Asia's Farm to Fork: 5 Good Questions Podcast
Asia's Farm to Fork: 5 Good Questions Podcast
Ep 31 | Prof. Catelo on Smallholder Farmers and Empowering the Agricultural Sector
To kickstart the second season of our podcast Asia's Farm to Fork: 5 Good Questions Podcast, we speak to Professor Salvador Catelo from the University of the Philippines Los Baños (UPLB), about rising food prices and learn valuable insights about how current affairs like COVID19 and conflicts affects inflation, and what he expects the trend to be like in the near future. Professor Catelo also highlights the ways to enable and empower farmers on the ground and improve the food value chain. We end the podcast with a new question of the season which is “What is your favourite food?” Tune in to hear more.
[00:04] Duke Hipp: Hi everybody. This is Duke Hipp, host of Asia's Farm to Fork: 5 Good Questions Podcast. And we're beginning the season two of the podcast today. We're very excited about having special guests with us to get things started. Joining us is Professor Salvador Catelo. He's with the Department of Agricultural and Applied Economics at the College of Economics and Management at the University of the Philippines in Los Baños, or UPLB. Professor, how's it going?
[00:48] Prof. Catelo: Hello. Everything is okay and fine, thank you. How about you?
[00:52] Duke Hipp: All good. We're excited about having the new season, and we're very excited about having you help us get things started. So if that's okay, we'll jump right in and I'll give you the first question, maybe get things started with a tough subject. Talking about inflation and high food prices, which really are prevalent around the region and around the world. But particularly, I think it's fair to say, in the Philippines. In a recent Philippines food and Security Monitoring report by the World Food Program, or WFP, it was noted that households in the Philippines are really most concerned about increasing food prices more than anything else. Not surprising really, given how expensive everyday food items and items such as onions and so forth that are really risen in recent months. Question for you is this is the current spike in food prices reflective of a new normal in the Philippines and around the region, or do you think this is something that will be seen come down in the weeks ahead and really sort of stabilize?
[01:49] Prof. Catelo: Okay, thank you for that question. Yeah, you're right. I'm saying that this is a little bit tough. But before I respond to this question, allow me to set my reference and departure points of discussions. Generally, the increase in food prices in the past was a confluence of many factors that included COVID-19, we have this Russia's invasion of Ukraine, the after effects of economic stimulus, and the spillover effects of continuing marketing inefficiencies in the supply chain. Now, concerning COVID-19, it has practically affected the regional production and post production operations, the flow and cost of transport, modality of distribution, and the structure and volume of demand. Actually, the pandemic has slowed down supply and has disrupted the regional and global supply chains as well. The demand for commodities under the work from home and then this one home quarantine atmosphere was not matched correspondingly by production capacities. This in turn propelled demand for inflationary effects. Moreover, because of the massive and disparaging socioeconomic effects of the pandemic, well, governments were impelled to provide cash transfers that are aimed to boost social safety nets and also to promote consumption. Economic stimulus packages were also resorted to in order to avert any further economic loss. With more money in circulation, people essentially had more spending power over the limited consumer goods available in the market. This demonstrates another picture of inflationary effect as the global economy started to recover from the pandemic. The invasion of Ukraine by Russia resulted to far reaching economic consequences as financial markets tumbled and prices of oil serves. It must be recalled that Russia is considered as one of the largest suppliers of gas and oil in EU while Ukraine is one of the producers of important agricultural products such as cereals. We have wheat, corn, barley and sunflower oil. This suggests that the crump in the supply of oil meant higher prices of oil and consequently higher production cost, more expensive transport cost and consumer prices. On the other hand, the cut in Ukraine's productions limited its supply to import-dependent countries. So basically the situation added pressure on the global oil and gas market as well as on the food security of a number of importing countries that had been already debilitated by the COVID-19 pandemic. So I suppose this equation is another case of inflationary. Now with respect to your question on whether current spike in prices is reflective of a new normal in the Philippines around the region well, I would say that price increases will subsist if shortage in supply continues in the market. The reversal of the situation will depend on how the agricultural sector bounces back and how the market margins can be reduced. This is why we need to prime up farming as a backbone of the economy and source of livelihood, especially of smallholders. It should be complemented by efficiency gain in the domestic and regional supply chains. For the meantime, the provision of economic stimulus to protect the poor and sustain the livelihood of the farmers would be a good move. To reiterate, it is always the poor that is hard hit by spikes in prices. As to your next question if I can see the prices coming down in the weeks and months ahead, well, I am tempted to be more of a pessimist. For now the situation would depend on how quick economies can fix the after effects of the COVID-19 and the spillover effects of the Russia-Ukraine crisis. Central to this is the stabilization of the global supply of oil and gas and sufficiency of agriculture commodities for trade. Obviously, these are not realistic occurrences in the immediate future like in a month's time or so. The issue of onion prices in the Philippines the past three months is a different story. We have recently witnessed the price levels reestablished after the abnormality in supply was corrected. So these onions that normally pass through a value chain, well it can be likened to a flight that has layovers. The flight may face delay somewhere for some reasons. However, if the cost of delay were promptly and properly addressed, the flight reaches its destination with less opportunity cost. One thing is clear from this experience when farm produce, no matter how big, no matter how huge, fails to reach the final market on time. There is this unwanted distortion in the supply-demand situation. This leads to unstable or even exorbitant retail prices that may prove prejudicial to the interest of consumers. Well, I hope I answered the first question properly.
