How did we get here?: Why livestock prices have skyrocketed

We sat with Economist Jefferson Arapoc and MASIPAG National Coordinator Cris Panerio to uncover the cracks in the national agriculture scene and the effects of the worsening price hikes.

Let’s say we hear of a story of a pork retailer who we’ll name “Arnel.”

Much like everyone else in his line of work, days are becoming worse for him. As more pigs die from disease, hog farms have to sell whatever they have left to pork retailers at a higher price to cope with their losses. To bring home at least a reasonable profit, retailers like Arnel have to sell pork at 400 pesos per kilo. Meanwhile, they lose more of their loyal customers whenever they refuse to haggle. 

Arnel could not blame his customers for haggling for a lower price. Everyone is struggling just to make ends meet, including himself.

His daughter has started noticing how they do not serve her favorite, adobo, for dinner anymore. Since his wife has lost her job in the factory, it has become even harder to pay for load so their daughter can continue attending her online classes. 

Today, Arnel has to face yet another challenge as the government implements a price ceiling. 

He could either continue selling his wares at the government’s set price and go home to his family buried even deeper in debt than he already was, or sell at his usual price covertly, and run the risk of being fined. Or, he could choose neither and simply go home.

In all these options, Arnel is at a loss. Unfortunately, these are his only choices. 

The ceiling can’t hold us

Prices of pork and vegetable produce have recently risen, with a price freeze driving more retailers out of business. This was the consequence of the implementation of strict lockdown protocols aimed at preventing the spread of the Coronavirus, which also left around 3.8 million Filipinos jobless, and many businesses ceasing operations.

The country’s inflation rate also spiked to 4.2% in January 2021, and 4.7% in February. National Statistician Dennis Mapa attributes the uptick to the increase in meat prices, which had an inflation rate of 20.7%. Meanwhile, vegetable prices rose at 16.7% in February, and 21.2% in January.

Before price ceilings were imposed to control the rising pork prices, a kilo of pork cost over 400 pesos, almost around the same price as beef. 

While it is difficult enough to recover from a pandemic, Economist Jefferson Arapoc pointed out that the nation is actually hit by a triple whammy. Before our import-dependent pork supply was stifled by lockdown restrictions, we already experienced a cutback in 2019, after the African swine fever (ASF) virus hit the country’s hog farms. To add, five consecutive typhoons, among which is Supertyphoon Ulysses that capped off the year 2020, ravaged a lot of crops and left little to harvest.

(RELATED STORIES: Ulysses storms Southern Tagalog and African Swine Fever persists, UPLB closes pig farm for sanitation)

Meanwhile, Magsasaka at Siyentipiko para sa Pag-unlad ng Agrikultura (MASIPAG) National Coordinator Cris Panerio said that with our livestock industries’ dependence on imported breeds, we are closer than ever to a food crisis.

Is imposing a price ceiling always bad?

To control the price increase, the government has resorted to imposing a price ceiling – a government-mandated maximum amount that sellers are allowed to charge for a product. When used appropriately, imposing a price ceiling can prevent profiteering practices or keep traders from overcharging for products and services.

Despite it being meant to prevent overcharging, the idea of a price ceiling becomes a problematic solution to the increasing prices of livestock. This is simply because the pork price hike is not a profiteering issue, but a supply issue.

Arapoc emphasized that the pork we purchase is brought to us by a supply chain, from hog raisers, to middlemen, to retailers, each of course pencil in a profit margin to sustain their livelihood.

“Ang problem din natin during the lockdown, ang dami rin kasing nasirang supply chain. Kaya dahil nasira yung supply chain, mababa yung production. Ngayong panahon ng pandemic, makikita mo talaga how the markets are connected and integrated. Kapag may nawasak diyan, talagang [may] domino effect [na nangyayari],” Arapoc explained. 

According to Jess Cham of the Meat Importers and Traders Association (MITA), hog raisers add a risk premium of 30 to 40%, because they are now working in a very hostile and risky environment. To minimize their losses due to the ASF, producers would tend to sell at a higher price. With these increases in the farmgate price, it has become increasingly hard for retailers to get their cut without losing buyers. Far from profiteering, retailers in this case are fortunate enough just to break even.

President Rodrigo Duterte’s Executive Order (EO) No. 124 imposes a price ceiling of P270 per kilo for pork and P300 per kilo for pork liempo. 

However, according to Samahang Industriya ng Agrikultura (SINAG) chairperson Rosendo So, it is simply not possible for retailers to sell at this price, citing that the acceptable retail price for pork given the current circumstances has to range from P330 to P380 per kilo. 

“‘Yung mga retailers, wala naman talaga silang control doon sa presyo ng baboy na binibili nila. Kung ang profit margin ko dito sakto lang talaga para mabayaran ‘yung renta ko at makakain ‘yung pamilya ko tapos bibigyan mo pa ako ng price ceiling, hindi talaga [ito] sustainable,” Arapoc explained.

