By Jasper Emmanuel Y. Arcalas & Cai U. Ordinario
NEARLY a year after facing the wrath of avian influenza, the local poultry sector grappled with a familiar foe: price.
In August of 2018, in fact, the farm-gate price of broiler started to decline on the back of increasing output.
During that time, the sign of a glut seemed too early to call, United Broiler Raisers Association (Ubra) told the BusinessMirror.
However, prices maintained a downward trend and, indeed, an oversupply was confirmed by November.
The glut wasn’t the usual production spree by local raisers in anticipation of Christmas demand.
It was a glut that no poultry raiser saw coming and which persists until today.
The Ubra explained that the glut stemmed from aggressive loading by poultry raisers who thought that the market can absorb additional supply. Poultry raisers, Ubra said, were wrong on this.
Just as the local industry loaded more and more day-old chicks unto the market, imported poultry meat products were surging. The market eventually choked on an oversupply that even big poultry producers like San Miguel Corp. and Bounty Fresh Food Inc. were forced to sell at a bargain.
Could the glut have been averted?
Yes, if only timely and updated data on the country’s supply and demand situation was available to guide farmers on their production cycles, Ubra said.
But the data, which could have saved small poultry raisers from a gloomy Christmas, came months after the industry had already incurred losses.
And the chance of it repeating again, sans this updated and timely data on the country’s supply and demand situation, is likely, Ubra President Elias Jose Inciong said.
IN January, Agriculture Secretary Emmanuel F. Piñol admitted that the government was partly to blame for the oversupply.
“We had a lapse in issuing guidance to the stakeholders on the current chicken supply situation, which we have to do actually to guide farmers on the volume they should raise in their farms,” Piñol said in a January 8 interview. “So, we will be updating our data on our supply situation.”
The broiler wasn’t the only farm commodity that was hit by oversupply last year. Tomatoes being dumped on the roadside in Laguna and truckloads of vegetables being rejected in Baguio also made headlines.
Situations like these could have been easily prevented if farmers were properly guided on market demand and production trends in the country, according to economists and policy-makers interviewed by the BusinessMirror.
The lack of data hampers policy-making as the absence of empirical evidence could cause government to undertake ungrounded decisions, economist Rolando T. Dy said.
“If data shows we lack pork fat, or pork skin, then we must import,” Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, said in an interview.
“But if we do not have data, which could be used to forecast or project supply and demand situation, and we are blind, then it is likely that we would have oversupply or undersupply because our decisions do not have any basis,” he added.
DY said the verification of data adds veracity to the collected information to ensure that accurate figures are being used in policy-making.
Such process is presently absent from the country’s data system.
For example, Dy pointed out, the government could cross-check data sets on rice and palay production with rice millers.
He further explained that these millers are the ones on the ground and could verify if estimates on production and projections are realistic.
For one, the government still uses 65 percent as the average milling recovery rate (MRR) of palay to rice—a figure that, Dy said, has been disputed by local stakeholders for some years now.
Citing rice millers, he added that the average MRR right now in the Philippines could be around or below 62 percent. And the 3-percent difference could mean thousands of metric tons of rice that could spell an oversupply or shortage.
DY said it is high time the government adopted modern technology, such as drones and satellite images, in collecting and validating data.
The use of such equipment, he added, would reduce errors committed by humans in statistical work as they provide opportunities for cross-checking manually gathered data.
However, Dy pointed out, having such statistical system or process is easier said than done, especially when the government doesn’t have an “appreciation” for “good” data.
“But the problem is that it would entail big investments. And the government does not appreciate good statistics,” he said. “We have capability to conduct such data collection and verification but we do not have the funding.”
More so, Dy proposes that the government create a tripartite body or board that will focus on data verification.
This board could include representatives from the government and private sector to ensure that there is timely updating in the data covering food supply situation in the country.
Other Southeast Asian countries, such as Thailand and Malaysia, have these types of boards to monitor the supply and demand situation of their key crops, Dy said.
He added that the government could even look at putting up a separate agency to focus on analyzing data. However, Dy noted this may entail amending the charter of the Philippine Statistics Authority (PSA).
The government could even tap professors in state universities and colleges (SUCs) to conduct the data validation to easily boost the manpower or staff in such process, he added.
