“With the Russia-Ukraine conflict continuing to drag, winter coming up, and the peso value continuing to go down, today’s relief might be very temporary”
We’re in for a very rough ride in the months ahead, well into the whole of next year. So fasten your seat belts, folks.
Sometime in April, I told my friends who were watching how the dollar was appreciating towards the peso, that I predict a 58 to 1 US dollar exchange rate by Christmas 2022.
We started this year at 51 pesos to the American dollar. It’s 91 days before Christmas, and 58 came sooner than I estimated.
It’s now 58.50, and still going up. The US Federal Reserve, counterpart of our Monetary Board, has been relentless in fighting inflation through monetary tools, which means increasing their interest rates.
At the risk of triggering a recession, officialdom finds controlling inflation, the scourge of the ordinary man, as the more urgent priority.
So it is most likely that we will have to shell out 60 pesos for every dollar by Christmas.
The eminent House economist, Albay Rep. Joey Salceda, fears 65 to 68 by next year, and our BSP can do little or nothing about the plunging exchange value. The dollar strengthens and the backlash on weakened currencies is worldwide.
Sugar hasn’t gone down to pre-crisis levels, although there is the sweet promise from the newly-formed SRA that prices will go down by November when the mills go on high gear just as their 150,000 metric ton imports come in.
But don’t count on a return to the 50-60 peso per kilo level.
Livestock will still be on the high side, and that is not just because of the seasonal year-end demand.
It will still be cost-driven, with the price of feed, principally corn, not getting any lower, and logistics still quite high. Even imported pork will be costlier, especially with the peso exchange rate.
Poor families used to be happy with a noche buena of nilagang baboy or tinolang manok; this time they will have to content themselves with pancit laced with a little pork and vegetables.
It’s the middle class who will be most hit by high food prices, with ham and queso de bola prohibitive, along with the canned fruit medley that makes up the traditional fruit salad. By the end of the festive season, most of our middle class will be feeling like they have become nouveau pauvre.
Rice prices are on a gradual upswing in the world market, with devastating floods in Pakistan, drought in China, the export tax in India, plus Vietnam and Thailand eager to cash in on the supply situation.
It is a deadly cocktail which can only mean bad news for the price of our rice imports.
Yet, because our traders over-imported this year and last, we have enough to last us for the year, even if government holds no more than four days inventory.
Which means the privates will still call the shots, ready to cash in on any shortage of supply between the wet season harvest now and the summer crop in April-May next year. Government, with a neutered NFA, will be no more than a helpless observer.
Still, our farmers are crying. Traders are buying at 13 to 14 pesos per kilo of palay, just enough to cover the cost of production as fertilizer costs have trebled.
Worse, if as feared, farmers scrimped on the use of fertilizers, the season’s harvest will be lower than last.
And then again, watch the typhoons which are yet to come. As we write this piece, Signal No. 3 has been hoisted over swaths of the palay-producing regions, courtesy of Typhoon Karding.
I recall the Sept. 26 anniversary of the National Food Authority in 2011, when Typhoon Pedring caused landslides and massive flooding in Central Luzon, and flattened a million metric tons of soon-to-be harvested palay (that’s about 600 million kilos of rice) when muddy floodwaters rushed from the Sierra Madre. “Dumapa ang palay,” the Nueva Ecija farmers cried, and ruined their harvest.
Incidentally, and ironically, today is the 50th anniversary of the National Food Authority, an agency decreed by the president’s father through PD 4 with the mandate of ensuring availability and affordability of the country’s staple food.
Farmers in Isabela and Cagayan began harvesting their yet to fully ripen palay, fearing a repeat of the Pedring ravage. This means the rice they mill will be “hinog sa pilit,” easily broken immature grains. That will translate into lower incomes.
Pray that Typhoon Karding will not be deadly, and that succeeding storms will not hit the rice-producing regions.
Sardine canneries are complaining about two of their most important inputs: the cost of tin cans, and, would you believe it, the lesser harvest of fish from our seas.
Our fishing boats come to shore with just about 20 to 40 percent of their regular catch of sardines. The urban poor’s fish, galunggong, has long been scarce and expensive, and in its stead, the tinned sardines on top of loads and loads of rice, has become staple, along with the instant noodles the price of which has also almost doubled.
Is there any good news in the food department?
Well, the president, mismo, has identified agriculture as first priority.
Because of him, the Department of Agriculture will be getting the biggest budget ever for 2023. Yet even with that, there is a long gestation period between promise and fruition.
Whatever is done now and next year should start producing good results by 2025, assuming proper and effective implementation.
And though news readers smile whenever oil on the pump goes down marginally, perish the happy expectations of final relief.
With the Russia-Ukraine conflict continuing to drag, winter coming up, and the peso value continuing to go down, today’s relief might be very temporary.
Meanwhile, we just have to fasten our seat belts, pray for the best and whisper the hope for better times to come sooner.