NBI asked to check middlemen’s role in manipulating food prices

The price of onions in public markets reached as high as P700 per kilogram in 2022. —File photo from the Philippine Daily Inquirer

MANILA, Philippines — House lawmakers had tasked the National Bureau of Investigation (NBI) with checking on the possible role of middlemen in manipulating food prices, as a House of Representatives super committee checked on why the cost of basic commodities had not gone down.

During the hearing of the House quinta committee on Wednesday, Iloilo 1st District Rep. Janette Garin made a motion asking the NBI to check if middlemen were involved in keeping prices of goods, particularly rice, high.

“With this, Mr. Chair, will this august body allow me to put forward a motion to direct the [NBI] to investigate [both ways] — from the retailers to the middleman to the wholesalers, or wholesalers going towards the middleman, then to the retailers — so we can specifically identify the responsible people in terms of price manipulation. I so move, Mr. Chair,” Garin said.

Cavite 2nd District Rep. Lani Mercado-Revilla seconded the motion, which was eventually approved by the lead presiding officer and the House committee on ways and means chairperson, Albay 2nd District Rep. Joey Salceda.

Garin made her motion after a presentation by the Philippine Competition Commission (PCC) outlining vulnerabilities in the rice supply chain, particularly among vertically integrated entities and middlemen.

Monitoring middlemen

Garin then asked Agriculture Secretary Francisco Tiu Laurel Jr. to clarify which agency was responsible for monitoring middlemen in the rice market — to which the cabinet official admitted that there was no specific government office tasked to do that.

“In your opinion, with the flow presented [by PCC] earlier, there was a chart presented by PCC and they mentioned the vertical aspect of the wholesaler going towards the retailer, there seems to be middlemen.  That aspect, what agency polices the middlemen?” Garin asked.

“In my opinion, Mr. Chair, none,” Laurel admitted, further highlighting the regulatory gaps that allow manipulative practices to persist unchecked.

Garin said that these gaps might have been capitalized on by scrupulous individuals, which the National Food Authority (NFA) would have addressed by selling cheaper rice — therefore, stabilizing prices.

“NFA lost its power to sell rice. Why is this important? Because when there may be connivance, the government can enter to sell cheaper rice and stabilize prices,” she said.

“And also, the retailer seems to be given a direct line towards the true wholesaler because the middlemen control this,” she added.

Fake shortage?

The government has been looking to reduce the prices of goods. including rice, ever since President Ferdinand Marcos Jr. took office. However, despite the administration’s efforts, there were instances when the price of rice and other goods like onions ballooned.

In the last quarter of 2022, onions sold for around P500 to P700 per kilogram — far from the usual P80 to P200 per kilogram.

According to Marikina 2nd District Rep. Stella Quimbo, the hearings done by the House committee on agriculture and food showed that onion cartels were able to manipulate prices by creating a fake shortage of cold storage facilities needed to keep onions fresh.

Quimbo explained that cartels connived with cold storage facilities to falsely claim that slots were already filled up.

Traders would then urge farmers to sell their produce at lower farm gate prices, as it would be better to earn from the onions than to let them spoil due to the lack of cold storage rooms — eventually keeping the produce in storage to create an artificial onion shortage.

READ: Quimbo: Cartels exploit farmers to rule onion industry

Marcos also reduced tariffs on imported rice, but retail prices remained high, ranging from P55 to P60 per kilogram.

Garin said that some middlemen might have exploited their control over access to legitimate wholesalers, which pushed prices upward.

“When I checked on these, we saw which sector was in hiding because the importer, wholesaler, and farmers’ association say different things — only to realize that the bulk of revenues are in the middle. There was actually a jump of, I believe, P250 to P300 per kilo profit only net for that specific person and organization the NBI is now suing,” Garin said.

“To clarify, Mr. Chair, my motion was for the NBI to do both ways — either retailer, backward from the source in [the Bureau of] Customs, or from the importer towards the retailer — indicating the price so that we can really identify whether there is price manipulation or there is unacceptable profiteering and economic sabotage at the level of the middleman,” she added.

Middlemen have been accused of causing high prices of goods, as growers and traders’ profit margins have been deemed minimal.

Difference between farm gate and retail prices

Last April 29, House Speaker Ferdinand Martin Romualdez said that they would check on traders and middlemen as there was a huge difference between farm gate and retail prices.

READ: House to summon traders, middlemen for next House probe on rising prices 

Farm gate prices refer to the price point of produce and goods when sold by farmers and growers, while retail prices are what consumers see in stores and supermarkets.

Lawmakers noticed back then that according to Agribusiness and Marketing Assistance Service Director Junibert de Sagun’s presentation, there is a huge gap between farm gate and retail prices like in the case of bitter melon (ampalaya), which has a per kilogram farm gate price of P52.00 during the third week of April — which is eventually sold at P120.00 at grocery stores.

Aside from that de Sagun also gave the following figures:

• string beans (sitaw): P45.50 per kilogram farm gate, P100.00 per kilogram retail
• snow cabbage (pechay): P44.50 per kilogram farm gate, P80.00 per kilogram retail
• squash: P18.88 per kilogram farm gate, P50.00 per kilogram retail
• tomato: P25.56 per kilogram farm gate, P60.00 per kilogram retail
• cabbage: P30.75 per kilogram farm gate, P60.00 per kilogram retail