Wanted: Hoarders

Day six in the imposition of price caps on rice, and still no one arrested for hoarding – the reason cited for the measure that throws askew the law of supply and demand.

As of yesterday, rice was still being retailed in my neighborhood at P50 to P60 – all varieties labeled as special rice. Several retailers were not selling regular-milled or well-milled. Those who did allocated only a sack for each variety, at the government-mandated caps of P41 and P45 a kilo, respectively.

Last Friday, the Grains Retailers Confederation of the Philippines said retailers would lose at least P49,000 in just a week of the price caps, with P5 lost for each kilo of well-milled rice sold at P45.

The P15,000 subsidy for them will barely cover the loss. And the ayuda is sourced from public funds. Since all of us in this country are taxpayers because of value-added tax, it means people’s money is simply being juggled around to narrow the retail price gap between P20 a kilo rice and (horrors!) P60.

The rice subsidy distribution also gives politicians a chance to win brownie points with their constituents. The Commission on Elections must make sure the fund distribution is not linked in any way to the campaign for the upcoming barangay and Sangguniang Kabataan elections.

Because of their losses that are way over the P15,000 subsidy, the retailers have said they would comply with the price caps for a week, and then decide their next move. Are they planning legal action? The government does not have the right to drive legitimate businesses into bankruptcy.

Trade and agriculture officials have said the price caps could be lifted within three to four weeks. Within that period, they better present a rice hoarder or dealers engaged in cartel-type trading – and no small fry, please – to justify the burden they have imposed on retailers.

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We keep hearing government officials blaming cartels, smugglers and hoarders for shortages and high prices of basic agricultural commodities, from rice to sugar to onions.

But the supposed ringleader of the onion cartel has been identified in several congressional hearings. Personnel of government agencies such as the Sugar Regulatory Administration have been accused of collusion in agricultural smuggling. Officials and politicians keep posing in front of mountains of supposedly hoarded or smuggled sugar and rice.

Yet here we are, still waiting for anyone to be formally indicted for hoarding, overpricing or smuggling of agricultural products.

Admittedly, hoarding can be tricky to prove. Where do you draw the line between sound business practice and hoarding? When warehouses containing white refined sugar were raided last year, the owners said the normal practice is they don’t release their stocks all at the same time. The government said at the time that the raids were meant as a warning. I don’t remember anyone being actually prosecuted for holding on to their stocks.

Speculation is normal in commodities trading. There are even futures markets for various commodities including agricultural products.

But it’s also true that speculation can go overboard, fueled by greed, and harm consumers. The government can then step in to moderate greed – the reason cited for the rice price cap.

The government can persuade the public that the reasoning is valid by showing that unscrupulous rice traders are caught and punished. This must be done within the period that the price caps are in place.

Instead of any arrest, we have been treated to the “non-renewal” of the tenure of Cielo Magno as undersecretary of the Department of Finance, for posting a graph on the law of supply and demand on the same day that Malacañang announced the rice price caps.

Malacañang described Magno as “unsupportive” and “clearly set on maligning” the P20-a-kilo-rice administration.

Appointees serve at the pleasure of the appointing power, so the Palace merely exercised its prerogative to dis-appoint or (as Malacañang put it) approve the immediate “expiration” of Magno’s tenure.

She is expected to return to the University of the Philippines School of Economics, where she was an associate professor before being recruited to the Department of Finance. Magno’s immediate superior in the DOF, fellow UPSE alumnus Benjamin Diokno, said over the weekend that the economic team, which he heads, was not consulted and was “shocked” by the rice price caps. It’s shocking that Diokno was shocked.

Imposing the price ceiling was reportedly the idea of the Department of Trade and Industry and Department of Agriculture. All along I thought the DTI chief was part of the economic team.

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Greed is also cited by many industry players for the continuing unreasonably high prices of sugar in our country. Yet the government seems to have abandoned the effort to bring down sugar prices, which have contributed to price hikes of items popular among the masses such as three-in-one coffee, pandesal, tasty and soft drinks.

Food inflation was again a key driver of last month’s uptick in inflation. The government is addressing rice prices, but curiously ignoring sugar prices.

The buzz is that billions have already been raked in from the sugar overprice by the well-connected sugar traders. But I guess the mindset that one can never be too rich is back in vogue in our unfortunate nation, and moderating greed is an oxymoron.

In the coming days, because of the price caps, the public expects two things: the arrest of hoarders, and the lowering of rice prices without affecting supply.

The P20-a-kilo-rice administration wouldn’t want Cielo Magno saying, after three or four weeks, “I told you so.”

Diokno said the government may also temporarily cut the rice tariff to 0 to 10 percent to bring down prices.

Surveys by reputable pollsters have consistently shown Filipinos giving Marcos 2.0 the lowest marks in managing inflation.

The messy implementation of the rice price caps can only reinforce this perception.