The Philippine Statistics Authority recently announced what it considers good and welcome news—the inflation rate (which is the rate at which prices increased) was down from 2.9 percent in January to 2.1 percent in February. However, in the same press release, this agency admitted that it was only 1.9 percent in September last year.
The most relevant question would then be: Why did inflation go up, in the first place? Why did the national government not do its best to keep it at 1.9 percent or lower?
To compound what appears to be misdirected information, this decline to 2.1 percent inflation was highlighted by the 4.9 percent decline in the price of rice.
So, the next question is, why did the price of rice decline? The big part of the answer is that the government allowed the private sector to import a large volume of rice and subsidized (the government bought it using the national budget and distributed it to farmers for free) inputs like fuel, seeds, and fertilizer.
For example, half a million metric tons of rice arrived from abroad (or imported) from December 2024 to February 2025. What do these huge imports and billions of pesos worth of subsidies per year mean to the economy?
The imports mean that we are buying from other countries a large portion of the rice we consume, thereby creating jobs abroad for thousands of Vietnamese and Chinese farmers, instead of producing jobs here and solving the unemployment problem as well as increasing low agricultural incomes.
All of these trends will be corrected if we increase the production of rice lands and make our farmers produce more, meaning giving them the opportunity to earn more and help local economies grow.
The existing solutions have short-term benefits like keeping inflation down. However, this is achieved at great cost to the economy since revenues from taxes and other government incomes are being used for the above-mentioned subsidies and allow farmers income to be at low levels.
The solution should be to improve productivity so that there is a significant increase in rice harvests. As long as productivity per unit area or hectare of land planted to rice remains low, the future will remain dark and hopeless for the agriculture sector.
Also, the use of substantial subsidies results in less funds that can be used for other purposes such as agri-business and in promoting the enhancement of education and health. Is lower inflation good news. Not always.
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