1 in 4 Pinoys live in poverty–gov’t data

A bigger proportion of the population or about one in every four Filipinos were considered poor in the first half of 2014 due to government restrictions on rice imports and the lingering effects of a killer typhoon, state data released last Friday showed.

Socioeconomic Planning Secretary Arsenio Balisacan said poverty incidence among Filipinos rose 1.2 percentage points to 25.8 percent in the first half of last year from the same period in 2013.

Higher food prices, particularly of the staple rice, and effects of Typhoon Haiyan that devastated the Visayas region in 2013, wiped out gains in per capita income, he said.

Baliscan said the increase in poverty could have been avoided by better management of food supplies nationally, particularly rice which accounts for 20 percent of the budget of low income families.

He called for a review of the government’s rice self-sufficiency policy which involves restricting rice imports to encourage domestic production.

“Just at the time when the world price of rice was declining, the domestic price of rice was skyrocketing,” said Baliscan. Philippine rice prices rose 11.9 percent in the first half of 2014 as supplies tightened due to lean harvests and lower imports.

Poverty worsened despite 6.1 percent economic growth last year that was the second fastest in Asia after China.

Balisacan said data in 2014 showed the government’s income redistribution program and policies to attract investment benefited the poor, but the higher inflation eroded incomes.

Balisacan noted that per capita income in the first semester of 2014 was higher by 6.4 percent than in 2013. Among the bottom 30 percent of income-earners, per capita income increased by about 7.3 percent in the same period in the previous year.

The fastest growth rate was observed among those in the fifth income decile (8.5%) and the slowest increase was experienced by the top income decile (4%).

“Per capita income data in 2014 show that economic growth has benefitted the lower income groups, including the poor. This means that the twin strategies of encouraging investments and production alongside the implementation of a large-scale income redistribution program have worked,” said Balisacan.

However, the country’s inflation rate hovered near the higher-end of the inflation target in the first half of 2014. The consumer price index for food went up to 6.5 percent and 2.7 percent for the non-food items in the same period. These eroded the growth in per capita income of Filipinos.

“The very high prices of food wiped out the gains in per capita income.  This situation could have been avoided especially in the case of rice, which is a staple food for low-income and vulnerable families, usually accounting for 20 percent of their budget. Just at the time when the world price of rice was declining, the domestic price of rice was skyrocketing,” the Cabinet official added.

Balisacan, who is also National Economic and Development Authority (NEDA) Director-General, stressed the need to revisit the government’s grains sector policy, particularly the quantitative restrictions (QR) policy on rice to achieve rice self-sufficiency goal, taking into consideration its broader impact on food prices and poverty.

“While we definitely need to support the agriculture sector in general, we should also maximize the gains from trade and globalization.  The private sector should be allowed to take the driver’s seat while government simply facilitates the access to both the import and export markets,” Balisacan said.

Higher food prices resulted in a huge increase in poverty thresholds. Food poverty threshold rose by 9.5 percent while overall poverty threshold increased by 9.4 percent year-on-year in the first six months of 2014. Ten out of the 17 regions experienced double-digit increases in their poverty thresholds. The highest was observed in Region VIII with 14.2 percent, possibly due to the lingering effects of Typhoon Yolanda, then in NCR with 13.5 percent, as it had to face the highest price of rice during the period.

Balisacan also stressed the need of updating budget components of government poverty reduction programs to balance the movement of prices and incomes of the poor.  “The government’s social development programs, particularly the Conditional Cash Transfer provided through the Pantawid Pamilyang Pilipino program, may have provided additional support to temper the rise in poverty but could have contributed more towards reducing poverty had the value of the grants increased with inflation,” he said.

“It is also important to ensure the timely disbursement of the budget to maximize the impact of programs and projects,” Balisacan added.

The income and poverty      estimates were generated from the 2014 Annual Poverty Indicators Survey but do not include sample households from Batanes (due to less than 100 sample households) and Leyte (no survey has been conducted since Typhoon Yolanda). To be comparable, the PSA also excluded the poverty statistics of the said provinces in the 2013 poverty estimates.