PCC enters rice probe, focuses on middlemen

MANILA, Philippines — The Philippine Competition Commission (PCC) will probe the middlemen in the rice industry, particularly millers, traders and wholesalers, as anti-competitive practices leading to high retail prices of rice could be present in this phase of production.

“If there is concentration, if there are players who are in a dominant position in certain markets for this middle phased transactions, then is it worsening the gap between farmgate prices and retail prices,” PCC commissioner Johannes Bernabe told reporters.

“If some of them are in a dominant position or, worse if they are engaged in cartelistic behavior, then they will exacerbate the gap between farmgate prices and retail prices,” he added.

The PCC recently signed a memorandum of agreement (MOA) with the Department of Agriculture (DA) to probe the impact of the Rice Tariffication Law and unfair competition on stakeholders amid the continued drop in prices of palay (unhusked rice).

Based on latest data from the Philippine Statistics Authority (PSA),average farmgate price of palay declined by 0.6 percent as of end-September to P16.18 per kilo.

The current price is a 30.1 percent drop from the P23.14 per kilo last year, when rice liberalization had yet to become a law. It is also lower than the P19.40 per kilo last March when the law took effect.

In contrast, average retail price of regular-milled rice registered at P37.79 per kilo as of end-September.

“What we should be concerned about whether middlemen, because of their dominant position in certain relevant geographic markets, or if they are engaged in some cartelistic behavior, should be investigated by PCC and be taken to task for aggravating this price gap,” Bernabe said.

Asked why the focus of the investigation would be on the middlemen, Bernabe emphasized that farmers are not in a position to abuse any position they might have.

“They are not organized. They don’t have any leverage on imposing prices at a level which will be sustainable,” he said.

“Primarily, the ones who have leverage in this value chain appear to be the middlemen,”he added.

The PCC official, however, emphasized the agency does not want to call anyone liable, or name guilty parties.

“It’s just that in the PCC, it behooves us to try and narrow down who it is we should be prioritizing in terms of examining behavior or conduct,” he said.

Moreover, Bernabe said if they are able to establish that there is anti-competitive behavior going in the industry, whether it is in the form of cartel or abuse of dominant position, sanctions will be placed for parties involved,

“At this point, it is probably premature to pinpoint any particular entity,” Bernabe said.

Agriculture Secretary William Dar earlier said it is necessary for the DA to cooperate and collaborate with PCC for the purpose of understanding the management of importation process and the declining prices in the farm areas.

 “PCC has the mandate to investigate whether there is unfair competition among players in the rice industry. We hope this can help us unearth those who are really not doing fair business in the country including importers traders and millers,” Dar said.