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Philippines: Rising rice prices and lower remittances
In preparation for a further relaxation of quarantine guidelines in the country after the May 15, Congress is readying the passage of a “new normal” code of conduct for the whole nation to prevent any future spread of the coronavirus infection until a vaccine or some similar more permanent solution is found.
A bill, which will take into effect over a three-year period, has already been introduced in the Lower House, and should have been up for discussions when sessions resumed last May 4. The Senate is still to come up with its version of the proposed law.
This should pretty much allow the economy to restart, even at a much reduced pace. If the House version takes wings, businesses will need to present a “New Normal Workforce and Workplace Management Plan” to their local governments before they are allowed to resume operations.
With local governments also devising their own “new normal” work plans, this sounds like a recipe for pandemonium. There should be a simpler way to speed up resumption of business operations with less government intervention and bureaucratic nuances.
A better option would be for government to come up with general guidelines for businesses categories. Hard and fast rules, like use of masks, sanitizers, regular disinfecting of the work place, and social distancing, can be uniformly applied.
Food chain disruptions
Meanwhile, two concerns on a more global perspective need to be carefully looked at. The first would be disruptions in many of commonly traded food commodities like sugar, oil, dairy, and yes, rice.
According to the FAO Food Price Index tracker for March, sugar and vegetable oil price indexes showed some of the biggest drops. Sugar was down 19.1 percent from the previous month, while vegetable oil was lower by 12 percent.
The price reductions are not a supply problem, but rather one of demand. With world economic growth severely hampered by the lockdowns in the US and most of Europe, the market for sugar and vegetable oils is also in a similar glut situation like crude oil and oil products.
The recent free fall in crude oil prices, with even some benchmarks falling in negative territory, has also dragged sugar and vegetable oil prices, both of which are linked in the world supply and demand market. Production of foods that heavily use sugar has also seen shocks as factories have stopped operations in locked down areas.
Rice supply insecurity
Rice prices, on the other hand, have shown a steady increase since the start of the year. Panic is building up as reports of many rice farmers struggling with the coronavirus and fields grappling with droughts continue to pour in.
India, regarded as the world’s biggest source of rice exports, has already curbed most of its outbound shipments. Vietnam has followed suit, and a quota system is already being planned. Cambodia has just announced that it would limit its exports.
Thailand, which sets prices for rice in the global market, has denied any plans to limit exports – so far, but its domestic prices have been rising by 20 percent to 30 percent since January as its farmers worry about the virus spread and loss of income from rice fields.
Thailand, Cambodia, Laos, and Vietnam’s rice fields are dependent on the Mekong River, but recent severe droughts supposedly brought about by climate change and the construction of hydropower dams have forced farmers to abandon their livelihood.
For the Philippines, which heavily imports rice, these developments should force our government to rethink its current strategy on rice supply management. The last thing we need now is for domestic rice prices to rise, especially with Thailand already seeing a continued escalation of its rice prices until the end of the year.
Remittance contraction
The second concern is our remittances. The Bangko Sentral ng Pilipinas has already warned a significant contraction in income from overseas workers, particularly those employed in the shipping and sea-based tourism industries.
Last week, the last of the luxury cruise ships at sea docked to start unloading passengers after staying afloat for more than a month. This signaled the end for now of the industry that had employed thousands, including Filipinos.
The global pandemic is also likely to affect the employment of migrant Filipino workers in businesses and households abroad as economies contract. The repatriation of shipping crews has already started, and those employed in the oil industry are expected to follow soon.
More than ever, we need to take concrete steps to mitigate the loss in overseas jobs and remittance earnings.
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Source: https://www.philstar.com/business/2020/05/07/2012231/rising-rice-prices-and-lower-remittances