Stop The Blame Game!

By Manny Piñol

The author is a former Secretary of the Department of Agriculture. This was posted on his Facebook page.

Correct Flawed Market System,
End Outrageous Onion Pricing

The volatile pricing of Bulb Onion and other basic agricultural commodities is not the fault of anybody but a symptom of a sick and flawed marketing system deeply rooted in our culture.

From the farm gate to the kitchen of Filipino families, basic food commodities pass through at least 10 hands - from the community dicer, to the town trader, to the consolidator, to the wholesale buyer, to the market distributor and to the vendors.

Things could get worse when big traders, who control the post-harvest and storage facilities for commodities like Onion and Rice, connive among themselves to create an artificial shortage and manipulate the prices.

This was the point of conflict between me as then Secretary of Agriculture and the proponents of the Free Market Policy for imported rice who naively believed that by flooding the market with huge volumes of rice, the prices would be lower because of the "law of supply and demand."

They failed to understand the realities on the ground where traders and middlemen control the market system and the fact that for a geographically fragmented country like the Philippines, the very high cost of transport of goods affect the prices of basic commodities creating a fertile ground for market manipulation.

The violent fluctuation of the prices of basic food commodities is indicative of an institutional problem which is the flawed and trader-controlled marketing system.

An institutional problem could only be solved through institutional reforms which is why I had long been advocating for the reactivation of the moribund agricultural marketing corporation of the government, the Food Terminal Incorporated which is under the National Grains Authority.

Here is how it could be done:

1. Identify the basic food commodities which contribute largely to Food Inflation and offhand, I could cite five: Rice, Fish, Meat, Vegetables and Fruits;
2. Establish FTI buying stations and cold storage facilities in the agricultural production areas of the country using existing NFA buying stations by just adding stand-alone cold storage facilities;
3. Engage farmers, fishermen and local producers by giving them a quota of the volume of specific commodities that FTI will buy with a guaranteed price;
4. Open FTI Food Outlets in the urban centers, especially Metro Manila, Metro Cebu, Metro Davao and Baguio City which will sell the goods consolidated from the FTI Buying Stations all over the country at prices with a minimal mark up to cover the operational costs and ethical profit to keep FTI viable.

This is not a new idea neither do I claim to be creator of the concept because the FTI is a creation of the older Ferdinand Marcos about 60 years ago.

Proofs of Concept were also made when I was DA Secretary through the TienDA Program and when I moved to the Mindanao Development Authority through the MinDA Tienda which sold agri commodities in Metro Manila and Baguio City at farm gate prices.

The only thing that is needed to implement this is an Executive Order to be issued by President Ferdinand Marcos, Jr. with corresponding budgetary support for the operations of the FTI.

In two months this could be implemented and the agony and hardships suffered by Filipino consumers could end.

Well, that is if the cartels and lobbyists will not be able to influence our policy makers and legislators to oppose this, just like what they did with the Rice Tariffication Law.

By the way, as Food Security Adviser to Secretary Clarita Carlos of the National Security Agency, I have already submitted this recommendation in the form of a formal memorandum.

I am just sharing this with you, followers of this page, to reassure you that something is afoot, although given the nature of the bureaucracy, this will go through a gauntlet of policy advisers.

Let us pray that those reviewing this recommendation will, at least for now, set aside their vested interests and look after the welfare of the Filipino consumers.