Govt focuses efforts on bread, sardines, fuel prices

MANILA, Philippines - Malacañang has zeroed in on bread, sardines and fuel in its latest bid to cushion consumers from rising prices of basic goods. In a press conference held after a Cabinet meeting Tuesday, Press Sec. Jesus G. Dureza said President Gloria M. Arroyo had directed agencies to undertake steps to ensure that prices of sardines and bread are well within the reach of poor households. "[There were] discussions on the prices of flour and pan de sal which touch the lives of the masa [masses]As regards the sardines, which are usually purchased by the masses, the problem is caused by rising prices due to higher tin prices which in turn, will also be shouldered by the masses," he said in Tagalog. Mr. Dureza said the Cabinet has agreed to implement the following measures: Conduct dialogues with commercial fishing groups to ensure adequate supply of sardines and prevent price increases; * Procure equipment that can mass produce flour made of vegetables to lessen the country’s dependence on imported flour. The Department of Trade and Industry (DTI) will also hold dialogues with flour millers and bakers to discuss ways to temper the increases in bread prices; * for the Energy department to conduct "intensive" auditing of oil firms to determine if the prices they are imposing to consumers are reasonable. The measures were enumerated as the National Statistics Office said that inflation had hit another record-high of 12.2% last month due to soaring food and oil prices. In the same briefing, Presidential Management Staff head Cerge M. Remonde said the President had directed Energy Sec. Angelo T. Reyes to meet with commercial fishing groups to address their concerns over rising fuel prices. "We are setting a meeting with them [fishing groups]. It will be arranged by the Mindanao Economic Development Council in Davao. The discussion will center on two issues: how the government can help them with their immediate concerns and long-term solutions like the conversion of their engines to LPG [Liquified Petroleum Gas] or CNG [Compressed Natural Gas]," he said. "Their problem is the rising prices of fuel. Since Sec. Reyes is the Energy Secretary, he will discuss with them ways aimed at helping their industry," said Cabinet Sec. Silvestre H. Bello III. Mr. Dureza said the government may use the windfall from the value added tax (VAT) to subsidize the conversion of their vessels’ engines to make them run on alternative fuel. "Maybe [the VAT on oil will be used to subsidize the engine conversion]. If you scrap the VAT, how will you subsidize this [engine conversion]? In these kinds of occasions, the VAT can provide support," he said, adding that the Energy department would have to thresh out the details. Members of the Southern Philippines Deep Sea Fishing Association (Sophil), which accounts for bulk of the nationwide supply of the canned sardines — considered the poor’s staple — suspended operations on Monday last week amid the rising price of diesel, which makes up 70% of commercial fishers’ operating cost. The group had tried to raise sardines prices to P25 per kilogram (kg.) from less than P22/kg., but canneries in Zamboanga — which supply at least 80% of the country’s canned sardines and get 90% of their raw material from those fishers — said they could afford only as much as P23/kg. Sophil officials had said that they would only resume operations if the canneries would agree to a higher price or if the government would implement steps to help them cope with rising diesel prices. Mr. Dureza said the dialogues seek to convince Zamboanga’s commercial fishers to resume their operations to ensure enough supply of canned sardines in the country. "The prices of crude have increased, so they [fishing groups] are not earning enough anymore. They need helpthe ones who will be affected most are not the rich but the poor," he said. Sophil President Michael P. Lim could not be reached for comment as of late Tuesday afternoon. The government plans to use "excess revenues" from the VAT on oil to fund various subsidies and social services. Dubbed as "Katas ng VAT," (roughly Fruit of the VAT) the program has so far been implemented in two phases. The first phase allotted P4 billion for the following: power subsides for small power user (P2 billion), scholarships and student loans (P1 billion), conversion of public utility vehicles to make them run using cheaper alternative energy sources (P500 million) and the replacement of incandescent bulbs to the more efficient compact fluorescent lamps (P500 million) The second phase also allocated another P4 billion for the following: power subsidies for small power users (P1 billion), rehabilitation of infrastructure affected by typhoons (P1 billion), loan packages for the wives and immediate relatives of transport workers (P1 billion), upgrading of provincial hospitals (P500 million) and assistance for senior citizens not covered by the Social Security System and the Government Service Insurance System (P500 million). Mr. Dureza said the subsidy to be given to fishing groups may become part of the third phase of the program. To ensure affordable bread prices, Mr. Remonde said the President has ordered the Department of Science and Technology (DoST) to buy equipment that can mass produce vegetable flour. "The President has directed DoST to procure mass production equipment for the reproduction of veggie flour. The flour is partly made of kamote [sweet potato], squash, or cassava to augment the supply of flour in the market," he said. Mr. Remonde said this will be done to hike the income of local farmers and to reduce the country’s dependence on imported flour. He added that the mass production equipment may be acquired in three months. When asked what short-term measures would be implemented to prevent the looming increases in the price of bread, Mr. Remonde said: "[Trade] Sec. Peter B. Favila will continue holding dialogues with bakers and flour millers." The Philippine Baking Industry Group (PhilBaking) has said that bread prices may have to rise again following an increase of P40-P50 per bag of flour to P970-P980/bag from P930/bag. Philbaking Pres. Simplicio P. Umali, Jr. said the upward price adjustments may be implemented this week. Philbaking data showed that the price of a 600-gram loaf could rise by P1.50, while pan de sal prices may increase by 25 centavos to P1. Philippine Association of Flour Millers Executive Director Ric M. Pinca could not be reached for comment Tuesday. Mr. Remonde said the President also ordered the Energy department to conduct an "intensive audit" oil firms to check if their prices are justifiable. "One of major directives issued by President Arroyo was for the Energy Department to do an intensive audit of oil companies, especially on the matter of cost recovery," he said. Mr. Remonde said this was done in response to complaints that the oil firms are not adjusting their prices even if prices in the world market are going down. "There are downward movements in the past but, despite this, some oil companies continue to increase prices due to under recoveries," he said. Energy department data showed that, as of July 29, the price of Dubai crude had tumbled by $18 to $26 a barrel, or about 15% to 20% since striking record highs in the first week of July. — Alexis Douglas B. Romero, BusinessWorld