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Garlic, rice and failed agri policies

DEMAND AND SUPPLY By Boo Chanco

There has to be a conspiracy in the current shortage of garlic just when we have to exorcise so many demons feeding on our tax money. Come to think of it, we have these problems because those demons we call our public officials can’t seem to manage an effective agriculture policy.

This shortage in garlic is an embarrassment to government. Garlic is an important ingredient in the typical Filipino menu from adobo to fried rice. With all the reports of garlic’s health benefits, senior citizens like me take more of it. Those garlic chips I get from a stall at Shopwise Libis are great and better to munch than potato chips.

Two weeks ago, I got a shock normally reserved for the electricity bill when I noticed the price tag on fresh garlic at the supermarket was at P340 a kilo. I tried looking at the bright side of it ever so grudgingly. I told myself that at last, the Customs people are being honest and are now able to stop the garlic smugglers.

The thought then occurred to me that we must be a sorry people to have to depend on smugglers to keep food prices at reasonable levels. The garlic and rice smugglers have also shown that economic principles are always superior to government policies.

It’s nothing new. I reviewed my digital files of past columns and was amused to see this column of February 13, 2008. That time, it was about onions. Here is a portion of that column:     

I like doing the weekly grocery shopping if only because it gives me a sense of the market. Last Saturday, the cost of onions, local or imported, was P110 a kilo at Robinson’s Supermarket in Galleria, Ortigas Center. It had been in three digits for a number of weeks now. We (with Marichu Villanueva) brought up this problem with Secretary Yap a couple of weeks ago when he showed up at the Tuesday Club.

The Agri Chief was disturbed by the report. But he was candid enough to say that it was partly his fault because he agreed to the request of the local onion traders to give the local farmers a breathing spell by stopping the importation of onions. Hence, even the Customs people started stopping onion smugglers with highly publicized raids.

Stopping importation to help farmers is one thing. But what is this I heard that they have now allowed importations but the same onion traders are also now cornering the importation of onions? This is a cartel which shouldn’t be allowed if this government is to protect consumers. I can understand helping local farmers but they make no money out of this scheme. Only the already wealthy traders do.

You see, guys, it isn’t as simple as supporting our poor farmers and stopping imports. There had been this claimed bias for our farmers for years and somehow, did them no good. The poorest of our people live in the farms. They need more than protection from imports in order to flourish and our clueless bureaucrats haven’t figured that out for decades.

In the meantime, this supposed bias for farmers translates to a bias against consumers… the classic rural versus urban struggle for government favors. And the thing is… urban consumers are also struggling and many are barely able to eke out a living.

The typical urban consumer spends more than half his budget on food. Expensive food translates to stronger pressure for higher wages which ends up destroying our labor competitiveness with our neighbors who enjoy lower food prices and whose workers can be paid less.

The fact that garlic and rice smuggling had been thriving despite official government policies of import restrictions shows that the economic gains from smuggling far outweighs the danger of being caught.

Now, it is turning out the garlic and rice smugglers (onions too) aren’t the devils they are made out to be. Indeed, they seem to have done urban consumers a favor. Without the garlic, rice and onion smugglers, the price of food would have been higher.

I realize most of our food producers are scared of foreign competition. But that’s because food production here is more expensive than elsewhere. I blame government for the problem.

Local farmers do not have the same access to cheap and ready credit that farmers in Taiwan, Thailand and Vietnam have. Our farmers don’t get the same assistance from government in terms of affordable fertilizers, technology and other production requirements despite the budgets for these. Our farmers don’t have the benefit of good farm-to-market infrastructure that the cooperatives in Taiwan, for example, have.

The solution, I suggest, is not to sacrifice the urban consumer through quantitative restrictions in imports of farm produce we cannot produce competitively. The solution is for government to clean up its act and give our farmers the same quality of assistance farmers in other countries in the region enjoy from their government.

Take garlic, for instance. From news reports the past few days, agriculture officials concede that local producers can only provide for 30 per cent of our market needs. Artificially restricting supply through import restrictions is obviously unfair to the consumers and it won’t make local farmers produce quickly the rest of the 70 per cent the market requires.

Some consumers may still pay the high price for garlic these days but that does not mean it is the right price for the commodity. Indeed, if quantitative restriction to imports is taken away, we can expect the importers to import only enough garlic that the market would buy. If producing countries resort to dumping, it will be obvious and government has the power to act decisively to stop it anyway.

Getting our agricultural producers competitive is something that government must do, in any case. We will soon be part of a common market in ASEAN and those artificial import restrictions will necessarily fall away.

Ironically, Filipino technicians had a hand in making Taiwanese producers world class. Dr Emil Javier of UP Los Banos, for one, worked a number of years in Taiwan helping food growing coops become competitive. Why can’t our technicians do the same here?

What is true with garlic and rice is also true with onions and even with pork and poultry. There was recently a howl of protest when BOI gave investment incentives to a Thai company specializing in pork production. Backyard pork producers say they cannot compete.

Indeed, backyard producers cannot compete unless government manages a better program to integrate backyard pork producers so they can achieve better economies of scale. It would have been better to get the Thais in with their money and technical expertise now and help us become competitive for the ASEAN common market rather than meeting them strictly as competitors in 2015… which is next year.

Liking or not liking globalization is irrelevant. It is a reality and we just have to be competitive unless we want to isolate ourselves from the world economy the way the North Koreans have. That, in any case, is impossible given our archipelagic configuration and our centuries old expertise in smuggling.

Right now, the little that our farm producers earn is dissipated by high production costs. Only the traders make money but that’s only because traders provide farmers the assistance that government should have been providing… financing and market access.

There was a time when I thought something good was about to happen in the agri sector. Then Agriculture Sec Arthur Yap was talking of an integrated farm support system to include not just the usual credit and market access but even refrigerated trucks and cold storage facilities so farmers won’t be forced to panic sell produce to traders for fear of spoilage.

As in any nice plan articulated by idealistic technocrats in the early years of their tenure in government, nothing happened. I guess Art Yap learned how things are done in government soon enough and just went with the flow.

The programs of the agriculture department had been a traditional source of illicit wealth for officials and those close to powerful officials as in the fertilizer scam and the Napoles scam. Besides with powerful guys like that JocJoc Bolante, how can Art Yap say no to those close to then President GMA when even poor Cito Lorenzo failed and ended messing up his good name?

Today, I see nothing good coming out of that agriculture department, Daang Matuwid notwithstanding. I am hoping that Francis Pangilinan will succeed where Sec Prosy Alcala failed and is still failing.

P-Noy must get serious with food security and not confuse that with food self sufficiency. As economist Dr Cristina David puts it, “food security means ensuring household incomes, specially those of the poor, are sufficient to purchase adequate food --- whether imported or locally produced --- at reasonable prices.”

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

                               

 

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