What now, Department of Agriculture?

One of the country’s most pressing needs now is the appointment of a full-time secretary at the Department of Agriculture, where President Marcos Jr. is still the head but does not initiate crucial solutions to our woefully dysfunctional agricultural economic system. The President cannot take his own sweet time in mulling over who to appoint as agriculture secretary, while onion farmers are killing themselves due to government apathy and the poor suffer from hunger amid abnormally high food prices. The neoclassical economists of his administration are singing praises over the country’s high GDP growth rate of 7.6 percent and its consequent P22.02-trillion worth of the economy; however, they should ask themselves if this growth rate has tangibly trickled down to the masses and solved the country’s age-old problems of poverty, inequality, and unemployment.

Currently, the most pressing problem lies in the monopsonistic-oligopsonistic distribution system of farm products characterized by the multilayered system of from four to as many as eight middlemen who depress farm gate prices to ensure their own profitability and who are controlled by cartelized urban merchants who dictate the terms of agricultural trading. Based on studies of the Philippine Peasant Institute, the price-setting urban cartel leaders hide behind two masks — one as monopsony traders at the farm gate and another as monopoly traders at the consumer market. They also provide the capital used by agents and traders — capital which ironically comes mostly from government-owned/controlled banks and institutions.

Practically the same pattern of cartelization occurs for major farm products and which cannot be dismantled effectively by the government’s interventionist institutions such as the National Food Authority with their limited budgets for stabilizing prices or perhaps with their deliberate connivance with the traders to relinquish control of the market. The cartels’ market control has also been strengthened by market deregulation and easy resort to import liberalization by the government. However, we must remember that importations are always capital leakages that result in the loss of multiplier effects from the national economy.

The most effective solution is for farmers to organize themselves into marketing cooperatives and farmers’ nongovernment organizations—an activity that the Cooperative Development Authority should have been pervasively promoting all over the country. Cooperatives interacting solely among themselves can break the control of middlemen and ensure high prices for farmers’ produce. Farmers should also be provided with sturdy vehicles for bringing their produce to good markets, as well as sufficient cold storage and post-harvest facilities for keeping their harvests fresh while waiting for favorable prices—information on which the government should also help provide. The Landbank, Development Bank of the Philippines, and private banks should be proactive in providing easily accessible and low-interest loans. Rampant smuggling in our porous ports that is abetted by conniving customs officials should also be curtailed, as they contribute to the depression of farm gate prices.

On a long-term basis, the government should provide a more elaborate system of farm-to-market roads, especially in highland areas where the terrain abets a dendritic road pattern leading to the large urban centers where the controlling cartel leaders are located. Then, of course, on the production side, the government should intensify the provision to farmers of technical, managerial, and accounting support services for increasing agricultural production and raw material processing and for limiting the exodus of farmers’ sons from farm work.

The new agriculture secretary has a plateful of challenges awaiting him. He should be one, then, with a deep understanding of our grossly dysfunctional agricultural economic system, i.e., of the ingrained imperfections in the production, distribution, and consumption phases of the grain, vegetable, fruit, fishery, meat, and other sectors of the agricultural economy. And, most importantly, he should have the grit to prosecute cartels, smugglers, and the entrenched cabal of corrupt bureaucrats, and to use the full range of weapons in the enforcement arsenal.

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Meliton B. Juanico is a retired professor of geography at the University of the Philippines Diliman and a licensed environmental planner.