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By Nora O. Gamolo, Senior Desk Editor
“Rice is an P80-billion local industry. Those
who control the local production, as well as the importation of rice
will surely control local and national politics, since rice is a
highly sensitive and politically explosive product,” said Fernando
Hicap, national chairman of the farmer-affiliated Pambansang Lakas
ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya).
The government is targeting owners of rice
warehouses, and has announced plans to raid warehouses. To date,
even the military sector has pledged 200 out of 400 trucks needed to
carry the rice and palay (unhusked rice) purchased by the National
Food Authority (NFA). The Department of Trade and Industry vowed to
collar profiteers and hoarders of prime commodities, intensify its
monitoring and enforce laws against any diversion of
government-procured rice being repacked by traders as higher-priced
commercial rice. Price billboards or lists will now be posted more
prominently.
The rice marketing system in the Philippines has
always been dominated and controlled by a cartel of merchants. Rice
imports when there is ample local supply will just solidify power of
the cartel, said researcher Rosario Bella de Guzman, of the
independent research group Ibon Databank.
Justice Secretary Raul Gonzalez has also
confirmed the existence of a rice cartel.
Known as the Big Seven, this cartel’s
existence was confirmed also by the Department of Agriculture, and
the Senate concluded, “The combination and operations of these Big
Seven traders force or compel other traders to buy only from
them.”
In Senate hearings, witnesses have alleged
that the members of the cartel are Joaquin Go Soliman (JOMERCO
Trading), Pio Sy Lato (PNS Grains Center), Ramon Ang Syson (Family
Native Supply), Gil Go (Jocardo Merchandising), Leoncio Tan/Janet
Tiu (Leoneco Merchandising), Santos See (Manila Goodyear), and
Teofredo Co (Teofredo Trading).
These personalities are respected Tsinoys who
are also the influential members of the government-accredited
Confederation of Filipino Rice and Corn Traders Association, or
CONFED.
The Big Seven are alleged to control
Dagupan Street in Metro Manila, depicted as a wholesaling center
that supplies 45 percent of the total rice needs of Metro Manila.
Its supply ends up in two other districts, Binondo (in Chinatown)
and Paco, whose middlemen and retailers were alleged also to be
controlled by the Big Seven.
The government found out that 22 percent of the
daily rice consumption of Metro Manila come from the
Dagupan-Binondo-Paco area. The cartel allegedly operates through a
network of structured traders that funnel production to it, and at
the same time are allowed to import heftily, having cornered
valuable import quotas due to a liberal rice importation climate.
In 1995, the rice cartel was blamed when
the country experienced an artificial shortage of rice and retail
price shot up from P8 to P20 a kilo. While the Ramos government
denied the shortage, some businessmen, politicians, and media
attributed the artificial shortage to the half-visible rice cartel.
The number of rice wholesalers has increased as
more rice millers concentrate on trading and as more rice imports
flood the market due to the Philippine commitment to the Agreement
on Agriculture (AoA) of the General Agreement on Tariffs and
Trade-World Trade Organization (GATT-WTO) that the country ratified
in 1995.
Since 1995, when the Philippines ratified
the GATT-WTO’s AoA, the retail prices of rice have increased at a
faster rate (52 percent) than farmgate prices (50 percent). Even as
farmgate prices continued to decline, consumer prices still
registered an annual average increase of two percent. This has been
seen as proof that traders really have the power to determine rice
prices as the country liberalizes imports while local production is
down for various reasons.
Traders depressed farmgate prices, while
raising retail prices according to whim. The National Food Authority
was almost helpless to control the market since it cannot
accommodate more than one percent of all production from farmers.
Trade liberalization thus intensified monopoly pricing and
operations, strengthening the cartelized operations of the rice
trading business.
Said De Guzman, “The marketing structure
defines the price structure and subsequently dictates the profit
margins. A land-owning farmer gets 50 percent of the farmgate price
as profit, while a tenant gets only 21 percent. A tenant with credit
from merchants gets only nine percent.”
Farmers claim that the strength of the rice
cartel is founded on social inequities, the lack of farm support
mechanisms such as credit, technical assistance, and infrastructure
for farmers from government, financing institutions, among others.
“Farmers are forced to borrow for production
inputs from traders, compromising their produce as these are used as
payment for commodity loans. Even before harvesting, production is
already pledged to buyers who are part of the network of the
cartel,” said Rafael Mariano, chairman of the Kilusang Magbubukid
ng Pilipinas and chairman of the Anakpawis partylist.
If the government is earnestly set on
dismantling monopolies and leveling the playing field for all
stakeholders, the farming sector says there must be a full-scale
investigation of the so-called rice crisis.
“There should be a full blown inventory of
rice stocks held by the National Food Authority (NFA) beginning the
last harvest season, including the volume of rice imported from
Vietnam and other foreign sources,” said Mariano.
He also dared the Department of Agriculture (DA)
and the NFA to present a master list of all local rice traders,
importers, and retailers all over the country to identify networks
and interlocking directorates in procurement, distribution,
marketing, and retailing of rice across the nation.
Mariano sought reopening of the 1995 Senate
report on rice cartel at the height of the rice crisis during the
same year, since the names and operations of the rice cartel known
as the Binondo 7 were substantially identified in said Senate probe.
The DA should bare the “true state” of rice
production in the country, particularly the effects of land
conversion, and how many hectares of rice lands were converted into
“golf courses, subdivisions and industrial centers”, with the
aim of reclaiming and reconverting these lands for rice production
purposes.
Recognizing that precious funds were used for
production, Mariano said, “The national government should also be
put to task on how the P20 billion Agricultural and Fisheries and
Modernization Fund, including the P4.2 billion Ginintuang Masaganang
Ani Fund meant to procure 407,000 sacks of hybrid rice and 225,000
sacks of certified rice seeds last year was used up.”
Unless all market imperfections and social
inequities are resolved, small farmers will find themselves still at
the mercy of cartels and monopolies, he warned.
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