Operating amidst a pandemic is also costlier for hog farmers. Lockdown restrictions make it even harder to transport pork from farm to market. To comply with social distancing measures, hog farms may be operating with fewer workers, slowing down their overall productivity.

Using a price ceiling in this case could even lower the pork supply further. Arapoc illustrates a domino effect: with lesser retailers willing to buy from hog raisers, subsequently leading to fewer sellers in the market, then there will be less livestock for consumers to buy.

“Magbebenta pa ba ako kung nawawalan na ng mga tao na nagbebenta ng pork sa palengke at wala na ring mabili ‘yung mga consumers?” Arapoc said, demonstrating the situation of pork retailers.

Due to the price ceiling imposition, some vendors opted to close their shops, rather than shoulder losses upon continuation of sale. Among them are 50 pork retailers at the Murphy Market in Cubao, Quezon City, who still tried to sell at the indicated price ceiling but eventually stopped selling upon incurring significant losses. 

“Hindi na kaya ibigay pa ng 270 to 300 [pesos per kilo] kasi sinubukan namin siya, kahit ganoon ang presyo, negative pa rin ang kita namin, talagang wala kaming kinikita,” one of the hog dealers, Von Ocbena, said. 

Since the supply of pork becomes scarcer in the market, its price is pressured to go even higher. In addition, some who chose not to abide by the imposed price cap continue to sell at the risk of having their supply confiscated. 

Is importation always harmful?

Part of the government’s response to the dwindling supply of pork in the country is to increase importation. On March 26, the government decided to increase the minimum access volume (MAV) of imported pork from 54,210 metric tons to 350,000 metric tons. With this policy, the government expects to see lower market prices for pork as supply increases.

The Philippine government’s inclination to import has been seen by peasant organizations as a cause of alarm. This is not the first time that the government has resorted to importation in an attempt to lower market prices. Kilusang Magbubukid ng Pilipinas (KMP) cites the implementation of the Rice Liberalization Law, which gave way to the influx of more competitively-priced rice, pushing local farmers further into debt and poverty.

“Convenient na band-aid solution ng DA [Department of Agriculture] at economic managers ng gobyerno ang importasyon. Malinaw na hindi solusyon ang importasyon ng mataas na presyo. Ito pa nga ang puno’t dulo ng kinakaharap nating problema sa sumisirit na presyo ng pagkain at mga bilihin,” KMP wrote in their position paper.

As our food producers continue to struggle under the pressure of more competitive importers entering the country, it would seem like importation serves as the ever-hungry parasite to what could have been a thriving industry. However, Arapoc tells us that importation would have been helpful if only it was coupled with good policy direction.

“’Yung globalization kasi, mahirap talaga siyang pigilan,” Arapoc explained. It may be necessary to import from other countries to cope with the increasing demand for certain goods. Livestock, for example, is a staple food in many households.  

According to Arapoc, however, once the government does allow imports in the country, it is important to equip local farmers with financial and technical support so that local industries could survive and compete with the imports in the market, especially in terms of price.

“At the end of the day, kailangan talagang mag-improve ‘yung mga industries natin in order for them to be competitive. Ang ikinakalungkot ko lang kasi is may effort ba to improve or magkaroon ng capacity building sa mga local farmers?” Arapoc said.

He also explained the difficulty of the situation for local farmers amidst importation.

“‘Pag nag-iimport tayo, ang kawawa dito ay yung mga farmers na nagbebenta [sa mataas na presyo], walang bibili sa kanila kasi preferred ang imports. The government should really step up in order for our farmers to be competitive para ‘pag pumasok ang mga imports, kaya rin nila makipagsabayan,” Arapoc added.

He asserted that it may be the lack of government support for farmers that causes some local industries to weaken once the imports come in, and not importation itself.

“Sa ibang bansa, nag-iimport din naman sila pero hindi naman naha-harm ‘yung farmers nila. So ibig sabihin, there is something wrong sa ginagawa natin. Ito ‘yung mga bagay na dapat dati pa naisip. In case magka-pandemic or magkaroon ng supply shock, dapat yung mga local industries natin are strong,” Arapoc explained.

In fact, it may not be beneficial for our local industries to always be protected from foreign trade. Arapoc cites the infant industry argument. This theory states that if local industries are not exposed to importation and trade (or are “treated like infants,” so to speak), they will have a hard time keeping up with competing products, and may also be unable to cope when they are struck with unexpected situations that drastically affect their supply, such as, in this case, the ASF virus. 

“Dapat mag-make sense din ‘yung policy intervention kasi kailangan din natin ng supply. So kung may negative effect [ang importation] sa mga farmers, kailangan [may gawin tayo] para maging resilient sila from importation. Kailangan balanse tayo,” Arapoc further explained.

