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Hungry people will be angry people

Some three decades ago there was a man who worked as a gardener in an exclusive village in Greenhills. He was an “elderly” but much of that was because he was never quite sober and never quite drunk, always carrying a small bottle of White Castle in his rear pocket.

On occasion he questioned anyone who would listen why P10 bought much more when he was young than it did now when he was old. Someone could have explained to him the effects of the 1944 Bretton Woods agreement. Or US President Richard Nixon ending the convertibility of the US dollar to gold in 1972, and the subsequent—but supposedly unrelated—1973 oil crisis when prices increased 400 percent.

The massive increase in predatory lending to under-developed countries, aided and encouraged by the World Bank, would have meant nothing to the gardener. He would not have understood that the post-Edsa agreement to pay the Marcos era debt to foreign lenders came with the high price of capital controls.

In the same way, a tricycle driver in some far-flung province who never tasted a chicken meal from a global fast-food chain, or ever saw much less slept in a five-star hotel, is unaware that both the fast-food place and the hotel influence the financial condition of his family.

We can appreciate and excuse the ignorance of the gardener and the tricycle driver. But what can we say about the highly “educated,” comfortably “wealthy,” and exceedingly vocal urbanite who has every modern gadget including a programmable air fryer? That person often displays the same level of ignorance.

It’s the upper-class “rabble-rouser” who challenges the thought that the Philippines has reversed the Covid case uptrend by asking for statistics and is unaware of the Department of Health’s “Covid-19 Tracker.” It’s the journalists that are often being questioned about their information on social media—and sometimes in print—that is two or 10 years out of date.

“Philippine inflation quickened in December to 3.5 percent driven by higher food prices and transport costs. Rice prices also climbed for the first time since the implementation of the Rice Tarrification Law, and transport costs also contributed to faster inflation with tricycle fares rising 47.2 percent in December, and jeepney fares rising 6.6 percent.”

Statistically, that is true. However, the analysis makes it seem like a local problem, which it is not.

The price of Brent crude oil is up 50 percent since November, affecting not only fuel costs but also agricultural production inputs like fertilizer, pesticides and herbicides. Globally, the FAO (UN Food and Agricultural Organization) Food Price Index averaged 107 points in December 2020, up 2.2 percent from November, marking the seventh consecutive month increase. The last time the index was at this high level was in 2011 and part of the reason is that global food production is down. Global cereal production in 2020 is the lowest since 2016 and is in a declining trend. Covid is not the culprit.

The third largest exporter of rice—Vietnam—just imported rice from India to lower the domestic price spike.

The Dow Jones Commodity Grains index is at a six-year high. The Industrial Metals index is at an eight-year high. Then we find out that it has never been more expensive to get a container of goods across the ocean as shipping rates are at historic highs.

The centerpiece “Build, Build, Build” program of the Duterte administration was important. The next administration must do something that has not been done in the last 30 years: “Grow, Grow, Grow.”

E-mail me at [email protected] Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.

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