Onions put Philippines in a stew over food price inflation

“Our ingredients have become so expensive that we are almost earning nothing. But we can’t change the recipe,” said the 76-year old Cundangan, taking a break from cooking to man the cash register. “Our customers will surely notice, and we want to keep our customers happy.”

Elected last June, President Ferdinand Marcos Jr has struggled to fulfil campaign promises to bring down inflation, which hit 8.7% in January, driven by an 11.2% jump in food prices, the biggest since 2009.

Like the rest of the world, the Philippines is having to pay a lot more for energy imports, but it is the steepling prices of staple foodstuffs that has become most hard to stomach.

The cost of onions – a mainstay in almost all Philippine dishes – shot up from around pesos 70 pesos ($1.28) a kilo in April to as much as 700 pesos in December, making them more expensive than meat.

Awkwardly for Marcos, who also holds the agriculture portfolio, the onion shortages stemmed largely from import delays. Imported onions, bought mostly from India and China, require sanitary and phytosanitary permits for quarantine and biosecurity purposes.

Acknowledging that part of the fault lay with poor planning, Marcos has acted to speed up imports and prices have tumbled from December’s highs, but rates in a Manila wet market are still around double the year ago levels.

“The price of onion is still like gold,” said Joey Reyes, a 52-year-old grocery store owner, who is waiting for prices to come down a lot further before she starts stocking onions again.

Consumer frustration is limited for now to social media memes, with some finding humour the best way to deal with hardship.

A bride from Iloilo city became the talk of the town after she walked down the aisle with a bouquet of onions, while one enterprising florist in the capital sold bouquets festooned with onions and chillies for Valentines’ Day.

“We wanted to have a different type of flower arrangement (for Valentines), especially since the prices of onions have gone up and we’d like to join the trend,” Nhits Evangelista, the 25-year-old florist, told Reuters.

Earlier this month, a branch of Japan Home Centre, a popular chain of retail stores in Manila, accepted onions as payment for a day, promising to donate the onions to food banks for families unable to afford the staple.

It is not just onions. Steep price rises for eggs and sugar have also whacked up the cost of putting food on the table.

Due to import delays and damage to crops from bad weather, the price of a kilo of sugar has nearly doubled to 100 pesos from a year ago, hitting beverage companies, while eggs, which cost 6 pesos a piece last year, were now selling at 10 pesos, as hatcheries are still reeling from outbreaks of avian flu.

Opposition politicians have criticised Marcos for not acting sooner to control spiralling prices, saying he should relinquish the agriculture portfolio and appoint a minister who can dedicate himself to the task.

And farmers are worried that the belated surge in imports will end up weakening prices just as they take their own onions to market during the February to April harvest season.

“We are nervous. We will get nothing from what we have worked hard for,” 41-year-old Jon-Jon Taberna, an onion farmer from the Nueva Ecija province. “No matter how good the crop is, if prices are depressed, you won’t make money.”

‘Unresolved’ supply problems

Officials say the high inflation was transitory and should ease once supply issues are addressed. But January’s higher than anticipated inflation reading has raised economists’ expectations that interest rates will rise further, after going up 350 basis points last year.

Economic growth is projected to slow sharply this year, after a forecast-beating 7.6% bounce back from the pandemic in 2022, and some economists reckon the official view on inflation may be too optimistic.

“The underlying drivers of inflation may be moving away from a transitory nature, and rather the result of more persistent factors such as an unsolved food supply problem which drives up costs,” said Robert Dan Roces, an economist at Security Bank.