Policy misdirection

Drastic as it may have seemed, this pork crisis did not happen overnight.

The current food crisis and pandemic only exposed the inefficiencies of the government and decades’ worth of policies, which failed to ensure food security in the country. Both Arapoc and Panerio agree that the government has “missed the opportunity” to improve the nation’s agricultural industry, making it difficult for the country to get out of this staggering price increase in the middle of a pandemic.

“In case na makaalis na tayo sa pandemic, iyon ‘yung dapat i-rethink ng government: how do we future-proof our industries? And we’re not just talking about the businessmen; we also talk about the laborers, and ‘yung mga nasa ilalim ng food supply chain like farmers,” Arapoc said.

Panerio said that the decimation of the country’s hogs was not a matter of unfavorable odds. The state that our livestock industry is in is itself already a “pandemic waiting to happen.”

The poultry and livestock industry in the Philippines grows mainly imported breeds. In fact, Panerio said that the global poultry and livestock industry is already in a genetic dead end because we rely on only a few breeds even on a global scale. 

In this situation where genetic bases of livestock are narrower, diseases spread even faster.

“Basic ang problema natin sa livestock at poultry natin. Una, imported yung breeds and therefore, imported ‘yung mga sakit, tapos imported din ‘yung mga gamot,” Panerio explained, citing a discussion between MASIPAG and the UPLB Institute of Animal Science (IAS).

Panerio explained that this problem could have been avoided if the country’s policy direction for agriculture was geared towards self-reliance. This means that instead of growing imported hog breeds, local farmers will have to grow native breeds. To pursue this, there must be sufficient government support and institutional research on self-reliant agriculture.

“Dapat sa agrikultura natin in general, dapat sikapin natin na maging self-reliant. Hindi tayo dapat maging reliant sa mga imported dahil sa maraming kadahilanan, isa na doon ay ang nabanggit ko na kapag imported ang sakit, imported din ang gamot. Yun yung basic na problema [ng agrikultura sa Pilipinas],” Panerio said. 

Part of what makes import-reliant hog raising unsustainable is the expense: not only do farmers have to buy imported breeds, they also have to continuously purchase imported feeds and medicines as well, which are more expensive. Under self-reliant agriculture, farmers are less likely to be buried in debt. 

Panerio shared that in the experience of MASIPAG farmers who shifted to growing native pigs, they had less expenses and more income. Instead of importing feeds, they now produce their own feeds and forage. Their native pigs are also the ones being bred for the next generation of production.

In turn, being self-reliant also spares the farmers’ livestock from being contaminated with diseases such as ASF. When importing breeds and feeds, Panerio explained that there is always a risk of contamination, which you are not as exposed to when you are raising native breeds and producing your own feeds and forage.

Panerio also emphasized the importance of diversified and integrated farming systems, which they teach to their farmers at MASIPAG. Farmers who practice this system, according to Panerio, are better off than their counterparts who stick to conventional farming practices.

“Organiko yung kanilang paraan ng produksyon. Yung ani nila, doon na rin kukunin yung binhi nila. So cycle lang – aani, kukuha ng binhi doon sa sakahan, tapos ang production inputs tulad ng fertilizer sila na ang gumagawa. Hindi na kailangan ng pesticide,” Panerio explained. 

Under this system, farmers practice varietal diversity, wherein they will choose three to five varieties of their main crop. Farmers have to go to trial farms to help them choose the right variety of crops that will thrive under the weather and environmental conditions of their community. By doing this, the possibility that their crops will be damaged by weather conditions is less likely, while the farmers themselves are also less likely to incur losses.

The diversified and integrated farming systems also teach farmers to observe species diversity. Aside from growing their main crops, they should also raise vegetable crops, poultry, and multi-purpose trees.

Diversifying crops could lessen the probable losses of farmers when facing harsh weather conditions. If one variety of crop may not survive, the farmers could still rely on the rest of their other surviving crops.

Raising poultry such as ducks can also help cultivate land, eat pests in the field, whereas their wastes can be used as fertilizers. Meanwhile, leaves from multi-purpose trees can serve as forage for animals, and are a rich source of protein and nitrogen for the soil. Tall trees can also serve as a buffer against strong winds.

Panerio pointed out that this farming practice is sustainable and ideal especially for a typhoon-prone country like the Philippines. Should they be affected by a typhoon, farmers who practice diversified and integrated farming systems will be able to recover faster because their sustainable practice allows them to be free from debt.

“Hindi siya mangungutang. Kasi ‘pag nangutang [sila], hindi naman iyan pupunta sa bangko na mababa yung interest. Pupunta yan sa mga usurero na ang laki ng interest kaya nahihirapan silang makarecover,” Panerio said, explaining that the only means accessible for most farmers to borrow money are usually lenders who charge with illegally high interest rates. 

