One does not have to be a graduate of Wharton or the Ateneo de Manila School of Economics to understand why the country is now undergoing a pork crisis, when there is a shortage of pork in the market.
The problem is basic: when there is lack of supply, prices will go up. And when the government resorts to a no-brainer such as imposing a price ceiling of pork, the problem becomes more intractable. This is a case when the cure is worse than the disease. Because simple logic would tell us that it is crazy for a trader to sell pork below his buying price.
And as a result of the price control, there was a pork holiday in some markets in Metro Manila.
Some economists are wary that the government’s price ceiling of pork may lead to higher food inflation and affect the economy in the long run.
We believe that the Department of Agriculture should be solely to blame for the pork crisis. It should have been more resourceful and creative in addressing the root cause of the crisis: the spread of the African swine fever that resulted in the death of 4.5 million hogs.
Needless to say, the DA’s inability to resolve the ASF infection has discouraged hog raisers to reinvest in the industry and this brought about the tightening of the pork supply in the market. The DA should have redirected some of its funds to find a solution to the ASF instead of recommending the price ceiling of pork which is unrealistic and ineffective in solving the crisis.
Now DA Secretary William Dar is saying that his department is finding ways to cough up at least P800 million to subsidize hog producers and traders who could not meet the price ceilings. The promised subsidies range from P10 a kilo for hog breeders in Luzon, P15 a kilo for those in the Visayas, and P21 a kilo for those in Mindanao.
But this is only a stop-gap measure. What we need is a long-term solution to ensure that the current pork crisis will not happen again in the future.