It is tragic that we now have agriculture officials who are clueless about basic economics. Unfortunately, Junior, who assumed the agriculture portfolio, isn’t that knowledgeable too. The blind are leading the blind.
Clueless is a merciful way of describing the statement of the DA’s deputy spokesperson who said the “out of control” increase in the cost of onions in public markets could have been averted if there had been tighter measures against smuggling of agricultural products, as well as the importation of commodities during harvest season.
Ano daw? The onion situation is basically a supply and demand problem. There is scarcity of supply in the market, so the price has gone to stratospheric heights.
Smuggling is not to blame for the high prices. Indeed, smuggling is an indication that market forces have sensed an opportunity and they are moving to increase supply. A timely legal importation of onions would have also increased supply and decreased prices.
Dr. Fermin Adriano, a former DA undersecretary, recalled in his recent column that when the DA’s Bureau of Plant Industry was in the process of approving SPS (sanitary and phyto-sanitary) certificates for white onion importation, Sen. Imee Marcos went on a rant. She said that just like the raging sugar importation controversy then, crooks in the DA who are in cahoots with smugglers and traders are creating an artificial shortage of onion to justify its importation.
“The Aug. 14, 2022 reports of morning dailies quoted the senator claiming that there was no need to import white onion because we have an abundant supply of it. She further complained that the DA could not produce empirical evidence or data showing that the country has an onion supply shortage.
“Fearing that they might lose their jobs (just like what happened to former undersecretary Leocadio Sebastian), concerned DA officials withheld the issuance of SPS certificates.
“Perhaps unknown to the current DA officials, the Philippines is a net importer of onion. The local sufficiency data for onion provided by the Philippine Statistics Authority from 2016 to 2019 indicates that we are on average self-sufficient on onion at 70 to 80 percent only. Obviously, the 20 percent will have to be imported to fill in the gap.”
Indeed, the need to import was belatedly recognized by the DA deputy spokesperson who said that if this price increase does not stop, we can import onions. Unfortunately, such delayed importation may arrive right during the harvest season and depress prices for onion farmers.
The other favorite solution of bureaucrats is to impose a price ceiling that they call SRP or suggested retail price. Actually, it is not a suggestion. It is an imposition. It attempts to intervene with market forces. Using it without addressing the supply gap is a stupid attempt to repeal the law of supply and demand.
A leader of a farmers group observed that “setting an SRP will not solve the problem. Traders will not follow it, and the DA will not be able to enforce it.”
Raul Montemayor, national manager of the Federation of Free Farmers urged the government to look behind who is responsible for the price upsurge. It’s not the farmers.
“In fact, almost all the onions being sold now at P600+ were bought from farmers last February-August for less than P100 per kilo, some as low as P20 per kilo.”
According to Montemayor, supplies thinned out due to typhoon-related agricultural damage and the DA’s refusal to import stocks. With the tight supply, traders are now selling red onions at higher prices, which they had bought cheaply earlier in the year.
“DA was saying that they stopped imports to protect farmers despite knowing that it was off-season and most of the stocks were already in the hands of traders. So, it was the traders who benefitted and took advantage of the import bans, not the farmers. Whether this was deliberate or not, we do not know,” he said.
Montemayor added: “If there is supply, it is very tight. Unless they fix the marketing system, imports will again be cornered by the very same traders who are controlling supply and manipulating prices.”
What use is a government that is helpless in dealing with abusive traders?
Red onion costs P500 to P750 per kilo, based on DA’s price monitoring of markets in Metro Manila last Dec. 28. This led the DA deputy spokesperson to urge consumers not to buy onions by the kilo. Another callously stupid statement from this bureaucrat.
What is happening in onions today is nothing new. The big problem of onion farmers in marketing their produce is the lack of cold storage facilities. They could have stored their produce to lengthen the shelf life so they are not forced to sell at low prices to traders who then hoard the stock to the detriment of consumers.
There is only one cold storage facility in Central Luzon and the DA is supposed to build one on Mindoro, another major onion producer. Normally, onion harvest starting in January and February are meant to immediately supply the market to tame rising onion prices.
Subsequent harvests in March and April are supposed to be stored to last during the onion off-season. But because we do not have enough cold storage facilities, only a portion of the harvest is stored.
Dr. Adriano explained further that “when imports of white onion were abandoned, consumers switched to red onion, which was the available variety. Note that if white onion importation was approved in August, imports would have arrived beginning late October till December, relieving the demand for red onion and taming rising onion prices.
“Because of the import ban, a dramatic rise in the prices of red onion is now being experienced as it is the off-peak season (during the last quarter of the year) as harvest starts in January.”
Hopefully, Junior wakes up and realizes he has made two big mistakes in six months, sugar and onions. Food inflation is at its highest and impacts on overall inflation and our cost of living.
It is time to get real experts to help him make better decisions. We, the consumers, suffer with every mistake he makes.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on Twitter @boochanco