Rep Momo: Spike in cost of goods from farm to retail is 215%

Ramon Saner looks after his rice stall in Quezon City. (File photo by GRIG C. MONTEGRANDE | Philippine Daily Inquirer)

MANILA, Philippines — A Department of Agriculture (DA) office was scolded by lawmakers at the House of Representatives for failing to check why basic commodities have high retail prices despite relatively low farm gate costs.

At a House Committee on Trade and Industry hearing on Monday, Agribusiness and Marketing Assistance Service (AMAS) Director Junibert de Sagun showed that farm gate and retail prices have been stable.

However, staples like rice have shown an upward trajectory.

Farm gate prices are the cost of the products from the producers or the farmers, while retail refers to the actual price of goods in the market.

During de Sagun’s presentation, lawmakers noticed the huge gap between farm gate and retail prices in the third week of April, among them:

• ampalaya (bitter gourd): P52 per kilogram farm gate, P120 per kilogram retail
• sitaw (string beans):  P45.50 per kilogram farm gate, P100 per kilogram retail
• pechay (cabbage): P44.50 per kilogram farm gate, P80 per kilogram retail

“Mr. Chairman, the presentation clearly shows that the price at the farm gate is too low compared to the retail prices,” Surigao del Sur 1st District Rep. Romeo Momo Sr. observed.

“In fact, it’s an increase of around 213 (percent), 215 percent! Why did that happen?” he said.

“We know the supply chain, but I don’t think that is how huge the prices of the commodities should be at the retail.”

De Sagun responded that they have been trying to compute the build-up cost from the farm gate to retail.

But he also admitted that if suppliers said they sourced their products from huge markets like Balintawak in Quezon City and Divisoria in Manila, they no longer questioned the price increase.

“Actually, there are certain commodities, Mr. Chair, that we are trying… We computed for the cost-build up from the farm gate until it reaches the retail,” de Sagun said.

“There are instances, however, like many of our suppliers come from Divisoria and Balintawak, so it’s very… When they say it’s Divisoria, we do not […] ask everyone in Divisoria because it’s somewhat difficult to do interviews in Divisoria,” he told Momo.

“But we are able to get prices… but we just take photos of prices in Divisoria, Mr. Chair,” he added.

This response prompted Deputy Majority Leader Erwin Tulfo to ask why AMAS was taking the word of traders as gospel truth.

“Mr. De Sagun, with the retail, who dictates the prices? the traders?” Tulfo wondered.

“And you just accept… ‘This is it DA. This is how we computed it, factoring fuel, blah-blah-blah, taxes.’ And you just take it like that? That’s what you meant when you said you do not investigate in Divisoria?”

Tulfo also noted that the Department of Agriculture seemed not intent on putting suggested retail prices (SRPs) on agricultural goods.

“Sir, you have the authority to investigate. It is not the power — well, we have the power, what we call an investigating power of Congress. But it is under your responsibility to check these prices actually,” he said.

“Do you just accept whatever the trader would tell you about his or her costs? You just say, ‘Ah, okay, very good. We cannot do anything about it’ — and then announce it? You also do not release any SRPs.”

Aside from the three vegetables mentioned, de Sagun also gave the following figures:

• squash: P18.88 per kilogram farm gate, P50 per kilogram retail
• tomato: P25.56 per kilogram farm gate, P60 per kilogram retail
• cabbage: P30.75 per kilogram farm gate, P60 per kilogram retail

READ: House execs want to check reason for high cost of basic commodities 

Prices not adding up

During the hearing, Iloilo 4th District Rep. Ferjenel Biron, the committee chair, asked Steven Cua, president of the Philippine Amalgamated Supermarkets Association, about the margins that supermarket operators placed on their products.

According to Cua, markets use different margins, but an average figure could be around 8 to 10 percent.

“For types of fresh produce, those which are refrigerated, 10 percent because of the cost of electricity,” Cua added.

Biron and Momo said that if that was the case, then somebody in the middle of these transactions was earning because the gap between farm gate and retail prices was still high even if these margins were to be factored in.

“But still, if you see the prices here – the retail price vis-a-vis the farm gate prices, you can see the discrepancy. So, somebody is earning in the middle,” Biron said.

“If their margin is only 8 percent, but the increase from the farm gate to market is 213 percent, who earned from this scheme? How many steps, how many people do the produce go through before these products reach the market?”

Last April 23, Tulfo and House Speaker Ferdinand Martin Romualdez sat down with farmers, retailers, and other stakeholders to find out why the prices of basic commodities had been skyrocketing despite low farm gate prices.