[07:17] Duke Hipp: Thanks. Professor Catelo. You absolutely did. That's a great answer and very thorough. And it got me thinking about another aspect of this whole dilemma, and that is the farmer. We talk a lot in this show about the impact of farmers generally around the food value chain, things that are happening, different dynamics. You mentioned COVID, climate change and the conflict in Europe in particular. In the same report that we just mentioned from the WFP, it also noted that one in ten Filipino households that are currently food insecure, it talks about those that are really most affected by this are coming from agricultural livelihoods more than others, more food insecure, unfortunately. So with that in mind, the aspect of, again, of the farmer in Asia and the importance of we talk a lot about empowering and enabling farmers to grow more food with fewer resources, less impact to the environment, and doing it in a sustainable way. But also about the idea of having the right support to these farmers, making sure that they're less vulnerable in situations like this, less vulnerable to food insecurity. So with that in mind, is there more we can do or we should be doing collectively to ensure that our regions, smallholders in particular, have access to the tools that they need?
[08:31] Prof. Catelo: Okay, well, to me, empowering and enabling the farmers is an endless mission. When principally, poverty continues to prevail in the rural areas and more especially when it has worsened, we can actually always claim that we are doing something for them. But if the outcomes remain below standards and targets in terms of productivity, net income, food security and environmental protection, among others, it pays always to go back to the drawing board and see the sources of gaps and the need. To grow more with less requires more intense farming up of the agricultural sector amidst adversities and challenges. It should not end up with interventions up to the farm gate only, but ensures business continuity until the ultimate consumption points. We have witnessed scores of successes in farming but were later derailed by the absence or lack of effective strategies beyond the farm. Our steadfast resolve to transform agriculture into a competitive, food secure, resilient and empowering sector must cover the entire spectrum of the value chain, not only the useful tools like credit facilities or input provisions, but to empower them also to develop and sustain themselves from the fruits of modernization and industrialization. Now, what is this modernization and industrialization? When speak of modernization, I take it from the viewpoint of a call for more investments on infrastructure promotion and effective adoption of site specific technologies. Continuous innovation such as digital agriculture, climate change, adaptation and mitigation measures, efficient marketing system and functional and pro farmer value chains. Industrialization, on the other hand, includes more efficient inbound and outbound logistics, development and promotion of agroindustrial business corridors, export expansion and sustainable trade agreements. Directing and enabling our farmers to grow more food with lesser resources through this necessary developmental means could spell the difference in stimulating timely, self rewarding and sufficient impacts on the ground. On a more specific perspective, growing more food with lesser resource requires substantial gains in farm productivity. Just to cite one example, the low yield levels in many farms have been attributed in more ways than one to inadequate nutrient application and soil nutrient mismanagement. Therefore, ensuring an adequate supply of fertilizer at reasonable prices, enabling farmers to gain more access to fertilizer and well inducing higher and proper fertilizer application by farmers are requisites. Modern crop varieties are particularly known to be fertilizer responsive, but inadequate and inappropriate use of fertilizer result in below potential farm yields and higher per unit cost. With optimal fertilization, the potential impact on yield of the recommended practices can be realized. Hence, scaling up and scaling out of practices are highly recommended. Basic in all this is the adoption of climate smart agriculture and environment-friendly technologies.
