It’s not like Ramon S. Ang to gripe about the economy. The go-getter president of San Miguel Corp. finds challenge in any condition. But he has taken up a cause of late: to unpin the peso. If only the monetary authorities would stop restraining the currency, Ang believes it would spring to P35:$1, from the present P43.50:$1.
At first glance, overseas Filipino workers would be disadvantaged. Instead of their families being able to buy more from every $1 or P43.50 sent home, OFWs would lose purchasing power from the P35. But Ang views it longer term. At the tipping point of P35:$1, imports would cheapen enough to matter. Foremost of these is oil, followed by food, and chemicals to process it or for medicines. Once oil devalues, so would local goods and services, like transport, electricity, construction supplies, manufactures, and again all-important food. Prices would spiral downwards. Not only the nine million OFWs would gain from cheaper commodities. Also the 30 million remaining labor force would enjoy the wider affordability. The more the money to spare, the brisker the spending. Livelihoods would intensify.
There’s another — more urgent — reason to stabilize the peso at Ang’s prescribed P35:$1. It’s to shield the country from the looming worldwide food crisis.
Nouriel Roubini, who predicted the US financial crisis, forecasts a global food shortage that will hurtle prices to calamitous heights starting this year. Actually alarm bells started ringing in the last quarter of 2010. Storms, floods, ice and droughts destroyed millions of hectares of farms in six continents. Most battered were corn, wheat and other staples. Rocking the world along with climate change is the nonstop rise in crude oil rates. Higher fuel prices in turn are catapulting to dizzying levels the cost of food processing. For three years now world farm hectarage has been decreasing to make way for bio-fuels. Sadly most of these plant oils require high energy to extract. So the impact is double-whammy: less land planted to edibles, and stiffer oil demand that pushes prices even higher.
The UN Food and Agriculture Organization foresees Asia to be hardest hit by the coming economic storm. The continent has the most number of people living on less than $2 a day, yet also has the fastest growing population. Sixty-eight million Filipinos fall in the former set; the Philippine population increases by 1.93 percent a year, one of the world’s highest. Asia, including the Philippines, is also beset by rapid urbanization and westernizing food preferences. Agricultural lands are turning into asphalt jungles or slums. Asians are demanding more and more poultry, dairy and livestock, but can’t produce enough because of low technology.
Philippine weather conditions have been most devastating in recent weeks. Prolonged rains have flooded grains and vegetable produce on the Pacific seaboard, and other parts of Mindanao and the Visayas. The government is still comfortable because sugar and rice prices have remained stable so far, despite spikes in the world market. But wait till the richer countries start stockpiling on food. China, with its $2.6-trillion foreign exchange reserve, can outbid most other Asian countries for eats. Where will that leave the Philippines?
Economic managers had better trust Ang’s instincts and heed his call for strengthening the peso to cheapen imports. His gift of foresight, honed by voracious reading actually, is tried and tested. Did he not steer San Miguel Corp. away from overdependence on its traditional food and beverage business? His aggressive diversification into totally new lines like infrastructure works, telecoms, power, energy and mining saved the conglomerate from stagnation. Net revenues doubled to P233 billion from 2008 to 2010, with another doubling to P520 billion expected this year. Ang’s out-of-the-box thinking, applied to the bigger economy, could be the shelter from the coming food price spikes. –Jarius Bondoc (The Philippine Star)
E-mail: jariusbondoc@workmail.com
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