By Bianca Cuaresma & Samuel P. Medenilla
Taal Volcano’s unrest is not expected to pull down the country’s economy this year, but it could stoke inflationary pressures in the coming months, a local economist said.
Early assessments made by Philippine National Bank (PNB) economist Jun Trinidad showed that the adverse impact of Taal’s eruption could be mitigated by the size and the speed of the government’s relief operations.
“Deploying significant private and public resources in disaster affected areas to address the natural disaster’s damages compensates for macro downside risks,” Trinidad said.
Trinidad said the government’s aid, reconstruction and rehabilitation efforts, coupled by a private sector-led reparation to normalize their operations will likely offset the negative impact of the natural disaster on domestic demand.
The economist also said that the P20-billion National Disaster Risk Reduction and Management Fund as approved in the 2020 budget, as well as the $222 million proceeds from the catastrophe-linked bonds could cover for the losses caused by the volcano’s eruption.
What is worrisome, however, is the pressure that the Taal eruption could put on food prices—particularly on chicken, hogs and fish since Region 4A—the region most affected by the calamity—is a significant contributor to local production of livestock, he said.
Trinidad said the region is the second-largest regional producer of live chicken, accounting for 87,000 metric tons out of the total 429,000 MT in the third quarter of 2019.
The Department of Agriculture (DA) said Taal Volcano’s eruption has damaged some P600 million worth of crops and other produce. The DA said the figure could go up in the coming days due to the probable fish kill in Taal Lake caused by the volcano’s eruption.
In its report on Tuesday, the DA said Taal Volcano’s damage to the farm sector rose to P577.59 million, from the agency’s initial estimate of P74.55 million.
The Philippines ended 2019 with a 2.5-percent uptick in inflation in December, from 1.3 percent recorded in November.
Even before Taal’s eruption, inflation has already been flagged to trend upwards in 2020 due to local and global developments.
The government’s target inflation range for 2020 remains at 2 to 4 percent. In 2019, inflation averaged at 2.5 percent.
‘No shortage’
The DA on Wednesday said it will ensure that there will be no food shortage in Luzon as it will mobilize supplies from areas outside of Taal.
In an ambush interview, Agriculture Undersecretary Ariel Cayanan said the DA is confident that other food-producing regions in Luzon could offset the losses incurred by farmers in areas affected by the eruption of Taal Volcano.
“So far BFAR [Bureau of Fisheries and Aquatic Resources] and BPI [Bureau of Plant Industry] have made no declaration [on a possible food shortage],” Cayanan said.
He said the crop production of Nueva Vizcaya, Quirino, and Baguio will be sufficient for the vegetable needs of Luzon.
And for fish, Cayanan said Pampanga, Tarlac and other areas in Region 3 “have greater market share when it comes to volume” compared to that of Batangas, which was severely affected by the eruption.
“The challenge for us now is how we are going to ration it. How we will distribute it from North to South [of Luzon],” Cayanan said.
Cayanan said Agriculture Secretary William Dar already gave instructions to the DA’s regional offices in Luzon to help with the logistics to ensure that sufficient supplies of vegetables and fish in the market and minimize possible “price distortion.”
Also, the Department of Health warned the public against eating fish caught from Taal Lake due to the concerns that these may be contaminated with harmful toxins released during the eruption.
“While we are not sure, might as well as be cautious because we know that toxic substances have been thrown out of the volcano and dissolved in the water. Ingesting fishes and animals, which were killed by it might transfer those toxins to our bodies,” Health Undersecretary Eric Domingo said.
However, Domingo said vegetables and fruits, which were exposed to ashfall from the eruption will be safe to eat as long as ash is washed away.
DOH said eating ash could cause symptoms similar to food poisoning.
Image credits: Nonoy Lacza