A lawmaker on Wednesday stressed the need for agricultural modernization as “crisis-proofing” for the Philippines amid the looming global economic downturn due to the tightening US monetary policy to curtail inflation.
In a keynote address at a convocation in the University of the Philippines-Los Baños, Albay Rep. Joey Salceda warned that a potential global economic crisis could come if the US decides to dramatically address inflation with monetary policies similar to those pursued during the early 1980s.
“We are now seeing the largest gap between Fed funds rate and adjusted core CPI (consumer price index) since late 1970s, which prompted then Fed Chair Paul Volcker to purse aggressive disinflation policies,” Salceda said. “In order to return to 2 percent core CPI today, we need nearly the same 5 percentage points of disinflation that Volcker achieved.”
He said policies to create 5 percentage points of disinflation will be “calamitous” for the global economy, and the country’s gross domestic product (GDP) growth, in turn, would possibly be lower by 3 percentage points when that happens.
Salceda said agricultural modernization will be key to preparing for these “dark clouds.”
“So, we better prepare. And there is only one sector that can absorb all the excess liquidity in the world. And regardless of what happens in the world, people have to eat,” he said.
Salceda said poor irrigation systems and water management in the country, as well as the lack of resources and government support to the proper sectors are the main problems in the Philippine agriculture sector.
He said the country has devoted too much spending on palay and not enough on other crops that the Philippines hold a competitive advantage, such as corn, banana, and other high-value sectors.
Salceda also recommended key proposals to modernize the country’s agriculture, such as expanding irrigation coverage and exploring micro-irrigation options, as well as more targeted, and more purposive irrigation; govern water resources more effectively; make agricultural support more proportional to production output and potential of sectors; and encouraging foreign scientists and technology transfer. (PNA)
