The Food Price Index of the Food and Agriculture Organization of the United Nations could cause jitters for countries dependent on food imports like the Philippines. The benchmark index of international food commodity prices rose in April for the first time in a year. According to FAO, this was caused by higher quotations for sugar, meat, and rice—three food items that the Philippines buys from other countries in huge quantities.
FAO’s All Rice Price Index averaged 124.2 points in April, up 2.5 percent from its March value and 17.8 percent above its year-earlier level. The steepest gains were registered in Pakistan where prices of 5 percent brokens leaped to levels not seen since late 2011. Based on data from the UN agency, Pakistan’s 5 percent brokens surged by 41.4 percent year-on-year, while quotations from India went up by 23.3 percent on an annual basis.
The UN agency also noted that the prospects for the 2023-2024 rice productions along and south of the equator are mixed, mainly due to the varied impact of the La Niña event. It is also closely monitoring the possible emergence of the El Niño phenomenon, which could cause drought in affected areas.
Another commodity that has become more expensive is meat. The FAO Meat Price Index rose 1.3 percent during the month, driven primarily by higher pig meat quotations, followed by poultry prices, which went up due to animal health issues that limited output as well as Asia’s rising demand for meat products. Bovine meat prices are also higher due to a decline in cattle supplies for slaughter, especially in the United States.
Rising meat prices means bad news for a country like the Philippines, which has been relying on foreign suppliers in recent months to meet the domestic demand for pork. Sporadic outbreaks of African swine fever had hampered hog raising in key areas. The threat of ASF has made it more difficult to ensure the stability of pork and even poultry prices.
While the local sugar sector is not faced with the diseases that have bedeviled livestock growers, declining productivity has affected its ability to meet the domestic demand for the sweetener. To fill the shortfall for this year, Malacañang has again approved the purchase of sugar imports. (See, “Marcos clears importation of more sugar on SRA report,” in the BusinessMirror, May 16, 2023) Manila will allow the entry of as much as 150,000 metric tons of imported sugar to pull down retail prices.
However, sugar is one of the commodities that saw double digit increases in prices, based on the FAO index. The sugar price index went up by 17.6 percent in April, its highest since October 2011.
FAO explained this was due to reduced productions expectations and outcomes in India, China, Thailand and the European Union caused by dry weather conditions as well as to a slow start of the sugarcane crop harvest in Brazil. Higher international crude oil prices, FAO said, could also put extra pressure on sugar prices as this could increase demand for sugarcane-based ethanol.
All these developments underscore the importance fast-tracking measures that would raise the productivity of the local farm sector. The performance of the farm sector in the first quarter, based on data from the Philippine Statistics Authority, is encouraging as output was higher by 2.1 percent year-on-year. It would do well for the government to put in more resources and effort into reforming the farm sector to enable it to adequately feed the entire nation.