The professor said it is only a matter of investing in a “good” and “sound” data system, which could be even beneficial to the government in the long run.
“For example you have P2 billion, that would be equivalent to 200 kilometers of rural road at a P10 million per kilometer cost. That’s the favorite thing the government does,” Dy explained.
“But if you invest that P2 billion in a data system and do a cost-benefit analysis versus the construction of rural roads—the benefit of good data would be double or triple of that road construction.”
According to Dy, the government can have a sound data system if it wants to.
“Kung gusto may paraan; kung ayaw maraming dahilan [We can find means if we want something but if we don’t, we can only find excuses not to do it],” he said. “The corporate sector is even willing to pay more than P2 billion to have an information system [where] the benefits are multifold. Look at it, they even have ‘Big Data’ analytics and Blockchain.”
Dy said the Philippines is not lagging in terms of data coverage but it has to catch up in terms of analytic responsiveness.
For example, the government has no data monitoring on new emerging crops in the country, such as avocado and durian, he said.
The demand for these commodities, Dy explained, is growing fast in countries such as China and Vietnam.
PHILIPPINE Institute for Development Studies (PIDS) Senior Research Fellow Roehlano M. Briones told the BusinessMirror that the PSA faces a lot of challenges when it comes to data. Foremost among these challenges is the issue of regularity.
Briones said data from the PSA “comes intermittently,” leaving little or no room for policy adjustment. This is a function of money because it is costly to fund annual or monthly surveys. This is partly because official data usually has larger sample sizes.
A case in point is the conduct of the Family Income and Expenditure (FIES), which is done only every three years. This survey is being used as the basis for the government’s poverty data. The information that is collected is always three years late.
Speeding up the conduct of such surveys, including agriculture data, could involve the local government units (LGUs) to get updated data, especially on the consumption side. However, Briones said this is difficult when it comes to production because, oftentimes, there is underestimation or overestimation, depending on what suits the LGU concerned.
This is the same reason, Briones said, why the government does not entrust the LGUs with funds for conditional cash transfers (CCTs) since these can be used for patronage politics. This is the reason for the emphasis on the need to have an independent body to handle the CCTs.
“For consumption, that might be less problematic. Why am I saying this? There’s always a debate between PSA and LGUs especially with respect to production figures. So LGUs are always debating [against], either seriously overestimated PSA [data] or seriously underestimated; often it is underestimated,” Briones said.
“For its part, the PSA says once you link production with government programs or whatever data, consumption or production, to government data from the national government, and then you ask LGUs who could potentially benefit from these programs, ask them to collect the data, you’re undermining the integrity of the data-collection process,” he explained.
Briones added that LGUs are not set up as data-collection agencies and thus have no capacity to undertake data gathering for official statistics. He said that government does not allocate plantilla positions for LGUs. However, should government decide to create these positions, the people who will be assigned to fill them will have to go through years of training.
Experience and technology are also factors that can spell the difference between good and bad statistics. He said the PSA had to go through years and decades before they reaching a certain standard in data collection and processing efforts.
“This is all part of the infrastructure I’m saying. It takes a long time to accumulate this expertise and capacity,” Briones said.
He added that while the PSA has become an independent agency capable of undertaking the task of collecting and processing quality data, there are other practices done by countries that are helping them come up with the data they require.
Briones cited as example the Thai government, which uses a crop-cutting methodology that allows the government to take a sample of the harvest and from there extrapolate how much will be produced based on the yield and the size of the harvested area. The government will visit farmers, select random plots, cut the produce and compensate the farmers for their trouble.
In the Philippines, he said, the Philippine Rice Information System (Prism), which is helping the country monitor rice production and prepare for and mitigate the effects of disasters such as typhoons and El Niño to rice areas, was introduced.
The Philippine Rice Research Institute (PhilRice) explained that Prism evaluates crop health and damage in the event of typhoons, flood, or drought. For instance, damage caused by Typhoon Glenda and Typhoon Marion in 2014 was assessed using SAR images.
The PhilRice said flooded rice area maps were also produced and used to validate the reports from the LGUs. This also helps assess drought-affected areas in Mindanao due to the prolonged El Niño.
