FTI urged to build cold storage facilities for onions

MANILA, Philippines — Food Terminal Inc. (FTI) should consider undertaking a P1.5 billion cold storage program to stock onions and provide farmers with guaranteed market while preventing another runaway in prices, an industry group said.

Cold Chain Association of the Philippines president Anthony Dizon proposed a “transactional” business model that would allow the FTI to fill in about half of the shortage in cold storage space for onions without incurring losses.

Dizon said the FTI could consider building 10 cold storage facilities nationwide with 5,000 metric tons of capacity each valued at P150 million per facility.

The total cost of P1.5 billion, Dizon noted, can be funded through a loan from state-run Land Bank of the Philippines (Landbank).

The government can provide the FTI with the necessary funds to procure as much as 50,000 metric tons or 50 million kilograms of onions during harvest season, he said.

The FTI can buy onions at a farmgate price of at least P30 per kilogram, providing farmers with a return on investment of 50 percent since they spend P20 to produce a kilogram, Dizon added.

The FTI can now store the onions for at least six months to ensure that the country has sufficient supply of the commodity throughout the year.

In doing so, it will cost FTI about P2 per kilogram per month or about P12 per kilogram in the course of six months.

The FTI can sell the onions at about P100 per kilogram, resulting in a net profit of P58 per kilogram since its total costs will be about P42 per kilogram, Dizon said.

The FTI can post a net income of as much as P2.9 billion if it will be able to store and sell 50,000 metric tons of onions.

“That way you can now pay the loan from Landbank,” Dizon told The STAR.

“(The construction of the facilities) does not have to be a developmental strategy. It can be transactional,” he added.

Due to lack of post-harvest facilities like cold storages and improper handling, the Department of Agriculture estimated that the country lost 100,000 MT of onions in 2022.

“We already recognize the situation we are up against. We lack cold storages especially during harvest season,” Dizon said.

“Some are blaming the traders for controlling the stocks but that is only possible when there is a shortage in capacity,” he added.

According to Dizon, nobody will invest in putting up cold storages just to store onions without becoming traders themselves.