Written by John Carlo Tria
As many economies around the world will experience economic stress resulting from this pandemic, lower incomes across the board in all industries are expected. This will force people to set spending priorities for essentials like food, water, shelter and forego others like travel, leisure and entertainment.
With this, the industries that will survive are food production, construction for shelter and health services and supplies, power and water. Likewise slated to continue running are the industries that process and distribute them: transport and cargo, business process outsourcing companies, and telecommunication companies.
These economic activities will continue even as lockdowns are imposed and will expand further as restrictions will eventually be lifted, as they are in China following a slowdown in the spread of the disease and the increase in recoveries. These are the industries where the eventual recovery will take place. Our financial system will be kept alive to keep finance flowing for these “surviving industries.”
We will need to think about the economy not because we are scared of losing investment money from downturns, but because it is the economy that allows resources to be distributed and allocated- providing the necessary tools, like taxes that fund government to fight the coronavirus spread and ensure everyone’s health and welfare- especially the poor and vulnerable.
Around the world, government stimulus packages to pay for lost jobs will only be available for a limited period. Government depends on tax revenues sourced from economic activity — from us who have jobs and businesses. The task therefore, is to sustain jobs and the enterprises that hire them. That said, there are a million registered enterprises, 97% of which are small and medium companies.
There, therefore, will be necessary imperatives.
The first is to ensure the freest flow of goods and services like food while maintaining government — imposed health measures. This strengthens the industries that will continue and keep workers employed.
The next is to keep food prices low. While we are confident that farms will continue to produce food, the challenge is getting them distributed on time to the communities that need them. Moving forward, the food supply corridors will need to be protected and enhanced with proper storage facilities to assure stable supply, and prices in case of disruptions. Farmers will be encouraged to grow more if demand is present and real, meaning, that there are buyers seeking them. A proposal to organize a food supply chain in Mindanao is in the works. Mindanao has the potential to feed the country and replace imports.
That said, expect that farms will expand as demand goes up. Helping farms produce and sell more will be good not only for the majority of the 5.4 displaced tourism workers in resorts and hotels in the provinces who will turn to farming, but will help the current 2 million rice and 2 million coconut farmers, and eventually us, as consumers, due to stable food prices. As of this writing, palay buying prices have already risen since imports have been drastically reduced, and copra prices have stabilized from last year’s lows. We hope they do not inch back up.
Low food prices are especially important for the vulnerable receiving government cash support. Allowing food prices to spike defeats the purpose of the cash support, since the pesos given them will not go far if and when prices spike.
More imperatives in next week’s column. In the meantime, we need to make sure commodity prices remain stable since we have a 60 day price freeze. Call the DTI hotline at 1-384 to report violations of the price freeze.
Cover image by Jeff Guab from Pexels.
Article first appeared in the Manila Bulletin website last March 23, 2020.