Break the rice cartel

Much blame has been put on the rice tariffication law for the current plight of local farmers, yet little attention is being focused on the cartel that has been hoarding imported rice to create supply tightness and, in the process, prevent prices from falling.

The liberalization of rice imports was intended to beef up supply of the staple given the shortage in domestic production, which had caused inflation to breach government targets last year. With imports allowed at a 35-percent tariff, economic managers had forecast rice prices to fall by as much as P7 a kilo.

Thus far, however, prices have only managed to stabilize and decline by P1-2 a kilo. The reason: Traders suspected of associating into a cartel have been controlling the supply of the staple to meet demand at a bare minimum and avoid flooding the market, which could help push prices lower.

It is right to focus a lot of attention on the plight of local farmers, but it is shortsighted to blame it all on the rice tariffication law, or Republic Act No. 11203. Some of the proposals to address this problem border on the absurd, including one seeking to impose an import tariff of 600-800 percent on rice, and others calling for the outright repeal of the law.

The rice tariffication law has a provision creating a P10-billion fund precisely to help local farmers survive a liberalized regime. Measures that the fund will finance are geared mainly toward bringing up the productivity of local farmers to enable them to compete with the low prices of imported rice. These include mechanization, improved irrigation, use of modern seeds, better farm-to-market roads and other challenges that local farmers have faced for decades.

The Department of Agriculture has its hands full helping farmers reeling from the falling farm-gate prices of their palay. The new agriculture secretary, William Dar, has been coordinating efforts with local governments and other departments, such as that of social welfare, to help buy the produce of local rice farmers at prices above their production costs.

But this is not enough. The government should likewise address farmers’ lack of access to storage, drying, milling and transport facilities so they can sell directly to the consumer, and eradicate middlemen who have taken advantage of the system for a long time. And it needs to release allotments from the P10-billion fund at a more urgent and more efficient pace, to ensure that struggling farmers are lent assistance in a speedy, timely manner.

Alongside these measures, however, the government should apply all its might to the critical task of dismantling the rice cartel, to allow prices of the staple to go down significantly for the benefit of millions of minimum wage earners and ordinary consumers, as had been promised by the law.

Last week, Albay Rep. Joey Salceda called on the Duterte administration to address the rice cartel problem; he asked authorities to look at the warehouses of big traders and check their import and delivery records, the Department of Justice and the Philippine Competition Commission to investigate possible economic sabotage, and the departments of Trade and Industry and of Agriculture to intensify the monitoring of price manipulations.

In his third State of the Nation Address last July, President Duterte once again warned that rice cartels will not be allowed to sabotage the economy, as he directed concerned agencies to hunt the syndicates behind them and bring them to justice. It’s time for those agencies — the departments of Agriculture and of Trade and Industry, the Bureau of Customs and even the Philippine National Police — to work together and finally
address this problem.

Local rice farmers are in dire need of all the help they can get from the government. At the same time, ordinary consumers also deserve the low prices intended by the rice tariffication law, and dismantling the cartel will do this. These criminal organizations are not that hard to find, if only authorities would stop looking the other way and do as the President had ordered them.