Time for consumers to grow their own food
COVID lockdowns, mobility restrictions and physical distancing rules, supply disruptions, strong consumer demand and stockpiling food supply altogether led to food price increases.
The common expectation is that post-pandemic, food prices will normalize or return to pre-pandemic levels. Will this happen?
The trend is opposite. Another trigger factor emerged as early as the second quarter of 2021: The price of fertilizer increased and it has more than doubled in retail outlets from less than P1,200 per bag to about P2,500 per bag.
What is the impact of the price increase in fertilizer? Many small farmers, especially rice farmers in the Philippines, rely on borrowed money to buy fertilizer.
For the last two years there was a price fall for their harvest. Here comes a cost trigger, high fertilizer prices, and no assurance of a substantial price increase in farm gate prices. The practical thing to do is reduce fertilizer use.
But the need to fertilize in rice farming is enormous.
For every ton of unmilled rice, at least 18 kg of nitrogen is used. With one kilogram of nitrogen now costing P111, P2,500 will buy 22.5 kilograms.
To harvest 100 cavans, up to 8 bags of urea fertilizer should be applied. This amounts to P20,000 per hectare in costs on urea alone.
But farmers should also apply phosphorus and potassium containing fertilizer. The farmer will spend about P30,000 per hectare on fertilizer alone.
At P15 per kg per unmilled rice, this translates to about 2,000 kg or about 40 percent of the value of a one- hectare yield at 5.0 tons per hectare. That is for fertilizer alone. What about land preparation, seeds, labor and harvesting costs?
This simple calculation suggests practical action by the farmer—cut down on fertilizer use or not plant at all, as some farmers had done.
If this happens to rice, it will also happen in sugarcane, corn and vegetables and it will cascade to livestock and poultry production.
Farmers cutting costs due to exorbitant increase in fertilizer costs will lead to decrease in yield and food supply.
Lucky for sugarcane and corn farmers, there is no equivalent trade liberation (granting RCEP will not be concurred in by our Senate).
But even if there will be trade liberation, the effect of fertilizer price increase is global. Farmers in other countries will also resort to cost-cutting. Total crop yields will drop among food surplus-producing countries. There will be no cheap food to import.
Necessarily, for farmers to continuously grow food, prices must increase. By how much is quite difficult to calculate.
To illustrate the point, let us use hog-raising. Feed cost for hogs is about 70 percent of total costs.
Consider the data: Corn price will increase from P22 per kg to 25 per kg as pigs consume 4 kg of corn equivalent per kg of pork. For feed costs alone, 1 kg of pork would require P100 worth of feed or P145 per kg in total cost.
At 65 percent recovery, price of pork shall average P223 per kg. Choice cuts may range from P370 to 400 per kg (profit for the hog raiser, retailers are not yet included ). The effect of fertilizer price can be more severe than the African swine flu virus (ASFV).
Prices of many food items, example, pandesal, will also increase as costs of raw materials being used (wheat, sugar, natural gas) will also increase. How much increase is difficult to calculate.
Small enterprises will be the hardest hit. If they decide to increase price proportional to the increase in price of materials they use, their sales will decrease.
Why is there so much increase in fertilizer price?
Producing nitrogen fertilizer, which is manufactured through the Haber-Boch process, consumes lots of energy. To manufacture 1 kg of nitrogen fertilizer, at least 1.8 liters of diesel is needed.
Add costs of storage, transport and distribution. While 1 kg of urea nitrogen is now P111, the current price of diesel is P52 per liter. The current price of oil is around $100 per barrel.
If Russia invades Ukraine, there will be war and the price of oil will further increase. If war breaks out, it was estimated that the price of oil per barrel would jump to $150.
What must be done to adapt to this energy-triggered food price increase or food shortage at the extreme?
In the Philippines, the government passed the Rice Tariffication Act to allow unrestricted rice import. There is abundant rice, though the retail price did not decrease relative to farm gate price of unmilled rice.
There are two major reasons. One, National Food Authority relinquished its role of buying rice to farmers as its role was relegated to buying rice only for buffer stock. There lies the cheat as it buys only five days equivalent of buffer stock instead of the usual 60 days.
The optimum buffer stock is 120 days as this matches the time it takes to grow rice.
Private traders, recognizing that the NFA or government cannot intervene in the market, are buying rice from farmers at very low prices. In short, the government should increase the volume of rice to be bought from farmers for a minimum of 60 days in buffer stock.
Farmers are claiming that they will be happy at P25 per kg direct from the thresher (1 kg of milled rice will be P50 per kg). If there will be tight supply of rice (it happened in 2008), imported rice will be priced at P60 per kg.
Since the budget cycle has been finished, the new budget shall already be for year 2023. We just hope that the adverse impact of this fertilizer price surge will be felt this year 2022.
For the long term, farmers should liberate themselves from their dependency on chemical fertilizer inputs. Fortunately, there are farmers who are already shedding chemical fertilizers and turning to organic faming.
The Philippines had passed a law on organic agriculture since 2008 (R.A 10068). The sad reality is that only few farmers were convinced to change their farming method. Less than 2 percent of our farmers are into organic farming.
For consumers, we need to shift our consumption preference. For rice, there is a need to shift from well-milled rice to dehulled rice (or brown rice). That will cut down our rice requirement by as much as 30 percent.
The meat-based diet is expensive (materially and financially—1 kg animal protein consumes 6 kg plant protein, 1 kg beef consumes 19,000 liters of water ). Why don’t we eat plant protein instead?
The term used now is plant based or planetary health diet. It means we consume more complex carbohydrates (root crops), vegetables, fruits and plant based protein and consume only once a week meat- based diet.
Many of us should grow our own vegetables, fruits, root crops in whatever quantity.
The COVID-19 pandemic led many to become plantitos, plantitas.
Many have learned to grow indoor plants to absorb carbon dioxide and generate oxygen.
The energy-fertilizer crisis shall motivate many of us to grow our own food (fruits, vegetables, etc.). Sunshine is plentiful in our country (12 months) and we have so much rain. A culture of food growing should now be the norm.
(Editor’s note: Teodoro C. Mendoza (Ph.D.) is a retired full professor at the Institute of Crop Science, College of Agriculture and Food Sciences, UP Los Baños. He is a practicing agronomist, advocate and practitioner of organic, small-hold, diversified farming and plant based diet or planetary health diet.)