Prism, PhilRice said, involves remote sensing, crop modeling, standardized procedure for crop health assessment, and smartphone-based surveys to provide information on where, when, and how much rice is grown in the country.
PhilRice said that since 2014, this monitoring and information system has been generating timely seasonal data on rice areas and yield, and assessment of crop health and damage in the event of typhoons, flood, or drought.
However, Briones said, these remote-sensing technologies are more widely used in OECD countries like Australia and the United States. The Philippines got its remote-sensing technologies from the National Oceanic and Atmospheric Administration (NOAA).
ONE powerful tool that is under the disposal of the PSA is the PhilSys, or the national ID. Briones said the national ID, which assigns “student numbers” to each Filipino, will give the PSA the wherewithal to cross reference with data such as the farmer’s registry or the list of those who have availed themselves of crop insurance. This will enable the government to ensure that those included in the registry are one and the same person.
However, the only limit in this system right now is the fact that it is still voluntary. Whereas countries like South Korea, Indonesia, Thailand and Vietnam have long had national IDs in place, the Philippines’ system is still voluntary.
Having a system that has less human intervention is more advantageous and will prevent inaccuracies that could lead to overestimations and underestimations.
“‘Personalistic’ interactions are prone to inaccuracies especially if there are incentives or money at stake in those interactions,” Briones said. “But there’s a greater hope of more objective assessment if you use technology.”
He said that in order to avoid gluts in the case of chicken
or tomatoes, Briones said the private sector can explore creating a
“Grab-like” application that can show farmers and buyers the prices of certain commodities per locale.
This gives farmers and consumers the power to choose the best produce at the best price. It can also inform farmers about the commodities that are in demand and at what price they can be sold.
While technology is not the best suit of farmers whose average age is 52, Briones said when it comes to these technologies, older farmers would usually involve younger generations in operating devices such as smartphones and navigating web-based applications.
This technology, however, needs to be developed by a private entity since application development and technology such as these cannot be efficiently managed by the government.
Up to par
The PSA said they have not been remiss in their duties to ensure that official government data remains on a par with international standards and international commitments.
These efforts include the updating of frames that are the basis of samples to be used in various agriculture surveys as well as the regular conduct of numerous surveys that seek to collect information from planting intentions of farmers in the rice and corn sectors to the production of livestock and poultry which is based on the number of animals that were slaughtered.
PSA Deputy National Statistician and Sectoral Statistics Officer in Charge Rosalinda P. Bautista told the BusinessMirror the agency regularly conducts agriculture-related surveys. In terms of palay surveys, the PSA collects information on production per quarter based on quantity and land area covered. They also observe standing crops and survey planting intentions.
She explained that the PSA would regularly conduct the survey a month after the reference quarter. Specifically, the first 10 days after the reference quarter. This is done except during the last quarter of the year when data for the fourth quarter is obtained in December. This, she said, allows the PSA to conduct validation of the data they have collected.
Apart from keeping a regular schedule, the PSA also regularly updates the surveys it conducts to make the instruments more responsive to current situations and the results more accurate. This is part of the PSA’s mission to “deliver relevant, reliable statistics and civil registration services for equitable development toward improved quality of life for all.”
In terms of agriculture data, Bautista said, the PSA is in the process of updating the frame that it uses to select its sample for all the agricultural surveys it conducts. This helps keep the list of respondents updated.
However, in the exercise of its functions, particularly where agriculture data is concerned, the PSA admitted that certain constraints cannot be immediately addressed. Bautista said these include human error; seasons that affect agriculture production; and the government’s own resources.
BAUTISTA admitted there are limitations on the part of farmers. This may be due to their lack of education, their age, or the simple reason they, too, are humans who can commit mistakes, she said.
Bautista explained that gathering information, for example, can be tricky given that many farmers do not keep records of their production. This makes it crucial for the PSA to conduct a thorough validation of the data they acquire, which can take time.
Further, their age becomes a factor. Bautista said the average age of Filipino farmers is 52 years old and nobody in their families is willing to go into farming. This leaves the farmer alone to his devices without a child to replace him in taking care of production and keeps them from being accurate with their answers when PSA conducts surveys.