Only a few farmers, however, apply these farming methods. Panerio points out that the mainstream narrative, which is being supported by the government and even by agricultural colleges and universities, is to “embrace modern agriculture,” vis-à-vis the organic agriculture which is being promoted by Panerio and MASIPAG.

Under modern agriculture, farmers are tied to a fertilizer-pesticide cycle, to using genetically modified crops (GMOs), and to associated debt from expensive and unsustainable farming practices, which are being promoted by large-scale agricultural corporations.

Panerio points out that under modern agriculture, farmers are being pushed into doing agricultural practices that even make them sick. Panerio shared that before MASIPAG farmers switched to organic farming, many of them would get sick because of their frequent exposure to toxic chemicals from pesticides.

“Imagine, ilang araw sila nagse-spray sa panahon ng taniman. Bago mag-anihan, magse-spray na naman sila. Tapos yung kinakain nila, may bahid na rin ng lason. [Kaya hindi sila nagkakaroon ng] malusog na pangangatawan,” Panerio explained.

But apart from deviating from organic farming, modern agriculture also provides less opportunities for farmers to market their own produce.

“Hindi lang ito usapin ng organic [farming] na from seed to plate. Dapat even beyond the plate, hanggang sa marketing and processing ay kontrolado ng mga magsasaka. Malaki dapat ang say nila roon dahil sila ang gumagawa ng pagkain,” Panerio added.

Even if farmers eventually proceed to organic farming, they will still not gain much income if they will sell their goods to processors. If they are in charge of processing and marketing their products, the food producers will benefit greatly from their own produce.

Under modern agriculture, Panerio says that farmers have very little to no control about how their food is marketed and processed. For instance, to be able to sell their produce at local markets as certified organic products, farmers have to avail the services of third-party certifiers, which are relatively expensive for small-scale farmers.

This, among many other systems in modern agriculture, puts them at a disadvantage against large agricultural corporations, which have the resources to avail expensive services and still be able to sell their goods at lower, more competitive prices. This is one of the examples that demonstrate the control that corporate agriculture has over pricing, technology, and the overall market of produce.

“Para magkaroon ng tunay na katarungang panlipunan, kung sino ang nagpapakahirap doon, siya dapat ang higit na nakikinabang,” Panerio stated.

Panerio and Arapoc both point out the elephant in the room: our local farmers, the suppliers of food, are hungry and buried in debt.  

“Mga isang linggo pagkaani, ‘yung mga rice farmers natin, nangungutang ng bigas. ‘Yun yung napakalaking irony. Yung nagpo-produce ng bigas, after one week of harvest ay nangungutang na ng bigas,” Panerio said, pertaining to the experience of Filipino rice farmers.  

The lack of genuine agrarian reform continues to be one of the glaring controversies in agriculture. 33 years after the Comprehensive Agrarian Reform Program (CARP) was passed, peasant farmers still have not been given the land that they have tilled for generations. Without genuine agrarian reform, farmers cannot decide what to grow, who to sell to, and even what to do with their money.

In spite of this, Arapoc and Panerio emphasized that we cannot simply shut down or replace agricultural corporations to address the social inequality experienced by our farmers. We cannot replace the large-scale production of factory farmers overnight, the same way that we could not simply eliminate importation and ignore globalization to save our local farmers.

Panerio says that we should not attribute the problem to one cause only, or else we would come up only with band-aid solutions instead of getting to the root of the problem.

“Long-term ang usapin,” says Panerio, suggesting that the long-term plan of the government must encompass economic, social, and environmental considerations.

“Hindi [naman pwedeng] tataas ‘yung supply pero in the long run, nasisira mo ‘yung resource base – ‘yung lupa, ‘yung mga magsasaka, ‘yung mga hayop, at ‘yung diversity ng binhi. Hindi dapat sila nawawala kasi sila ang pundasyon ng ating agrikultura.”

Arapoc acknowledges that social inequalities exist.

Nobody chooses to be in an unfortunate economic situation, yet some find themselves less fortunate than others. Regardless of the hard work we put in, it seems most of our fates are decided for us by a “social lottery,” as Arapoc calls it.

But with a history of favoring landowners wealthy and powerful, at the expense of the tillers who had cultivated their land for them, it can be said that this social lottery is far from an omnipotent force.

(RELATED STORIES: Still no justice for Hacienda Luisita victims, attacks on farmers remain rampant and Lupang Aguinaldo farmers assert right to land in Peasants’ month)                                                     

It is these existing social inequalities, Arapoc emphasizes, that justify the presence of the government. At the presence of these inequalities, it is then the government’s role to intervene, to address these inequalities, to open more opportunities for those who didn’t have any luck in the “social lottery.”

In the long run, perhaps abolish the very system that oppresses the Filipino people. [P]

Photo by Kennlee Orola