SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, we look at how investing in logistics could address longstanding issues on food security.
Invest in the logistics
The issue of rising meat prices is a complex one, and also one that strikes deep in the hearts – and bellies, and wallets – of ordinary Filipinos.
There are many facets. There are supply issues, exacerbated by the continued presence of African swine flu. There are cost issues, from the low prices received by the growers and farmers, to the high margins imposed by middlemen. There are logistical issues, from insufficient infrastructure to a shortage of capable personnel – something we’ve discussed many times in this column. There are likely demand issues, too, after Christmas, New Year’s – and the middle class’ never-ending love of samgyupsal, if we’re to be really specific.
The government has responded by imposing a 60-day price ceiling on pork. While it may provide relief for consumers, economists have warned of possible adverse effects to the economy in the long term, such as a continued rise in prices and businesses, particularly producers, closing up shop due to unsustainable losses. Just last month our inflation rate hit a two-year high of 4.2 percent, attributed to the rise in the cost of pork.
Other proposed interventions include a reallocating of supplies from Visayas and Mindanao to Luzon, a move which would definitely disenfranchise one group of consumers in favor of another, and the provision of subsidies to retailers and farmers to help them defray the increased costs of both supplies and transport.
If anything, those highlight the important role logistics plays in bringing food to our tables, in the best quality and at appropriate prices. They also highlight, perhaps, one answer to the perennial question of uplifting the agriculture sector in the Philippines: invest in the logistics.
To the government’s credit, this is something it has come to realize over the past few years. For instance, we at SCMAP were invited to take part in the multi-sectoral Pilipinas Kontra Gutom initiative; an important front is to enhance accessibility and affordability of food, uplifting our farmers and lowering prices, where logistics plays a critical role. But as we’ve seen when problems arise that directly and immediately impact Filipinos, there is a tendency to implement short-term solutions at the expense of long-term ones – and as the latter don’t always tend to be “sexy” and good from an image standpoint, they don’t get much love. Consider this a gentle reminder, then.
The agriculture sector benefits from having greater access to their markets. Infrastructure, of course, plays a huge role, from roads literally connecting farms to markets, to networks that virtually connect them. (The recently-launched DELIVER-e logistics platform, launched by the Department of Trade and Industry and the Department of Agriculture last year – and supported by SCMAP – is an important step.) This reduces costs by providing a more efficient means of transport, and perhaps reducing producers’ reliance on agents and other middle men. It would also help farmers from more isolated areas to penetrate bigger markets.
Infrastructure also helps ensure the quality of agricultural products. The recent launch of an industry roadmap for the cold chain sector provides a template to ensure the development of storage facilities across the country. (About time, and just as we have cold chain on our minds due to the entry of vaccines against COVID-19.) This also reduces spoilage of fresh produce and allows farmers to be more competitive across the year, rather than have to sell off bumper crops for much less just before they go bad, as we’ve seen in the past few years.
Of course, logistics isn’t just all about infrastructure. Any progress on that front will amount to nothing if producers and retailers don’t have the means to take advantage of them. Apart from connecting them to logistics providers, government can help by providing them with opportunities to understand supply chain and its impact on their livelihood, and perhaps also provide subsidies and other forms of assistance in acquiring vehicles, equipment and other capabilities that can help them deliver their products better.
Agriculture remains the sleeping dragon of the Philippine economy. While it ultimately shrank by 0.2% in 2020, it defied expectations and posted growth across several quarters of the last year, when the country was feeling its way through the pandemic. There’s long been talk of reducing our reliance on food imports and being a little more self-sufficient, of being able to feed every Filipino and providing much more choice, empowering them now and in the future. Doing so means investing in the long term in a sector long seen as underserved. So, yes, some patience is required, but also, some fortitude, and a lot of attention. And maybe soon we won’t have to feel guilty while eating unlimited samgyupsal.