Weak agri-food system

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The huge role of the agri-food system in our economy is beyond dispute.

It contributes around 30 to 35 percent of gross domestic product and supports close to 40 percent of total employment, directly and indirectly. The system covers not only farm inputs and production, but also processing, storage, transportation, distribution, retail and food service.

Despite our dependence on food to sustain the economy, our food policy remains weak.

Our production is wanting. The Philippines is a net importer of almost everything we consume, including rice, corn, onions, and more. And yet, policy responses remain reactive. What we have are band-aid solutions such as importation, subsidies, price controls and protective tax measures, but little is being done to strengthen the system.

Strengthening the agri-food system in the country not only requires investing in improving farm production and productivity, including better access to financing, technology and markets, but also  consistent policy that supports long-term investment across the value chain.

But how about pending policy proposals including the Philippine Nutrient Profile Model (PNPM), regulations on marketing food to children, and front-of-pack labeling aimed at improving public health outcomes?

Questions around the basis of nutrient thresholds and the absence of a transparent regulatory impact assessment across the food value chain warrant closer attention.

As designed, these measures will not only affect manufacturers but the entire food ecosystem. Can everyone afford to comply? Large firms may adapt, but how about smaller producers and processors? New requirements can mean higher costs, reformulation challenges and barriers to market participation on top of existing pressures.

The effects extend downstream. Retailers may face reduced product variety. Small stores may lose affordable, fast-moving goods. Restaurants may see fewer sourcing options or higher input costs. Tourism and hospitality, which depend heavily on food supply chains, are also affected.

Ultimately, it is the consumers who will bear the cost through higher prices and fewer choices.

Well-intentioned policy, applied at the wrong time and without full consideration of system-wide effects, can weaken the very ecosystem it aims to improve.

At a time when the priority is to stabilize supply and contain inflation, additional compliance burdens risk pushing costs higher across an already strained system.

Experts have emphasized that while public health and food system resilience are not opposing goals, they require coordination across the entire ecosystem.

Corporate governance woes

The Securities and Exchange Commission (SEC) recently ordered the Vibal sisters, who own majority shares in Vibal Group Inc., and former finance officers of the company, to explain alleged ghost transactions amounting to billions of pesos, corporate fraud, falsification of records and breach of fiduciary duty. Vibal is one of the country’s oldest and biggest publishing houses.

The SEC acted on a fraud complaint filed by reinstated Vibal chief executive officer Maria Kristine Mandigma when it ordered the three sisters to respond to the complaint alleging P1.6 billion in alleged ghost transactions between 1997 and 2014.

Siblings Nila Vibal Mata, Aida Vibal Gutierrez and Stella Vibal Lawson collectively control a majority stake in one of the country’s oldest and biggest publishing groups.

Mandigma has also filed a criminal complaint against the three sisters and several others for 458 counts of syndicated estafa and obstruction of justice, alleging that company funds were systematically being diverted to personal accounts through fabricated supplier invoices.

What makes the case instructive for corporate governance observers is not the specific family dynamics involved, but how internal financial controls can allegedly be circumvented when those overseeing the controls are also the ones benefiting from their absence.

The SEC’s order to comment is not a finding of guilt. It is just the beginning of a process. What is noteworthy, though, is the willingness of the regulator to examine the conduct even of majority shareholders.

The outcome of that examination, and the speed with which the issue will be resolved by the SEC, will say more about the practical state of corporate governance enforcement in this country than any number of revised codes or updated disclosure rules.

On the energy crisis

Last March 24, Sen. Loren Legarda castigated Energy Secretary Sharon Garin for the government’s alleged lack of preparedness amidst an emerging oil supply crisis, even as she accused the energy chief of being occupied with politicking instead of focusing on addressing the looming energy crisis.

While Legarda’s decorum toward Garin and other energy officials present during the Senate hearing can be justified as an attitude of a national official alarmed by the looming energy crisis, observers say that it is difficult to dismiss Legarda’s actions as not being politically motivated.

There’s the matter of course of the DOE’s existing conflict with the senator’s son and Batangas Rep. Leandro Leviste.

Two months ago, the DOE cancelled 28 power supply service contracts with Leviste’s renewable energy firm Solar Philippines Power Project Holdings Inc. (SPPHI) and its subsidiaries, totaling 12,000 megawatts, while imposing a P24-billion fine for its failure to uphold its commitment to construct numerous solar and wind energy projects across the country.

?In fairness to Garin, even during the early days of the war, the DOE has made sure that oil companies meet the required minimum inventory levels. According to reports, the country’s oil supply is even good for 45 days, exceeding the minimum inventory requirement of 15 days of petroleum products for oil companies, and for refiners, 30-day supply of petroleum crude oil and refined petroleum products.

Reports also reveal that the Philippines even has greater oil reserves compared to its regional neighbors, especially Indonesia, which can only stretch its oil reserves for 23 days since the start of the conflict in the Middle East. The predicted 45-day buffer provides a critical window for policy and procurement interventions.

Meanwhile, Finance Secretary Frederick Go has announced that they have secured an additional two million barrels of oil, as well as the arrival of 700,000 barrels of Russian crude oil. According to Go, the additional supply could extend the country’s buffer by up to 10 days, with the Russian shipment potentially adding five days to existing stockpiles.

The crisis highlights the country’s dependence on imported fossil fuels and the delayed transition to renewable energy. As for the latter, Leviste is partly to blame.

According to the DOE, the cancelled projects could deliver an additional 12,000 MW of solar and wind energy to the country’s electricity grid.

Observers say that had these commitments been fulfilled in a timely manner, renewable energy could have partially offset the pressures arising from geopolitical disruptions in the Middle East. Instead, the country remains exposed to external shocks due to its continued reliance on imported oil.

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