Business

Lack of shortage of pork, fish and vegetables poses inflation risks

TRYING FILE PHOTO / GRIG C. MONTEGRANDE

The expected shortage of fish, pork and vegetables should be remedied to keep prices stable especially in the wet season and with La Niña threatening food production by the end of the year, according to the state planning agency National Economic and Development Authority (Neda).

“Although the outlook for some foods is still favorable, the supply forecast for other foods may be in short supply. The government will work actively to support their availability and ease the potential price pressure, “Neda said in its latest inflation report on Friday.

Neda said the government also secured an “unhindered supply chain” despite some areas, including Metro Manila, returning to stricter lockdown measures this month.

Referring to estimates from the Department of Agriculture (DA) from mid-July, Neda said the pork supply would end 2021 with a deficit of 199,344 tonnes (MT), or 45-day values ​​of stocks, despite a 175.9 -percent year-on-year jump in imports during the first half of the year.

“Imports covered by the temporary increase in the allocation of MAV (minimum access volume) and the reduced tariffs began to arrive in July. Of the target for the first tranche of 140,000 MT, 13.8 percent has been utilized. Nevertheless, the supply must be further strengthened with the arrival of more imports in view of the expected pork deficit at the end of the year, ”said Neda.

The government lowered tariffs and increased quotas on pork to increase imports amid the local African swine fever (ASF), but Neda said “the government will remain vigilant amid reports of new ASF cases in other countries” such as Germany.

In July, meat inflation fell year-on-year, but remained high at 16 percent, mainly due to lower chicken prices, as pork prices remained flat.

In addition to a possible shortage of pork, Neda said that “lowland vegetable production and fishery supplies are also expected to exceed 1,267,804 MT and 135,135 MT, or only at 80 percent and 96 percent adequacy, respectively”, referring to DA and the Bureau of Fisheries and Aquatic Resources reports last month.

Although overall inflation returned to within the 4 percent target last month, food prices rose 5.1 percent year-on-year due to more expensive vegetables and faster increases in fish prices caused by low supply. Rising fuel prices also increased the delivery cost of these products.

“To control fish inflation and ensure a stable supply, DA will quickly follow the issuance of the Certificate of Necessity (CNI) to cover the domestic demand gap in the closed fishing season starting October,” Neda said.

“Although the availability of highland vegetables will partially offset the expected deficit of lowland vegetables, the government can proactively adopt measures to ease the price pressure on vegetables and fishery products,” it added.

The highland’s vegetable production was expected to generate a profit of 797,820 MT at the end of the year, while the chicken supply would exceed demand by 41,928 MT, DA estimates showed.

The rice stock is also expected to exceed demand by 2.99 million MT by the end of 2021, as “the reduced tariffs under EO [Executive Order No.] 135 contributed to the arrival of 494,248 MT of rice imports in June and July, corresponding to approximately 30 percent of previous arrivals, ”said Neda.

Referring to forecasts from the state weather bureau Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa), Neda said an extended wet season due to La Niña “would likely recur (55 percent probability) in September to November and may continue until the first quarter of 2022 ”after the ongoing El Niño.

Neda also said Pagasa forecasts had shown that 9-12 typhoons could enter or develop in the country between August this year and January next year.

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