Out with middlemen
For many Filipinos, the holiday cheer was spoiled by the high prices of basic commodities, particularly the price of onions, which has skyrocketed to more than P700 a kilo in some public markets in Metro Manila. This is more than double last month’s level and more expensive than pork and beef, prompting complaints and memes about how a main ingredient in Filipino dishes can truly drive one to tears.
Still, the Department of Agriculture (DA) says it is not considering allowing the importation of the commodity, insisting that there is enough supply. A year ago, DA price monitoring showed that local red onions were sold for P200 a kilo, while the imported varieties were priced at P160. In December 2018, the average price of red onions was only P90 a kilo, which rose to P193 the following year, and to P230 in 2020.
There is no doubt that the agricultural commodity is way overpriced. The Samahang Industriya ng Agrikultura believes local red onions should be sold at only P430-P450 a kilo, noting that the farmgate price—or the price at which farmers sell to traders—ranges from P250 to P370 a kilo. Its huge difference with retail prices in public markets is what the traders and middlemen rake in. The reluctance to allow imports to boost supply and in turn bring down prices is due to the expected supply coming from the “peak season” of local onions starting this month. However, DA deputy spokesperson Rex Estoperez notes that the agency has not made any projections on the volume of onions that may be produced this harvest season, adding that many farms are still recovering from the effects of typhoons. He says thousands of hectares also remain idle as onion farmers are worried since they “do not know when the prices will plummet, when the next typhoon is going to come.”
Even with the incoming harvest, many remain pessimistic that prices will go down to their level a year ago. The reason is that unscrupulous traders, perhaps working as a cartel, will make sure that supply will remain tight. Estoperez notes that some traders hide the produce during the harvest season when production is more than ample and thus prices are lower, and bring them out during the off-season when supply is tight, thus allowing the hoarders to make substantial profits.
The DA, according to Estoperez, has been looking into possible interventions to protect both farmers and consumers. He says the DA must improve transporting, storing, and packaging of farmers’ goods “because if we don’t do this, we won’t be able to address the problem,” and the government will not “break the cycle” causing the artificial lack of supply and the resulting high prices. In doing so, however, the DA needs to first and foremost address the problem about unscrupulous middlemen and traders, even before it maps out long-term plans for the onion-growing sector. It needs to undertake forceful intervention to bring the entire harvest starting this month to the consumers.
One way is to link onion farmers and producers directly with big buyers such as supermarkets and restaurant chains. In doing so, a big chunk of the huge profit margins added by traders to the farmgate price can be taken off the selling price to consumers. Another measure is to ensure adequate supply during off-season months by putting up more cold storage facilities to prolong the shelf-life of the harvest in the first quarter of 2023. Philippine Chamber of Agriculture and Food Inc. president Danilo Fausto says the country will have a stable supply with the expected bumper harvest. However, he warns that if the government does not put up additional cold storage facilities, “we will have a surplus in April” that needs to be disposed of quickly before they rot.
A third short-term intervention is to really come down hard on smuggling. In the 42 days since Nov. 12, the Bureau of Customs (BOC) has intercepted 60 shipping containers loaded with illegal agricultural produce worth more than P253 million, and at least 25 of these containers contained onions. Despite such efforts, smugglers continue bringing in onions through the ports in Subic, Manila, and as far as Cagayan de Oro because none of them has gone to jail. The government must show that it has the resolve to check rampant smuggling by prosecuting and putting these people in prison.
Then the long-term measures can come in. The DA only needs to implement the Philippine Onion Industry Roadmap 2021-2025, which aims to increase onion production from 229,539 metric tons (MT) to 279,270 MT, to achieve self-sufficiency by 2025. The DA should identify zones that are not frequently hit by typhoons and are resilient and suitable for planting the commodity. This is to avoid the “lechon manok syndrome”—where people simply copy what is popular in deciding what crops to plant.
The current price of onions at more than P700 a kilo is untenable. Consumers are hoping that the bumper harvest in the early months of 2023 will substantially bring down prices in the markets. However, prices will drop only if all of the bumper harvest reaches the markets and the consumers. If the cabal of shameless traders and middlemen who are driven by extreme profit greed will again corner the output and hoard them, then the DA’s expectations of lower prices will never materialize.
