High onion prices a symptom of misgovernance

Onion prices, which have skyrocketed to P700 a kilo, are indicative of the misgovernance that plagues our agriculture system. Fortunately, action has been taken to correct this.

Last Jan. 10, Agriculture Senior Undersecretary Domingo Panganiban signed Special Order 19 restoring the Price and Volume Watch, which was abolished by the previous administration. The Watch guides decisions on whether to increase production or not, and the volumes to import, if necessary. Panganiban also made a significant improvement: there will be a bigger private sector participation in both production and importation matters.

How did the onion fiasco happen? According to Alyansa Agrikultura Nueva Ecija leader Ernesto Tanedo, the main reason is lack of supply amid several factors: climate change, higher cost of inputs, hoarding by traders and onion smuggling (leading to job losses).

Government insecurity

Because the Price and Volume Watch did not exist for a time, the government did not feel secure in having accurate information on the onion situation. Farmers themselves predicted a supply gap and recommended to import but with two conditions: first is that the importation should not be so excessive as to significantly displace local production; second is that importation should not be done during harvest season so as not to depress farmgate prices.

Some believe that government officials opposed importation because they feared the castigation they witnessed during the time when sugar was being sold at higher prices.

Under pressure, they decided to finally encourage importation. Unfortunately, it’s too late. Furthermore, the onions are predicted to arrive during the harvest season, exactly what the farmers are against.

It must be noted that the Price and Volume Watch proved effective before it was abolished alongside other good governance practices like the international trade committee of the public-private Philippine Council on Agriculture and Fisheries (PCAF). The shutdown of the latter resulted in faulty agriculture provisions in international trade agreements.

Another practice terminated was the private sector monitoring of the Department of Agriculture’s budget at both national and local levels. This resulted in tremendous waste and corruption, as evidenced by the P22-billion unliquidated and unexplained expenses in the DA budget in 2020.

Appeals

The Price and Volume Watch is finally being restored.

Urgent appeals by PCAF for its revival initially fell on deaf ears. Many suspect that there are unholy alliances between government officials and unscrupulous importers and traders. Without this Watch, supply can easily be manipulated to the detriment of both farmers (who would get lower farmgate prices) and consumers (who would pay for higher retail prices).

Thankfully, aside from restoration, there is also improvement. Special Order 19 mandates this committee, composed of government representatives, will now be made accountable to look at the “supply and demand structure of livestock commodities, meat and meat product prices (both local and international) and volume gaps.” They should also look at other factors such as outlook, cold storage facilities and importation.

More importantly, there is now a significant role given to the private sector. They will be involved in “close monitoring,” “reliable industry information” and “the dissemination to the rest of the private sector and their industry associations, the development and implementation of programs that enhance the predictability of production and consumption, and the integration of policy issues and recommendations.” All this would be done at both the national and regional levels.

The Price and Volume Watch restoration should be done immediately and implemented in other critical agriculture sectors, as has been the previous practice.

Agriculture misgovernance, characterized by the abolition of important proven mechanisms such as the Price and Volume Watch, could be reversed if the current administration undertakes a systematic study of what other practices should be restored and improved upon.