Smugglers getting back smuggled goods

Since smugglers are rarely penalized, the Alyansa Agrikultura has recommended since its founding in 2003 that smugglers not be given the opportunity to get back their smuggled goods through auction. Except for rice and sugar, this policy has been generally implemented.

Last Aug. 29, however, 189,480 kilos of garlic were auctioned at prices ranging from P24.76 to P25.13 a kilo. This is extremely low. In an Aug. 29 news report, Jerry Esplanada stated: “The garlic shipments were confiscated by the agency in June as retail prices reached as high as P300 to P400 a kilo from the usual P60 to P90.”

The Alyansa has seen this before.

Seized smuggled carrots were auctioned at below P8 a kilo when the market price was more than P20 a kilo. Thus, smugglers could readily buy back the smuggled goods through auction using dummy organizations, laughing all the way to the bank.

When the Alyansa started its drive against smuggled onions, the Alyansa convinced the Bureau of Customs (BOC) to use legal alternatives allowed other than auction to dispose of these onions.

These are: (1) return of these goods to the source country, (2) donation to the poor, or (3) destruction. Though the onion smugglers were identified, they were not penalized. But since they could not get back their onions through auction, their smuggling resulted in a total loss. This policy acted as a deterrent for them to continue smuggling. As a University of the Philippines Los Baños study shows, onion smuggling significantly decreased.

Garlic and rice

Those who won the garlic auction at very low prices may well be legitimate businesses. But in other cases like this, smugglers may use dummy organizations to buy smuggled goods at very low prices during an auction.

Rice is the next product scheduled for auction. There is a contention that smugglers are even now conniving to drive the floor bid price down to very low levels so that they can make an enormous profit and recoup their losses due to confiscation. Though possibly unrelated to this contention, the garlic floor bid price was similarly decreased from P50 to P25 a kilo, even though some retail prices were at P300 to P400 a kilo.

This same method may be used by the rice smugglers. Allowing this to happen will make a mockery of our government’s antismuggling drive.

First, the smugglers are not penalized. Second, they are able to buy back the smuggled rice using dummy corporations at such low prices that they make enormous profits anyway. Third, the smuggled goods are then sold in the open market at a low price. This drives the normal market price down, poses unfair competition to our products, and further impoverishes our farmers.

Effective method

The preferred mode for the smuggled rice is to sell or donate this to the National Food Authority (NFA). Instead of NFA buying rice from Vietnam or Thailand, it should instead buy or get the smuggled rice from the BOC. The Department of Social Welfare and Development (DSWD) can also get this rice for their poverty programs.

This way, the smugglers can never get back these goods. If they are not penalized in other ways, at least they will be penalized by losing their smuggled goods and not getting them back through auction.

We hope that the effective policy implemented since 2003 of generally not allowing smuggled agriculture goods to be put up for auction is not reversed by the recent auction of smuggled garlic. Given our current procedures, the only quick way to penalize smugglers is to make sure that they at least lose their smuggled goods.

Since dummy organizations are commonly used, the smugglers may well use these organizations to buy back the smuggled goods at very low prices at an auction, recoup their losses from getting caught, and still make a healthy profit from the auction at a very low price.

The farmers are even made fools because their products now compete with the low-priced smuggled goods that the smugglers put into the market place. This practice was stopped in 2003. We hope it is not resurrected at this time, especially when the antismuggling drive is finally starting to succeed.

(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, Trade and Industry. For inquiries and suggestions, e-mail [email protected] or telefax (02) 8522112).