Trade liberalization better than food price subsidies, says PIDS

To make food affordable in the Philippines, the government should pursue trade liberalization and other policies that are cost-effective instead of price subsidies, according to the Philippine Institute for Development Studies (PIDS).

In a study published by the state think tank, senior research fellow Roehlano Briones said doing so would be a timely move considering that, before the COVID-19 pandemic, the nutritional status of Filipino children was already a serious concern.

Briones said that, with the recent rounds of food price inflation, these economic shocks are likely to have an adverse impact on food consumption and nutrient intake at the household level. This, in turn, would lead to worsening nutritional status.

Rather than implementing financially unsustainable price subsidies, Briones said that

He said that implementing liberalization measures to improve food affordability is more cost-effective than financially unsustainable price subsidies.

Briones said that producing rice, cereals, fish, meat, and poultry — which contribute most to the Filipinos’ energy, protein, and micronutrient intake under high levels of trade protection against cheaper imports was reducing the affordability of nutrient-rich foods.

“The sooner the government dismantles high tariffs and overly strict (and often arbitrary) application of sanitary and phytosanitary standards on these major consumer goods, the more affordable these items become, especially to the poor,” he said.

Briones assessed the implications of the COVID-19 pandemic and the rising inflation to food and nutrient intakes of Filipinos.

His findings show that the government’s Bayanihan programs effectively countered the adverse nutrition impacts, but these programs are “very expensive and are not sustainable”.

He was referring to the program that provided essential food packs to the most vulnerable households impacted by the COVID-19 pandemic and related measures.

Under the Bayanihan program, around 140,000 households were targeted for food distribution over a six to eight-week period, backed by $5 million in grants from the Asian Development Bank.

“One way to keep the fiscal cost down is to target cash transfers to the most vulnerable groups—the poorest households,” Briones said.

In a related development, the Department of Finance said earlier this week cash subsidies for Filipino households that are deemed most vulnerable to the impact of high fuel prices will no longer receive dole outs as the national government has wrapped up the targeted cash transfer program (TCT) with a total of P18.3 billion paid out.

Finance Secretary Benjamin Diokno said in a statement that with the TCT ended, the government will shift focus on efforts to ensure there is enough supply of food and on bringing down the rate of increase in prices of goods and services.

According to the DOF, 9.2 million households benefited from the TCT program. In accordance with Joint Memorandum Circular (JMC) No. 1 issued in 2022, the program expired on Dec. 31, 2022, with the last payout distributed on Jan. 4-14, 2023.