Historically, the fourth quarter of the year is the pertinent time for businesses to ramp up production, taking advantage of the increased demand for a variety of products during the holiday season.
Christmas is, after all, the most important holiday among Filipinos, with preparations and merrymaking starting as early as September. With the 13th -month payouts and employer bonuses, typical Filipino consumers tend to spend more this time of the year, and industries naturally had to keep up.
However, with global macroeconomic factors such as a weaker peso, Russia’s ongoing invasion of Ukraine, and higher crude oil prices influencing heavily the expenses, manufacturing activities, specifically in food production, have become challenging.
To cushion the impact, various business groups have requested the Department of Trade and Industry to allow price increases of specific products by a significant amount.
Last week, the Philippine Association of Meat Processors Inc. asked DTI for an increase on the suggested retail price of meat products.
According to PAMPI, production costs went up by over 20 percent this year alone on the back of higher costs of imported mechanically deboned meat, peso depreciation, and higher oil prices. The group is hoping to recover just 10 percent of the additional production cost through the new SRP. If approved, this will affect the prices of hotdogs, sausages, and other processed meat products sold in the market.
Before PAMPI’s request, local bakers have already requested a price increase for two of its bread products — Pinoy Tasty and Pinoy Pandesal — by up to P4 due to the rising cost of raw materials.
According to a news report, Philippine Baking Industry Group president Jerry Lao said there was no more incentive for the bakers’ group to keep making the two bread products amid the rising production costs, thus the petition.
Asosasyon ng Panaderong Pilipino president Lucito Chavez supported the petition. Pinoy Tasty and Pinoy Pandesal prices are the barometers of consumers. If they increase prices, then local community bakers can too, which will help alleviate problems emanating from low sales conversions side by side with the higher cost of raw materials.
According to the DTI, manufacturers of sardines, canned meat, coffee and evaporated milk also requested between 50 centavos to five pesos in the price increase. However, further documents to support the request are still pending submission to the department, and until then, no decision will be made.
Tough decisions have to be made in the coming days or weeks, as DTI weighs in on the petition of food manufacturers to increase prices, and at the same time safeguard consumers from the impact of food inflation. It is imperative that the government must come up with a decision that balances the protection of both businesses and consumer welfare.
Moving forward, the Philippines will also benefit from the Marcos Jr. administration’s mandate on boosting domestic production. Subsidies may also help in the meantime, costly as they may be for the country’s coffers given the pandemic-related expenditures.
But long-term solutions on intensifying measures to help increase the domestic supply by ramping up local production, ensuring timely importation of goods, fertilizers, and raw materials, and improving distribution efficiency will have a significant impact in the years to come. Our path towards limiting food importation will shield us from being victims to other countries’ food nationalism that triggers supply shortages and higher pricing.