[12:20] Duke Hipp: Thanks, professor. Very insightful again. And I'd like if it's okay we're moving through this discussion, these questions. I like to stay on the topic of the farmer because you give me a lot of things here, a lot of food for thought, no pun intended. As you know, our region is home to the smallest size farms and the largest number of smallholders in the world. Smallholders are really at the center of everything we do with respect to food production. And for these growers, having access to market is important not only for trade, but also for their own and their families livelihoods. We just touched on how we're seeing that impact not just in the Philippines, but it affects food security for the farmers themselves because of the interdependence on food production and their role in that equation. So specifically thinking about that and the impact of farmers with food security and their own livelihoods, what recommendations might you have for countries in the region and helping maintain and grow their competitiveness access to market at that sense? On the trade front, particularly in the area of agriculture, food export, anything comes to mind as far as sort of recommendations or suggestions to countries in that area?
[13:31] Prof. Catelo: Well, we know that smallholder farmers cannot engage in farming as intense and innovative as the heavily endowed commercial farmers. More so when we speak of competing with the giants in the industry. They remain needy of appropriate support from the government and the private sector via sound macroeconomic environment and institutional reforms. Areas of particular concern include the low capital. We can also speak of the limited land for farming and poorly functioning input and output markets to help the smallholder farmers maintain or raise their competitiveness and access to market. We have to accept the reality that we have to assist them to make the agriculture sector more profitable and better prepared for global competition. This means that we have to intensify the efforts to address the sources of inefficiencies along the production and marketing continuum and provide necessary support system. A structural shift out of low productivity agriculture to higher productivity and competitive market sector is imperative, I suppose. At the core of this challenge is the packaging and delivery of various credit assistance programs aimed at, among other things, easing farmers access to input such as fertilizer, seed, farm machinery, water pumps. We're dealing with crop production, breeding stocks, feeds, veterinary services and the like, when we talk about livestock farming. Farmers must be empowered as entrepreneurs with the aid of broadened access to support services. For instance, to sustainably promote the development and adoption of agricultural technologies, synergies between government agencies, the research and development programs of academic institutions, farmer organizations and private entities are essential. Central also our efforts to sustain the initiatives of building linkages between farmers and provide training extension services for them for their produce to generate more and sustainable income. They should be mainstream in the agri value chains. I should reiterate that the gaps in infrastructure, particularly the road and rail connectivities as well as in logistics and energy are disruptive and disadvantageous. The absence of functional infrastructure results to significant post harvest losses. It drives up well the transaction cost and it also renders lower competitiveness. Last but not the least, is the effort towards consolidation through cooperative development and promotion. I am a strong advocate of cooperative movement. Success stories speak a lot about the power of cooperative identity and integration. It has catalyzed synergy and purpose collective membership. That translates to enlarged manpower, stronger bargaining power and more importantly the sharing not only of resources but of goods and services to all members as well. The unselfish nature of the coalition has become a pretty powerful instrument in terms of expertise, relationships, reputation and performance, especially in times of the recent pandemic and the global adversities. In many cooperative integration efforts, innovation and digital transformation were imperative given the current and emerging technological innovations that are taking place in banking and commerce. This will help them adapt quickly to the changing external environment, enable the business climate, especially the micro and small cooperatives and survive the highly uncertain and competitive market. So this is how I look at things based on that question.
[17:57] Duke Hipp: Thank you so much for that, and coming to near the close. But one more question of substance I'd really like to get into. We talked previously about the drivers and food security and food insecurity, and one of them that came up earlier was climate change. I'd like to get into that a little bit deeper. When it comes to climate change in the region and you don't need to be necessarily a climatologist or a scientist to see the effects that are happening around the region. Particularly in Southeast Asia, and the impact of increased droughts and floods and the impact that it's having with food production in particular, specifically looking at the Philippines and across ASEAN, given the global food crisis that we've seen as well that's been playing out. What are the opportunity costs for governments and what's being lost for governments in the region if they don't implement climate adaptation and mitigation measures for farmers, specifically the introduction of seeds, it can cope with adverse weather conditions, crop insurance technology, et cetera. What are the threats? And again, the opportunity cost? What's going to be lost for governments if they don't take action to support farmers in some of these respects?
