Struggling to boost production, DA intensifies anti-smuggling fight

MANILA, Philippines — The Department of Agriculture is training its sights on curbing smuggling in a bid to bridge food supply gap and ease inflation, as farm production — which the agency is mandated to improve — fails to keep up.

In an interview with Bloomberg on Wednesday, President Ferdinand Marcos Jr., who appointed himself as agriculture secretary, said the DA is starting to “rationalize the system” to fight illegal importation of some food items like onion, a key cooking ingredient in the Philippines whose prices might be the most expensive in the world now.

READ: In latest Senate probe, tear-inducing onion prices take center stage

“At the very beginning, it's almost impossible for us to determine how much onions there were, how much we had in country because some of it were smuggled in and we didn't where they are, what they were, and where they came from,” Marcos said in an interview at the sidelines of the Davos forum.

“So we’ve rationalized that now and our importation schedules are well-established and well-understood, and all done in keeping with the consultations that we’ve had with all the stakeholders, including the onion growers in the Philippines,” he added.

Policing smuggling falls under the responsibilities of the Bureau of Customs. The agency conducted 107 seizures of agricultural products worth P1.23 billion in 2022. Of that figure, P191 million comprised of onions that illegally entered the country.

As it is, the DA’s increased focus on fighting illegal importation of farm products came at a time boiling inflation continues to squeeze Filipinos’ budgets. In December last year, when inflation sizzled to a fresh 14-year high of 8.1%, the DA set up a new office tasked with curbing smuggling. 

Dr. Ronald Mendoza, senior economist at Ateneo Policy Center, said access to "timely data" is needed to strike a balance between keeping prices low through stable supply and helping farmers.

"I agree with the President’s assessment that the challenges in our agriculture sector touching on production challenges, smuggling and possible hoarding practices are deeply intertwined," he said.

"Market signals to our farmers are noisy in this kind of an environment; and it will be necessary for our policymakers to approach this using a systems lens that keeps prices affordable for consumers and yet sufficiently profitable for some domestic production by producers, combined with reasonable importation levels," he added.

Food production amid bloating prices

But experts like Leonardo Lanzona, an economist at Ateneo De Manila University, believe going after smugglers would do little to solve food supply.

“Smuggling is not the problem. It is a symptom of the problem. Fixing the import schedules will not be a solution since the lack of supply remains, making all of these importation unsustainable,” he said, adding that supply gaps foster a conducive environment for smuggling. 

“To solve the problem, (the government should) address these high costs coming from very distribution and other delivery costs such as storage. Reducing these transaction costs will incentivize farmers to produce more and eliminate hoarders, smugglers and cartels,” Lanzona continued.

While improving production is the “long-term” goal, Marcos told Bloomberg that his government had no choice but to import farm products to soothe inflation, a move that angered local farmers preparing for the harvest season.

READ: 'Too much': Ex-SRA chief says Marcos suggested importing 600k metric tons of sugar | Import plan to hurt local onion farmers — analysts

Nicholas Antonio Mapa, senior economist at ING Bank in Manila, believes improving local production should be given more urgency. 

“As secretary of agriculture, hopefully, there is a focus on implementing actual reforms and improvements in production. As president, he can work with BoC to ensure that smuggling is eradicated,” he said in a Viber message. 

“Still hoping to see reforms to help increase yields domestically,” Mapa added.