Tuesday, May 18, 2021
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Invest in the Logistics

The issue of rising meat prices is a complex one that strikes deep in the hearts—and bellies and wallets—of ordinary Filipinos.

 

There are many facets to this issue. There are supply issues, exacerbated by the continued presence of the African swine fever. There are cost issues, from the low prices received by the growers and farmers to the high margins imposed by middlemen.

 

There are logistical issues, from insufficient infrastructure to a shortage of capable personnel—something discussed many times in this column. There are likely, too, demand issues after Christmas, New Year’s—and from the middle class’ never-ending love of samgyupsal, if we’re to be really specific.

 

The government has responded with a 60-day price ceiling on pork. While the price cap may provide relief for consumers, economists have warned of possible adverse effects to the economy in the long term, such as a continued rise in prices, and businesses, particularly producers, closing shop due to losses. Just last month our inflation rate hit a two-year high of 4.2%, attributed to the rise in the cost of pork.

 

Other proposed interventions include reallocating supplies from Visayas and Mindanao to Luzon, a move which would definitely disenfranchise one group of consumers in favor of another, and providing subsidies to retailers and farmers to help them defray the increased costs of both supplies and transport.

 

If anything, those highlight the important role logistics plays in bringing food to our tables, in the best quality and at appropriate prices. They also highlight perhaps one answer to the perennial question of how to uplift the agriculture sector in the Philippines: invest in the logistics.

 

To the government’s credit, this is something it has come to realize over the past few years. For instance, we at SCMAP were invited to take part in the multi-sectoral Pilipinas Kontra Gutom initiative; an important front is to enhance accessibility and affordability of food, thus uplifting our farmers and lowering prices, with logistics playing a critical role.

 

But as we’ve seen when problems arise that directly and immediately impact Filipinos, there is a tendency to implement short-term solutions at the expense of long-term ones—and as the latter don’t always tend to be “sexy” and good from an image standpoint, they don’t get much love. Consider this a gentle reminder then.

 

Agriculture and Infrastructure

The agriculture sector benefits from having greater access to its markets. Infrastructure, of course, plays a huge role, from roads literally connecting farms to markets, to networks that virtually connect them. (The recently launched DELIVER-e logistics platform, launched by the Department of Trade and Industry and the Department of Agriculture last year—and supported by SCMAP—is an important step.) Infrastructure reduces costs by providing a more efficient means of transport, and perhaps reducing producers’ reliance on agents and other middlemen. It would also help farmers from more isolated areas to penetrate bigger markets.

 

Infrastructure also helps ensure the quality of agricultural products. The recent launch of an industry roadmap for the cold chain sector provides a template to ensure the development of storage facilities across the country. (It’s about time, and just as we have cold chain on our minds due to the entry of vaccines against COVID-19.) This also reduces spoilage of fresh produce and allows farmers to be more competitive throughout the year, rather than having to sell off bumper crops for much less just before they go bad, as we’ve seen in the past few years.

 

Of course, logistics isn’t just all about infrastructure. Any progress on that front will amount to nothing if producers and retailers don’t have the means to take advantage of them. Apart from connecting them to logistics providers, government can help by providing them with opportunities to understand supply chain and its impact on their livelihood, and perhaps also provide subsidies and other forms of assistance in acquiring vehicles, equipment and other capabilities that can help them deliver their products better.

 

Agriculture remains the sleeping dragon of the Philippine economy. While it ultimately shrank by 0.2% in 2020, it defied expectations and posted growth across the quarters of the last year, when the country was feeling its way through the pandemic. There’s long been talk of reducing our reliance on food imports and being a little more self-sufficient, of being able to feed every Filipino and providing Filipinos more choices, empowering them now and in the future. Doing so means investing in the long term in a sector long seen as underserved. So, yes, some patience is required, but also, some fortitude, and a lot of attention. And maybe soon we won’t have to feel guilty while eating unlimited samgyupsal.

 

Supply Chain Essentials: Our new webinar series kicks off on February 19 and runs every Friday until March 26. Take part and get a head start—ora refresher—intothe world of supply chain, with the help of industry experts with real expertise. Learn more and sign up by visiting scmap.org.

 

Henrik Batallones is the marketing and communications director of SCMAP, and editor-in-chief of its official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.

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