the Philippines has already caused farmers to incur P9.9 billion in production losses, according to data from the Department of Agriculture.
In a recent media briefing, Agriculture Undersecretary for Operations Emerson U. Palad said the bulk of the production losses was incurred from January to April 2016. Crop damage during the period amounted to P6.5 billion.
In 2016 the three regions that incurred the biggest crop damage were Region 10 at P2.46 billion; Region 6, P1.9 billion; and Region 12, P748 million.
Crop losses from February to December 2015 reached P3.4 billion, according to Palad.