Rapid assessment of the impact of COVID-19 on food supply chains in the Philippines

EXECUTIVE SUMMARY

On 8 March 2020, the Philippine government declared the State of Public Health Emergency to address COVID-19. On 13 March 2020, the government imposed enhanced community quarantine (ECQ) over Luzon. Subsequently, similar measures were imposed throughout the country, including in Mindanao, and especially in Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

Although the COVID-19 epidemic is primarily a public health concern, the necessary measures enacted to contain the spread of the virus, especially the restrictions placed on the movement of people and goods, were likely to have a significant impact on all levels of the agricultural market chain. The Food and Agriculture Organization of the United Nations (FAO), International Fund for Agricultural Development (IFAD), the World Food Program (WFP), and the United Nations Children’s Fund (UNICEF) decided to conduct a rapid assessment on the impact of the COVID-19 outbreak on food security and nutrition. The results of the impact assessment was envisioned to inform key government agencies in identifying the appropriate measures and programmes that will ultimately help ensure food security for all, at all times.

Given the focus on food security, the team consisting of FAO, IFAD and the Department of Agriculture (DA), concentrated first on the main population centers of the country, which have the largest concentration of households, namely: Metro Manila, Metro Cebu, Metro Davao.
Sites in BARMM, Marawi City and Basilan to represent internally displaced population (IDP), and geographically isolated islands, respectively. The supply of 16 site-specific fresh produce: rice, hogs, chicken, chicken eggs, bangus (milkfish), galunggong (round scad), tilapia, eggplant, squash, tomato, cabbage, carrot, potato, and banana (Lakatan), for all regions; and for BARMM: ampalaya (bitter gourd) and cassava, were traced back from the demand areas to their respective major trading hubs and supply areas. Secondary government data and key informant interviews from a wide-array of respondents from the government, and the private sector were used to establish the baseline conditions, and acquire information on by the impact of the restrictions, feedback on policies, and outlooks for the next months. Questions on gender and halal were also incorporated.

Baseline information. Consumption and import dependency are highest for cereals and meat;
Metro Manila, by far, has the heaviest consumption owing to a large population. Filipinos consume more lowland than highland vegetables. Mindanao centers tend to consume more vegetables per capita. Except for potato, the Philippines is mostly self-sufficient in vegetables.
The Philippines requires more than 1.2 million metric tonnes (MMT) of banana per year.
Mindanao Centers post a higher per capita consumption of banana; Basilan posts a high per capita consumption of cassava.

Rice, being the staple food in the country, is the biggest contributor to energy intake. Although iron and protein content is not high in rice, surprisingly, it is the top contributor to protein and iron intake, mainly because of high per capita consumption. On the other hand, owing to low per capita consumption, vegetables are only a minor source of micronutrients, except carrots for Vitamin A. Poor nutrient intake leads to widespread undernourishment. Rice and farmed animal products are produced in large quantities in regions adjacent to the key population centers. Vegetables tend to be also produced adjacent to the population centers, except highland vegetables in Luzon. Banana is produced near its key demand centers, except in the National Capital Region (NCR). BARMM appears more than self-sufficient in cassava.

Top provincial production centers in each island group are likely (but not certainly) a key food source for the nearest Metropolitan demand center. Based on past trends, the production outlook in most of the provincial production centers and key commodities is favourable for long-term food availability in the demand centers. Large demand centers tend to source their food from nearby provinces and nearby key production centers, over major transport routes (mostly by land in the case of Luzon and Mindanao, and by the sea in the case of Metro Cebu.

Within the short run one-year period (2020), several production shocks are expected to introduce deviations between the forecasted normal increase and the actual increase for the year. The shocks are African Swine Fever (ASF), avian influenza (AI), fall armyworm (FAW), and adverse climate events. The short–term production problems plaguing agriculture have been severe enough to impact growth figures for the first quarter of 2020.

Not only have there been problems plaguing agriculture in the short term; there have also been long-standing structural problems affecting the sector, namely:

  1. weak growth of agricultural output;
  2. low income of producers;
  3. declining labour supply;
  4. deteriorating resource base;
  5. lack of inputs and finance, especially for small farmers and fisherfolk;
  6. poor logistics infrastructure;
  7. disconnect between small farmers and fisherfolk (SFF) and the value chain;
  8. high cost of nutritious food; and
  9. dependence on concentrated distribution points (urban areas).

