Public Interest

Almost four months into the ongoing Russia-Ukraine conflict, there is no going around this: rising oil and gas prices and the global food crisis are due to the economic sanctions regime being imposed by the United States and the European Union on Russia.

The Filipino public continue to suffer under a weekly round of oil price hikes, with hapless jeepney driver and operators bringing home a measly P300 per day for twelve hours of plying their usual routes.

This is less than Metro Manila’s daily minimum wage of PHP 570.

Exacerbating this is the current PHP:USD exchange rate at PHP 54.065, which translates into imports being more expensive, and foreign debt more difficult to service.

More importantly, the country’s inflation could rise to 8% as long as the Ukraine conflict continues, according to Albay Rep. Joey Salceda.

Salceda said the national government has to focus on ensuring food security and the protection of poor Filipinos as prices of commodities soar.

He added that the bulk of inflationary pressure comes in the form of rising prices in transportation and energy.

On the other hand, agriculture groups are already sounding the alarm on an actual food crisis in the coming months as a result of tightening agricultural global supply.

Philippine Chamber of Agriculture and Food Inc. President Danilo Fausto said many problems around the world – particularly the Ukraine-Russia crisis – will take a toll on domestic food supplies. He expects there may be a food shortage in the country by the fourth quarter of the year, which is a holiday season.

Fausto added: “A lot of countries are banning their export to the Philippines in order to protect their own economic and food security, where do we get the food if we do not have the production?”

Incoming Socio-Economic Planning Secretary Arsenio Balisacan also acknowledged the current food crisis.

“Food prices have risen,” he said, adding this could continue in the coming months as countries exporting agricultural products are considering adjusting the quantity of the products that they will export and prioritizing their citizens.

Agriculture Secretary William Dar earlier clarified that the country has a sufficient supply of rice, vegetables, and fish for now.

He said that the next administration must put a premium on cushioning the impact of the inevitable limitation of food resources, considering the effects of the pandemic and the continuing Ukraine-Russia conflict.

However, what has not been extensively discussed is the impact of economic sanctions in the prices of oil, gas and food products.

More than the conflict, economic sanctions have placed difficulties on states to enter into bilateral contracts with sanctioned states and diffuse the current prices pressures on critical commodities.

Economic sanctions on Russia essentially prohibits other states from transacting with Russian companies which had previously provided oil, gas and agricultural supplies to its foreign partners.

With these sanctions, these foreign partners are forced to look for other sources of these commodities in the international market under a situation of limited supply.

The resulting consequence is clear: High prices for these critical commodities, and exporting states protecting their own supplies.

With varying sanctions continuing as a result of the conflict, there is little hope that the global food crisis will be resolved anytime soon.

In order to resolve the food crisis immediately, all forms of economic sanctions as a result of prosecuting the conflict in Ukraine should stop in the soonest time.

This will allow agricultural goods to flow smoothly through various ports and ensure stable supply for the world.

President Rodrigo Duterte made the right call to skip the ongoing US-ASEAN Special Summit in Washington D.C. from 12-May 2022.

According to the Mr. Duterte, he ‘might take a stand that will not be acceptable to the next administration.’

He said further, “Sabi ko sa kanila na pangit na tingnan kung magpunta ako doon, alam kong may bago nang president (I told them it doesn’t look good that I’ll be there as I know there’s also a new president) and besides, if it’s a working conference, there might be agreements and commitments that will be made there.”

This is a correct diplomatic posture by the outgoing President, particularly because the summit takes place only a few days after the conduct of the 2022 presidential elections, and presumptive President Ferdinand Marcos Jr. has not yet conveyed a particular position on the future of PH-US cooperation in the past.

Furthermore, there are concerns that Washington, through this summit, will try to strengthen its interference in regional disputes in the South China Sea, particularly with the recent release of its Indo-Pacific Strategy calling for an ‘empowered ASEAN’ working alongside other regional alliances such as the Quad.

It remains our position that disputes in the South China Sea should be resolved only by its affected regional actors, without the interference of other parties. In other words, ASEAN as a bloc should work together to stand up to Beijing in resolving specific disputes within contested waters and formations.