[19:05] Prof. Catelo: Okay, well, I'm not an expert in climate change, but maybe I can make some connecting dots based on my previous answers as to how this what you call nonadoption of the so called mitigating measures and adaptive measures would impact economically and socioeconomically. We know that, well, climate change refers to long term shifts in temperature and weather patterns. And in fact, the Intergovernmental Panel on Climate Change, that is the IPCC, has made projections on the impacts of climate change on food, water, ecosystems and extreme weather. For instance, an increase in global temperature of just one degree centigrade. I think this has been circulated in so many literatures already, and the literature says that it will melt some glaciers as well as threatened water supply in many areas. There will also be extensive damage to coral reefs and rising intensity of storms, floods, forest fires, what else? We have droughts and even heat waves. Further increases in temperature can lead to sea level rise that will inundate major cities in the world. So, climate change have wide ranging and uncertain effects on health and food security, livelihood and income, and even displacement of vulnerable communities. Health impacts can be in the form of increased morbidity and mortality risk arising from water and vector borne diseases, as well as incidence of pulmonary and how do you call that, cardiovascular illnesses. Fractioned food security and poverty may arise from reduced crop yields as well as animal, livestock and fish productivity that could in turn also lead to malnutrition and poor health among the vulnerable population. Adverse effects on marine ecosystems will affect the livelihood of households who are dependent on fishing. All this present opportunity cost to governments in the region if climate change mitigation and adaptation activities are not implemented, particularly in developing countries, that are bound to experience much of the adverse impact of climate change. So what we're saying here is that we don't pay so much attention on this, and we just think about the expenses that will go into engaging to similar concerns like this. There will be more cost, once we experience the upper effects of what you call disregarding the trap that is being given to us by this climate change. Thank you.
[22:11] Duke Hipp: Thank you for that. Again, I greatly appreciate your perspective on that. It's a tough topic and one that I think farmers around the region, and certainly other stakeholders as well, grappling with and how we can really support the farmers in a bigger way on that front. So a lot to do. So we've come to the last question in this first episode of our second season and would like to, with that, maybe lighten things up a little bit. We talked about some very serious and tough topics. But one of the things we did talk about, we talked about the smallholder, the farmers a lot and with a good reason. And keeping that in mind, we also give thanks to those farmers for the work they do to help drive food security and trade, but also for growing all the ingredients that we need for all the good food that we enjoy in this region. In that spirit, and kind of a little bit of levity with the last question I wanted to ask, is there a favorite regional food that you have, a favorite dish or favorite food that comes to mind when you think about, again, the role the farmers play and something that you enjoy to eat?
[23:15] Prof. Catelo: Yeah, I love eating and makes really the daily routine different when you see different food items. But when you talk about regional, can I go beyond Asia? Because I really love the Japanese food, but I don't know if I have to limit it to just our region.
[23:34] Duke Hipp: No, that definitely qualifies. Yeah, absolutely.
[23:38] Prof. Catelo: Okay. Now, I'm picking Japanese food for a number of reasons. First, well, I did my doctoral degree in Japan. So many say I've been exposed to their food, and it's not only the taste, but also I can consider its safety, the manner by which they prepare. Okay. The freshness of the food. They're not really that expensive if you know where to go for those food. And also, they have a very strong, what you call consumer rights. And so if something goes wrong, you are protected by simply expressing what you think about the food. And of course, I would like to thank those who have been laboring so hard. And I always ask my students and remind them that whenever they eat outside, they better be sure to order the right food and finish them because there's so much effort devoted by farmers producing these food items and that they should be thankful to our heroic farmers for doing their share in this developmental process. Did I answer the food item?
[24:48] Duke Hipp: Absolutely no, you did. You got me actually hungry for lunch now thinking about maybe getting some sushi based on that answer. Well, that's terrific. Thank you. And Dr. Catelo. Thank you. You're officially off the 5 Good Questions hot seat. Thank you so much again for your time and your insights today. We look forward to hopefully talking again soon.