"Price controls have the net effect of stunting efforts to take our agricultural sector to the next level."
President Duterte this week issued Executive Order 124 mandating a price cap on pork and chicken products for sixty (60) days in response to a week long barrage of reports of price spikes of these basic commodities coming from the Departments of Agriculture and Trade and Industry.
Though limited in duration (60 days) and area of coverage (Metro Manila), this latest executive action is another stab in the back of our already burdened agricultural producers promoted no less by the agencies who should be their main defenders in the Cabinet. The promised “balancing of interests between consumers and traders (producers?)” which this price cap is supposed to achieve is more illusory than real. In fact, this move is so tilted against the producers that one needs to ask: Why are we doing this at all?
Coming as it did after that price freeze on the same products only last November, this latest move only enhanced the view that the administration is being short sighted and is easily swayed by the (contrived) fears and passions of the moment. Truth be told, by relying on price caps (or freezes) as a principal weapon against any price surges in basic commodities, it is signaling to one and all, especially our local producers, that henceforth they are on their own, and that the country will be better off by simply importing our basic needs which are cheaper and readily available. Of course, these are cheaper and maybe readily shipped since these are from the countries which are heavily subsidizing their agricultural producers in the first place. They have to export (dump is actually the better term) their surpluses as they cannot keep these in storage longer than the next production cycle.
In any event, this price cap initiative coupled with that petition to increase the minimum access volume (MAV) for these products and the reduction of their tariff to almost zero is simply unforgivable. It may ease the buildup of tensions in Metro Manila, but it will consign our agricultural sector to the margins even more. It is virtually telling one and all that whatever intended assistance coming from the government to sustain local production and ensure a modicum of food security as has long been advocated and mandated by law, may not be forthcoming at all. Or, if by any chance the promised funding, affordable supply of basic agricultural inputs (seeds, fertilizer, feeds, etc) as well as the needed logistical support are forthcoming, the same may be availed going through a tortuous bureaucratic maze.
Indeed, price caps, freezes or controls, no matter how benign or temporary these may be, have the net effect of stunting whatever efforts we may make to take our already sluggish agricultural sector to the next level. It especially slashes on the small farmers and small-scale producers who, by the way, make up the majority of those engaged in this sector. They are the ones who are in such dire straits, especially under this pandemic and will probably be tossed to the streets in due time if not properly
and seasonably given all the assistance they deserve.
To think that for years various laws and rules have mandated all administrations to provide as much assistance to the sector as are legally feasible under any and all circumstances. Funding should not be a problem as was pointed out during yesterday’s Senate hearing. Of the P80 billion or so of the regular Department of Agriculture budget last year, only P29 billion was spent as of the third quarter.
On top of this, the agency was also allotted P64 billion as agricultural support under the Bayanihan acts which was over and above the billions more provided under the agricultural competitiveness enhancement fund (ACEF). The Land Bank and other banks have also been mandated to provide billions of pesos for concessional lending.
The question is: What happened to these funds?
Funding for support services such as equipment, input, logistics and the like should not also be a big problem as the banks have also been told to provide concessionary loans to those providing support services to the sector. The current incentives scheme has also been tweaked considerably for those engaged in agricultural projects. Again, the question is has the agriculture department been monitoring compliance or engagement in this regard? I seriously doubt it. After all, issuing import permits and providing haven for traders is a simpler and possibly more lucrative endeavor.
The fate of our hog raisers can make one cry. For more than two years now, the ASF menace has hounded the industry no end. After this became a hot issue, the agency ordered the culling of ASF infected hogs and the banning of imports from ASF affected countries. Good. But only for a while. For even as the local producers were going with the flow, so to speak, they were told that funding for the culling was limited. They were being offered P3,000 up to P5,000 per head – not even enough to reimburse them for raising a three-month-old pig.
So, instead of getting any kind of support, the producers just proceeded with the culling and cried over their losses. When finally the administration decided to increase the reimbursement a good number of close to 700,000 heads have been culled. Yet, the head honchos at the agricultural agency had the gall to report that they had succeeded in culling more than 200,000 only. Whether this is the number they reimbursed properly or just a figure they got out of thin air for reporting purposes, we do not even know. What we know is parts of ASF-free Visayas and Mindanao are now seeing batches of ASF-ridden farms needing to be quarantined before things get out of hand. Yet the agencies at the forefront of ensuring “balance of interests” and “food security” are more focused on the easy-way-out measures: price control and more imports. Stabs in the back of our producers and, yes, pretty soon when other countries start to restrict exports (like Vietnam in the case of rice) even our consumers if we do not watch out and produce more rather than issue more import permits. Grabe.