“Of course, farmers do make mistakes, the same thing that happens when we conduct our validation and we try and compare with what happened. So one time, I said, we should be concerned if farmers do make mistakes in estimating. Is it a defect [that is due to] our limitations or is it also a defect due to the fact that the farmer really did make a mistake in estimating? This can happen both ways,” Bautista said.
In PSA’s quest to deliver accurate and responsive data, Bautista said, the seasons that affect agriculture production and, eventually, access to the results become a challenge.
Bautista said that as much as the PSA would like to release information with as little lag as possible, sometimes the planting and harvesting season is too short for the PSA to capture the data that it needs.
This is particularly the case with data concerning vegetables when the planting and harvesting can only take months. Ampalaya or bitter gourd, for example, only takes two months to plant and grow. And even before the PSA can collect all the data, the planting and harvesting seasons have passed.
This poses concerns not only in collecting data but also releasing the information and ensuring that information reaches the intended audience in time.
Access to data, however, becomes another challenge as most of the data that PSA generates are in the website. This also means that farmers should have the technological knowhow, the knowledge and background on statistics, to be effective users of PSA data.
“There is issue of access among farmers. How can our web-based data reach farmers? And do they have the capacity to understand? Supposed to be, the DA should help them,” Bautista said. “We [only] produce the data and it’s in the website. It’s up to government to make a way for farmers to access this, understand it so that he may use it to decide when to plant, what to plant.”
Prior to being merged with the three other agencies that comprise the PSA, the Bureau of Agriculture Statistics (BAS) used to be the sole agency that addresses concerns of farmers regarding data. The data includes price monitoring and teaching farmers to interpret data.
Under the Agriculture and Fisheries Modernization Act of 1997, data dissemination and teaching farmers to interpret the data that they get was part of the functions of the BAS. This entailed going to farmers’ groups and conducting an extension service on statistics for farmers.
One of the products of this function was the Agriculture and Fisheries Market Information System (Afmis) launched in 2010. The Afmis is an online repository of price data as well as a directory of buyers and sellers and other market information.
HOWEVER, when the Philippine Statistical Act was passed in 2013, that particular function of BAS of extending help to farmers was excluded from the PSA’s functions.
Apart from legal limitations, there are also financial concerns. If PSA will come up with more frequent information or data on particular commodities, the government needs to allocate a lot of resources to finance these efforts.
Bautista said financial resources are important because statistical undertakings are expensive. The PSA needs to tap enumerators and equip them with the training and materials that will allow them to do their field work. Of course they are paid for these efforts.
One major challenge, particularly for this year, is the re-enacted budget. This is crucial not only for the preparations of the Census of Agriculture and Fisheries (CAF), which is being done through the redesign of various agriculture surveys.
The 2020 CAF will be pilot tested in six provinces this year: three for palay and three for corn. This will require a budget of P16 million.
“Even with the reenacted budget, we are really committed to do it. We will just agree on prioritization,” Bautista said.
Efforts to disseminate and explain the data are being done by PSA through a weekly radio program. Bautista said that the PSA’s regional and provincial arms also have tie-ups with local radio stations to reach more farmers in the process.
She added that to some extent, the Agricultural Training Institute (ATI) also conducts seminars and other capacity-building efforts for farmers and farm workers. However, the reach of these seminars and fora is limited considering that smallholder farmers live far from provincial centers. Many, Bautista said, live in hard-to-reach places.
Unlike social democratic states such as Canada and European nations, there are no production quotas in the Philippines. A production quota is when the government dictates the volume to be produced just sufficient to meet local consumption or export if there is excess.
If an investor seeks to enter the poultry industry, then he must wait for someone to quit business or wait for an available production quota, Inciong explained.
Since the Philippines has a free enterprise business environment, having a data system is crucial, he added.
“Everyone could go into the business because there is no production quota,” Inciong said. “Therefore, the only way for you to have a rational system, wherein everyone would self-regulate, is to have solid and timely data.”
Furthermore, Inciong, who is a lawyer by profession, said a sound data system is more vital than ever now since the country has competition laws already.
“Before you can invoke the competition law, you need data to say that there is oversupply already, or the production intention is greater than the demand,” he said. “The point is there is rationality in the system based on timely information.”
