PH among most at-risk countries to food security shocks — Moody’s

Food security risk in the Asia-Pacific region will remain elevated, as climate shocks are expected to persist in the coming years, Moody’s Investors Service said.

“Food security risk in Asia-Pacific (APAC) will remain elevated even if food prices fall. First, increasingly frequent and severe climate shocks will disrupt food production processes. This year, we expect the continuation of El Niño to impact crop yields in Asia and the Pacific,” it said in a report.

Moody’s said the region’s food security is at risk due to the rising global demand for food, geopolitical tensions and disruptions to agricultural trade and production. 

The Philippines and Laos are among Southeast Asian countries that show both “higher exposure to shocks and lower resilience to shocks,” it said.

“The proportional rise in food security risk in Asia has been smaller than other emerging markets, and this slower pace of deterioration partly reflects Asia and the Pacific being a major producer for primary crops,” it said.

“However, Asia and the Pacific is still home to some of the most populous economies, and as such still accounts for half the people facing moderate or severe food insecurity in the world,” it added.

The Philippines was the most at-risk country in the world in 2023, according to the latest World Risk Index (WRI).

Data from Moody’s showed that the Philippines scored a four out of five in its physical climate risk index. Along with Indonesia and Vietnam, it ranked the worst among its Southeast Asian neighbors. Singapore, Malaysia, Thailand and Cambodia scored a three out of five.

“Nearly half of the region has higher exposure to physical climate risk or water management risk. A significant proportion of the region also has lower resilience to respond to shocks, as reflected by higher social and governance risk scores,” it said.

Moody’s noted that countries with high exposure but low resilience to shocks also indicate there is a large portion of the population that is unable to afford a healthy diet.

“Climate-driven shocks will continue to drive food security concerns. The increased frequency and severity of extreme weather and climate related events including floods and storm-triggered landslides, will continue to have an impact on crops,” it said.

Moody’s also expects El Niño to impact crop production in the region.

The latest bulletin from the state weather bureau showed that the El Niño is expected to persist until May.

“While food prices have generally come down from their peaks in 2022, prices for a few crops — such as rice, a staple in this region — remain elevated,” Moody’s said.

“This comes on the back of a series of lower-than-expected rice harvests and a wave of export restrictions in the second half of 2023, which have kept rice prices high and renewed concerns about food security in the region,” it added.

Headline inflation accelerated to 3.4% in February amid high food prices, particularly rice. Rice inflation surged to 23.7% in February — the fastest since the 24.6% in February 2009.

Meanwhile, Moody’s said that the current policy measures in these countries can “mitigate but not fully offset food security risk.”

“Policy responses can partially offset food security shocks. Since COVID-19 (coronavirus disease 2019), a number of countries in the region have prepared themselves to ride out food supply disruptions and have been building up stockpiles,” it said.

“While cooperation on a multilateral basis is more limited and fragmented, negotiations still happen on a bilateral basis. Strong policy support will encourage new companies and financial institutions to enter the agri-related sectors, which is a credit positive for the sector, and will support farm productivity and crop yields,” it added. — Luisa Maria Jacinta C. Jocson