Point 9 is a structural constraint that is not traditionally mentioned as a long–term development constraint; however, it must be mentioned now, as it creates a vulnerability point that was exposed by the COVID-19 pandemic.

The current leadership of the DA has taken full cognizance of the long– term development constraints confronting the agri-food system and has adopted a New Thinking for Agriculture based on the themes Ani (Harvest) and Kita (Income). The growth target was set to 2 percent in 2019, rising to 4 percent by 2022. At the same time, adopting Kita in the New Thinking signaled that, aside from the usual preoccupation with production targets, DA was placing farmers’ welfare and livelihood front and center of the DA strategy. The New Thinking is founded on eight paradigms: Modernization, Industrialization, Export Promotion, Farm Consolidation, Roadmap Development, Infrastructure Development, Budget and Investments, and Legislative Support.

Impact of the COVID-19 pandemic. Since early March, the COVID-19 pandemic has inflicted unprecedented controls on travel and social distancing, with adverse economic consequences still on-going. Public health emergency measures have disrupted both supply and demand sides of agri-food systems worldwide. The COVID-19 pandemic had struck at a time when the agrifood system was facing a healthy outlook, implying that the recurrence of a world food crisis is unlikely.

As with other countries, food production and food markets were classified as an essential sector or activity and were exempted from the severest prohibitions. Food purchases and deliveries were allowed. However, the food supply chain was not left unscathed by the containment measures. The lead national agency for agriculture and food security is DA, which implemented various actions in response to COVID-19.

Impact on food supply chains. Some farmers and fisherfolk reported difficulties in securing inputs owing to the closure of agro-trading shops. The closure of banks and non-operation by financiers also affected some farmers and fisherfolk. Across the supply chain, workers have had a difficult time reporting to the place of work, owing to local government unit (LGU)-level quarantine regulations together with the suspension of public transport. Some business operators, who themselves were elderly, opted to rather stay at home and not open for business. Employers could not deploy either a full workforce owing to the skeleton workforce restriction and the need to providing shuttling services or staying facilities.

Throughout the supply chain, players who needed to travel as part of their business faced LGUimposed restrictions, at least in the initial phase of the lockdown. Gradually restrictions eased up over May and June, and complaints about transport restrictions have become less frequent. Both national and local governments imposed other types of restrictions affecting land and sea travel without necessarily stopping movement altogether.

There is widespread agreement that the DA’s food pass, together with Department of Trade and Industry (DTI)’s cargo pass, was eventually successful in assuring the movement of goods and agro-inputs. Input and credit support from the government was also cited by farmers as helpful, although some had no information about national programmes (which are focused on rice). The Kadiwa ni Ani at Kita programme of the national government, together with procurement for relief goods of LGUs, provided a strong demand boost to fruit and vegetable farmers.
Programmes to expand supply must be constantly confronted with the realities of market demand.

Most farmers and assemblers report reduced sales and sales prices. A good exception to this trend is direct online selling to households, which seems to have created opportunities for formal enterprises. After an initial round of panic-induced buying, retailers in wet markets and service establishments report dramatically reduced sales. In contrast, the quarantines had differential effects in the modern retail segment, favoring the top supermarkets. Retail prices in Metro Manila showed a clear pattern of initial volatility in the weeks before and after the ECQ, followed by several weeks of relatively stable prices.

However, the majority of monitored commodities under price control are non-compliant. Measures to contain the COVID-19 pandemic have severely affected livelihoods and the ability of households to purchase food. Some large agribusiness enterprises are making relatively optimistic forecasts about the domestic market for food products. Concerning imports, the selfcorrective nature of market forces makes it unnecessary for the government to step into explicitly stop importation, especially as these products are already being heavily protected under high tariff walls (40 percent for meat and 35 percent for Association of Southeast Asian Nations, or ASEAN, rice)

 

 

Source: Food and Agriculture Organization of the United Nations