INCIONG said Ubra has been advocating for a sound data system for the poultry and livestock sector since the 2000s.
The Department of Agriculture (DA) has just restarted its price and volume watch group that monitors domestic prices, production volume, cold storage inventory and import volume.
The price and volume watch group of the DA was absent for some months before it was reinstated last February, Inciong said.
Inciong explained that since the government implements a minimum access volume (MAV) on chicken imports then there is a need to monitor arrivals accordingly. At present, the MAV for chicken imports is around 23,000 metric tons.
All imports exceeding the MAV must pay corresponding special safeguard duty (SSG) if their landed cost is below the trigger price set by the government.
“We don’t know how much has entered the country and in particular our MAV utilization. Because you will cross-check the total arrival to the MAV utilization to determine the out-quota imports,” he said. “Once you determine it, then you could monitor next if they pay the corresponding SSG.”
However, Inciong said the data being collected by the DA is still insufficient.
He points out that it lacks data on the prices of imports, which is crucial in invoking the protective measures against surge.
Having data on the price of imports abroad could aid government to determine if there is a dumping or smuggling occurring in the country, Inciong said.
Since government is not monitoring the prices of imports abroad, then unscrupulous traders who misdeclare the value of their shipments could easily get away, he added.
Furthermore, Inciong pointed out that government could have been losing revenues due to the lack of a data system.
He said there is no current data system that monitors the imports that enter the customs bonded warehouses (CBW) as well as the volume being re-exported.
Since the government is encouraging exports as a dollar-earning revenue measure through CBW, some big companies are allowed to import raw materials, like chicken leg quarters, at zero tariff on the condition that they should export them as yakitori products, he explained.
However, the government is not able to monitor the volume that is being imported by these companies and the volume that they export in relation to raw materials they brought in, Inciong added.
Due to this, the government could be blinded if some of the imported raw materials—at zero tariff—are being sold in the domestic market, making it unfair to those who brought in the same commodity but paid corresponding tariffs, he said.
“So, yes, it is possible that the government is losing revenues. We do not know how much is being imported to the CBWs and how much of it is being exported,” he said.
On the lack of an improved agricultural data system, Agriculture Undersecretary Segfredo R. Serrano said that having a sound data system “should have been easier today because you have mass of mainstream technology to do that.”
Serrano concurs that the government as a whole has no appreciation for good data. Second, there still exists a “haka-haka” or guesswork culture even among policy-makers in the government, he added.
“We should promote increasing appreciation of science, of the scientific method and objective evidence,” he told the BusinessMirror. “So it is a climate of science. A climate of objective. And not a climate of fear or fearmongering.”
Serrano said data should be also made accessible to farmers so that they could make objective decisions in their production plans. Furthermore, he pointed out that it is wrong to assume that farmers are not capable enough to analyze data and other relevant information on planting.
“It is an insult to say that farmers are risk-adverse. It is the most stupid comment as farmers have dealt with risks all their lives,” he said.
“What farmers fear the most is uncertainty. It is the duty of the government, particularly in this era of climate change, to convert those uncertainties into quantifiable risks—and that is data,” he added.
Serrano said if the government can empower farmers to make choices on their own due to substantial and abundant information, then it has already succeeded in uplifting their lives.
“The mere fact that you liberate farmers from prescriptive services provided by the government and enable them to make choices based on their experience, competence and insights, we have already uplifted their welfare,” he said.
Serrano hopes that the establishment of the Department of Information and Communication Technology (DICT) would pave the way for the modernization of the country’s data system.
“I have very high hopes for DICT to do this in an integrated manner in the government,” Serrano said.
Since a lot of Filipinos now own smartphones, Serrano said it is possible for the government to conduct surveys among farmers through smartphones. With such technology at hand, the government easily expands its reach and sample size, thus, effectively reducing its margin of errors, Serrano explained. “Can you do a near census with smartphones? Yes,” he said.
Asked if it is too late for the government to have an advanced data system, Serrano said: It’s not.
“We should have done this in the last century. It’s not late—it is never late,” he said.
“But if we dilly-dally a little more, then we will be the only blind government in this region,” he added.
Image credits: Akarat Phasura | Dreamstime.com