MAPping the Future
Rice cartel / hoarding: Fallacy or fact
By Romeo G. David
Philippine Daily Inquirer
First Posted 18:33:00 05/25/2008
Filed Under: rice problem
MANILA, Philippines--The nation is again facing an ever-recurring rice crisis. And predictably, we hear the same rhetoric from our politicians to absolve themselves of any shortcomings relative to this crisis. However, it is curious that time and again the key issues raised by our politicians are rice cartels and rice hoarders with promises that they will address the issue and eradicate the problem.
Webster's dictionary defines a cartel to be "a monopolistic association" and hoarding is defined as "to store up beyond one's present or reasonable need."
This twin issues of cartel and hoarding touted by our politicians every time we face a rice-crisis raises the question if this is really the problem. Maybe it is they, our politicians, who are the problem? The fact that it remains an issue is testament to the indifference, lack of sensitivity as well as the lack of political will of our elected officials to address the problem.
That they, our politicians, having identified cartels and acts of hoarding as culprits that plague our society and economy every time we have a rice crisis; we should expect that through their conscientious and collective efforts, this matter should have long been resolved. So, if they honestly believed that it is the problem, then why has it not been their top priority? Why does the problem consistently surface only when there is a rice crisis? If it is only an issue worthy of attention when crisis time comes around, then one can only suspect that all their rhetoric was and is simply political grandstanding, absent of any sincerity to serve the people.
The question raised is do rice cartels exist? If we are to go by Webster's definition under the Philippine context, I cannot agree that rice cartels exist, much less is it possible in the local trade scenario. It is highly irresponsible to conclude and condemn rice wholesalers and or retailers to be operating a cartel if no factual basis can be forwarded to support such a serious accusation.
The grains trade is scattered over the thousands of municipalities all over this vast archipelago. While there are strong nationwide trade organizations like the GRECON and PHILCONGRAINS, to believe that they are organized for the purpose of instituting a cartel to foster a self-serving motive to gain undue profit in restraint of trade is a stretch of the imagination. For the little I know of them, they often can't even agree among themselves let alone organize into trading blocs.
Even within the tiny grains wholesaling district of Dagupan, Binondo in Manila this is not evident as traders compete fiercely to turn their inventories at least once a day just to earn their keep. With trading margins often running between 1 and 3 percent on investment, buyers and sellers are free to trade their goods in this free market and if one is not satisfied with the trade they get, they have many other areas to choose from...like Quinta Market, Paco Market or Munoz Market all within a few kilometers of each other. So there certainly isn't any lack of competition in this dog eat dog industry! But let's remember, the law of supply and demand rules at the end of the day.
Trade in the grains market are managed, operate and survive by the economic law of "supply and demand" and trade prices reflect the prevailing market situation. So unless some bright legislator believes that he can repeal this law, no effort or intimidation from government will change the situation.
Why is it that cartels seem to exist only when there is a crisis? And if it does exist, what is it that makes it unacceptable? As a consumer, I too would not agree to anyone gaining undue profit. However, we must understand that traders do provide a service for which he expects to be reasonably compensated. And if the amount of compensation is the issue, then let's address that so we can have an orderly market for grains for all to benefit.
But for the politicians to finger-point and intimidate, this is the mark of poor governance and is counter productive. Realities are, if threatened, traders, out of self-preservation and to avoid conflict with the government, will cease to provide the service and the public will suffer all the more. Government in all its omnipotence cannot fill this vacuum and besides, it is not the role of government to do so.
On the issue of hoarding, it baffles me to see the President of the Philippines take time out from her prime responsibilities of running the affairs of the country to raid grain warehouses. I fail to see intelligent or beneficial use of executive time here. The country, I'm sure, is beseeched with more pressing issues that require her immediate and undivided attention. If it takes the President of a country to get a simple enforcement issue adequately taken care of, then it is time for those tasked with the responsibilities to go.
As to hoarding, to my knowledge no one has ever been proven to be hoarding despite high profile raids by the government since the birth of our nation. Why is that so? I guess it has something to do with the definition of what constitutes "unreasonable need", which is very subjective, so until and unless we can find a mechanism to measure / determine the reasonableness of inventory on-hand of a trader this will remain a problem.
And yet, even with the absence of a definition to extract enforcement; each time administrations are pressed with a rice crisis issue, the knee jerk reaction of Malacanang is to organize raids for the president to attend to. How shallow is government's view of the citizenry it has pledged to serve. Do they honestly believe that this poorly choreographed theatrical antic will cure the problem? What the people need is food and not more politics.
If hoarding is perceived to be a problem then our legislators should define the parameters as to what constitutes "storing up beyond one's present or reasonable needs" so appropriate action could be taken against those who err. First of all, we have to define what is reasonable. And having a large warehouse full of grain certainly does not automatically constitute hoarding if this is normal volume of trade that a trader handles? This large volume on-hand seems to be the present yardstick of what constitutes hoarding whenever the government raids a trader's warehouse. In fact, after all the hoop-la and fan-fair is over, graft and corruption via extortion seems to be the next order of the day with minor minions of government moving in for the kill. This is one of the key causes of government's loss of credibility with its citizenry.
Hoarding or the amassing of huge inventories beyond reasonable or normal trade needs, if proven to be with the intention to gain undue profit must be punished to the fullest extent of the law. But until such time politicians can define what constitute "volumes of inventory beyond one's present or reasonable need" this will remain to be a politician's ticket out of the responsibility for not adequately providing in anticipation for the eventuality of a recurring rice crisis. Politicians simply shift the blame onto traders and wholesalers without real or beneficial resolutions of the issue.
In conclusion, the consistent and predictable high profile reaction of politicians to an ever-recurring rice crisis is not appreciated and is an insult to the people's intelligence. What we need is forward thinking politicians who are committed to addressing the rice crisis issue in a manner that is clear and doable so all will share in the responsibility of insuring that a rice crisis will be a thing of the past. That done, we could move on to bigger and better things to improve the quality of life for every Filipino.
Mabuhay ang Pilipino!
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is Chair and President of BNL Management Corporation and former Administrator of the National Food Authority. Feedback at map@globelines.com.ph. For previous articles, please visit .)
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