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In fact, the territorial disputes should not be a pretext by Washington to increase its presence in the region, as this would only play into its own agenda and strategy over this part of the world.

In no uncertain terms, Manila and ASEAN should play no role in elevating the level of interference of other nations in ASEAN’s regional disputes.

Correspondingly, Washington should not drag the ASEAN towards supporting its intervention in the Ukraine-Russia conflict. Except Singapore, no other ASEAN state has joined Western-led sanctions on Moscow. This should be a clear notice to Washington and US President Joe Biden that the ongoing conflict has no place in high-level discussions during the special summit.

Furthermore, ASEAN should be wary of the new but limited financial commitments being conveyed by Washington to its members, as the amounts being discussed are insignificant at best. Divided equally between ASEAN members, it represents funding that can be internally generated by the Philippines or secured through other partners, but without preconditions related to South China Sea disputes or the conflict in Ukraine.

As we find more clarity in the coming days with the foreign policy direction of the new Marcos government, it bears repeating that an independent foreign policy should be pursued by the Philippine government, which should not pivot to any superpower.

Inasmuch as the current regime has abandoned the pivot to Washington, we are expecting nonetheless that the new government will make a rebalancing in its relations with Beijing, as we had not seen real diplomatic and economic dividends in the last six years.  

With another round of oil price hikes this week, the public is clearly feeling the impact of Russia-Ukraine conflict on the global oil supply chain.

However, as early as the first few weeks of what Moscow calls special military operations, another global crisis has been brewing as a result of the conflict: global food supply.

According to the New York Times –

Ukraine and Russia are enormous producers of wheat, corn, barley, sunflower oil and fertilizer. One study calculated that the two countries accounted for 12 percent of the world’s calories.

With Ukraine under attack and Russia hit with strict sanctions, a huge supply of food is suddenly trapped — with Africa and the Middle East particularly imperiled.

In fact, since the start of the conflict, wheat prices have increased by 21 percent, barley by 33 percent and some fertilizers by 40 percent.

These are troubling statistics for our global food supply, because in comparison to global oil and gas supply, in which Russia only accounts for around 17 percent and 12 percent, respectively, Russia and Ukraine account for around 30 percent of the world’s wheat export.

Certainly, the 21 percent increase in wheat prices will not be ending anytime soon for as long as the conflict and sanctions continue.

More precisely, countries in the Middle East and Africa are severely affected by this supply crunch, but because the commodities market also follow global pricing, the impact is certainly felt around the world.

The Philippines should thus prepare for increases in the price of our pandesals and tasty breads, as a result of the ongoing conflict in Ukraine and Russian sanctions.

On the other hand, more concerning has been the increase in the price of fertilizers as a result of the Ukrainian conflict and Russian sanctions.

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For context, Russia is the world’s single largest exporter of fertilizers, accounting for 15 percent of world exports.

This is where the problem lies for the world, even for countries which do not consume as much wheat and barley as Europe, Middle East and Africa.

The soaring prices of fertilizer as a result of the Ukraine-Russia conflict will certainly impact the capacity of rice-producing nations to maintain its current production levels at the same prices prior to the conflict. In fact, it also impacts corn and other crops which are essential for animal feed.

As a result of high prices, it can be expected that farmers will apply less fertilizer, triggering an entire food chain crisis, in which less fertilizer means lower-quality crops, and lower-quality crops mean less nutrition for cattle, hogs and chicken.

Correspondingly, this also means higher meat prices around the world, including the Philippines.

Even the promised lower prices of the rice tarrification law will not help control expected price increases in rice, as even rice-exporting nations such as Thailand and Vietnam will have to contend with higher fertilizer prices.

Worse, Filipino farmers will have to deal with higher fertilizer prices during planting season, in a backdrop of minimal government subsidy and limited irrigated areas.

Ultimately, the way forward to stop a global food crisis from further escalating is for the Ukraine conflict to end, and correspondingly, for the Russian sanctions to stop.

With both sides continuing to prosecute the conflict, a large chunk of global food supply is stuck within their borders, and global prices continue to accelerate as a result of the shortage.

The point needs to be made: the food security of the Philippines and the rest of the world should not be hostage to the ongoing crisis in Ukraine. The international community should move to ensure that global food prices stabilize in the soonest time to avoid dire scenarios particularly in poorer areas of the world.

