"It is clear that the economic impact of the contagion would be far greater than initially predicted."
The observations in this article were being written earlier, but the sudden travel ban on Taiwan last Monday night required that we concentrate on the lifting of the ban through explaining the strict protocols that our office instituted to prevent the possible spread of the COVID 19 to the country.
As the number of victims rose in China and the number of cases in other countries were reported, it is clear that the economic impact of the contagion would be far greater than initially predicted.
China after all is the world’s second largest economy, and for us in Asia, it has the greatest economic influence. The Philippines particularly imports so much from China, whether these are consumer goods or intermediate goods which are part of the supply chain required by Philippine manufacturing. This disruption of supply chains would have the greatest negative impact on the Philippine economy, and the entire global economy for that matter.
While we import much, we export very little to China, with bananas gaining ground in the past three years only after political relations with it improved under President Rodrigo Duterte’s apertura Sinica.
If only eating Philippine bananas would cure the coronavirus, we would be running out of land for planting bananas. Some doctors have posited coconut oil as containing antiviral properties from mono-laurins. If validated, this would be good news for the long-suffering coconut farmers of our country.
We will leave it to our economic managers to determine the numbers of the COVID 19 negative fall-out. This writer, however, having served under previous administrations as Philippine Tourism Authority and later, National Food Authority administrator, would currently just zero in on two: Tourism and the potential movement of rice prices.
NEDA’s DDG Rosemarie Edillon already stated before the House Committees on Tourism and Economic Affairs that the tourism sector could lose as much as P22.7 billion a month, and the travel bans as well as downturn in visitor arrivals due to the tourism slump would result in the loss of anywhere from 30,000 to 95,000 jobs.
Depending on how long it would take to control the contagion and the discovery of medical remedies, the numbers could become worse. Many workers in the hospitality sector are casuals, and many in the restaurant and resort businesses are small and medium-scale businesses which could not absorb continued losses.
For the month of February alone, Tourism Secretary Berna Romulo Puyat said foregone revenues due to COVID 19 could reach 16.8 billion. Some 101,452 seats per week of the two-week long ban were forfeited.
As much as the DOT and the industry are heroically promoting domestic tourism to take up the decline in foreign visitor arrivals, domestic travel can only do so much. But with the precautions against crowded gatherings, both MICE events and even fiesta celebrations will be affected months after the contagion has subsided.
In 1998 in the wake of the Asian recession, DOT could only start reversing the tide after more than three years, and under a new government with Secretary Dick Gordon at its helm. And let us pray that when temperatures start climbing this spring and summer, the cases of this pestilence will likewise wither out.
It would probably be best for us meanwhile to improve our tourism infrastructure during the period of slack, in preparation for better times which would surely lie ahead. Looking forward, we should concentrate on sustainability of our tourism destinations, some of which are over the top in carrying capacity. Millennials will always have the urge to travel, and as soon as the coronavirus red light turns green, it will be business as usual for the tourism sector.
Secretary Berna has approved so many tourism rehabilitation projects for immediate implementation, in Baguio, Palawan, Bohol, even in Manila. This is the way to go. As they say, “when the going gets rough, the tough gets going.”
The Chinese always say that the other Mandarin character for “crisis” is “opportunity.”
To the highly adverse effects of the ASF infestation on our hog industry now comes the fears of the poultry sector also being threatened by a resurgence of the deadly bird flu.
There are reports coming from Hunan province in China about a big broiler farm affected by a pathogenic strain of the deadly H5N1 disease or bird flu. God forbid!
Now let me share my worry about rice.
The management of its supply and demand is always critical to a nation of 110 million rice eaters. In late 2017 until the whole of 2018, the mismanagement of the supply of the staple caused inflation to spike, causing consternation among our economic managers. They saw this however as an opportunity to pressure Congress to swiftly pass a Rice Tarrification Law which removed the rice import monopoly from the National Food Authority, and liberalized the private importation of rice subject only to payment of import duties.
I shall not belabor the resulting effects on the Filipino palay farmers; enough has been written about it. Due to record imports of close to 3 million metric tons, we now have ample stocks of rice, estimated at 84 days of average consumption.
But most of that supply is in the hands of the private sector. Government has palay stocks purchased from the last harvest plus a few left-overs from its 2018 importation some of which arrived as late as the first semester of 2019.
The news coming from our rice suppliers are not very salutary. Thailand is restricting export volumes in a bid to jack up prices for its farming sector. Vietnam’s rice production, the winter-spring crop, is not too promising. Besides, after almost a decade of stable paddy prices, many Vietnamese farmers have shifted to other crops whose export prices were more profitable.
But my bigger worry is China.
It produces some 208 million tons of rice per year, and imports some 2.2 million more. 35 million hectares are cultivated to rice compared to our 4 million hectares, but the major rice-producing provinces are those near the Yangtze River.
These major rice cultivating provinces are Heilongjiang, Hunan, Jiangzi, Hubei, Jiangsu, Anhui, Sichuan, Guangdong and Guangxi. Except for Heilongjiang which is in northernmost China, all these provinces are close to Hubei, the rice farms of which are irrigated by the Yangtze River and its tributaries. Together, these provinces produce two-thirds or 140 million tons out of China’s total production of 208 tons. Hubei province alone produces close to 20 million tons, the equivalent of the Philippines’ harvest target for 2020.
What are the effects of the COVID 19 on China’s agricultural production, particularly its rice harvest, with Hubei immobilized, and neighboring provinces cowering with fear due to the virus dread? Would China thus import more from Asean producers such as Vietnam and Burma, Cambodia and Thailand?
What will be the effect on world rice prices? How will the Philippines compete with China in securing its needed imports?
And finally, with the NFA devoid of its rice trading functions and the bulk of our present rice stocks in the hands of the private sector, how can government intervene in the market when this confluence of negative factors materialize in the latter half of this year?
Baboy ASF, posibleng manok, bird flu, pati kaya bigas? Huwag naman sana.