The world should not be at the receiving end of the ongoing conflict between great powers.

Last June, three hybrid corn varieties of Bayer led by DEKALB 9118S topped a corn competition in Asturias, Cebu with a reported computed yield of 8.3 metric tons per hectare (MT/ha).

The corn competition was organized by the local government of Asturias, which supposedly showed the Bayer hybrid corn varieties showed good resistance against tough corn diseases, particularly foliar disease, banded leaf sheath blight (BLSB), and stalk rot disease.

The corn derby also boasted that Bayer varieties provided a return on investment at 84.7% showing a net income of more than P45,000 per hectare.

According to Erwin Vibal, Grower Marketing Lead of Bayer Crop Science, “Aside from being the top performer in the Asturias corn derby, DEKALB 9118S characteristics include high shelling recovery at 84%, which indicates heavy grains once the corn ears are removed from the cobs.”

He added that this is advantageous for end-users who require high yield output from corn production.

It should be noted, however, that the corn competition appears to be a showcase of Bayer hybrid varieties more than anything else, given that the event was provided significant media exposure on the fourth week of June in major national broadsheets.

While hybrid corn presents a technological innovation to the agriculture sector, it should be determined whether introducing these products to the country’s vast farmlands is consistent with the country’s state policy on organic agriculture as enshrined in Republic Act No. 10068 or the Organic Agriculture Act of 2010.

In its declaration of policy, R.A. No. 10068 aims to “to promote, propagate, develop further and implement the practice of organic agriculture in the Philippines that will cumulatively condition and enrich the fertility of the soil, increase farm productivity, reduce pollution and destruction of the environment, prevent the depletion of natural resources, further protect the health of farmers, consumers, and the general public, and save on imported farm inputs.”

Further, the organic agriculture law advocates “the promotion of community-based organic agriculture systems which include, among others, farmer-produced purely organic fertilizers such as compost, pesticides and other farm inputs, together with a nationwide educational and promotional campaign for their use and processing as well as adoption of organic agriculture system as a viable alternative.”

As can be gleaned from the above-quoted state policy, it is the intention of government not only to increase farm productivity, but also to: (a) improve the fertility of the soil, (b) reduce pollution and environment destruction, (c) prevent the depletion of natural resources, (d) improve the health of farmers, consumers and the general public, and (e) save on imported farm inputs.

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It is our position that nothing in the results of the hybrid corn competition refers to these other important aspects of state policy on agriculture, as the competition has only highlighted farm productivity and specific characteristics of the winning corn varieties.

There have been no reports on whether these corn varieties serve to improve the fertility of the soil, reduce pollution and environment destruction.

More importantly, there are no reports on whether these corn hybrids pose no threats to the health of farmers, consumers or the general public. In fact, this should have been the major focus of the corn competition, as there is no point having massive profits if the short- and long-term health of the public will be compromised.

It has also been noted that since these corn hybrids are produced by a foreign corporation, farmers will certainly not save on imported farm inputs, contrary to the intended policy of the organic agriculture act.

Furthermore, it should also be disclosed whether these hybrid corns are true hybrids, and not genetically modified organisms (GMO). It has been noted that several agricultural products of Bayer include plant-incorporated protectant products such as Bacillus thuringiensis Cry1A.105 and Cry2Ab2 insecticidal proteins, among others. Certainly, it should be determined whether these corn hybrid winners include the same modifications.

This is important to significantly apprise farmers and the public that despite eleven years of the organic agriculture law, GMOs in the agriculture sector continue to be marketed and sold in the country.

While under certain conditions, GMOs have been beneficial to the world, Philippine law has made exceptions in its use in the agricultural sector. It is the role of government to enforce specific restrictions or regulations in its use in our farmlands and agricultural products.

With the coronavirus pandemic constituting a major economic strain on the country’s agricultural output, the government and the public should be wary of agricultural products which may take advantage of the limitations our agricultural sector, particularly the absence of well-developed, domestic agri-chemicals and biotechnology sector.

As multinationals continue their overtures into agricultural sector, government should be steadfast in ensuring that their products fully comply with with existing agricultural laws and regulations.