'Soaring garlic price result of traders' manipulation'

MANILA, Philippines - Traders may have manipulated the prices of garlic in the market that resulted in the sudden increase of garlic at P280 per kilo in the market in the past few weeks.

The Senate Committee on Agriculture and Food chaired by Sen. Cynthia Villar is looking into manipulation as the reason behind the soaring of garlic prices.

“There is really manipulation because the cost of garlic at production cost is P 40 per kilo while imported garlic is pegged at 17 pesos per kilo with duty. How can P 17 and 40 pesos per kilo can go up to P 280 per kilo?,” Villar said.

The Philippines produces only eight percent of the garlic supply in the market while the rest is being imported.

“The prices are too high. If you sell it at P 100 per kilo, that’s understandable but P 280 per kilo is too much,” said Villar, who is unable to hide her disappointments with heads of government agencies who do not want to take responsibility for the garlic price increase.

Villar slammed the Department of Trade and Industry (DTI) and the Department of Agriculture for failure to provide consumer protection in the case of garlic.
Production cost is too low relative to price. The concerned agencies also failed to fully implement the Price Control Act, she said.

“There is no shortage in supply. They (traders) are just controlling the supply  which is in the hands of the few. If there was shortage, importation would cost P17 per kilo only at landed cost,” Villar said.

Instead of the traders taking control, Villar said the Department of Agriculture (DA) should be doing its job of protecting the local garlic industry.

“The DA should be helping them. You are the ones who are supposed to take care of the farmers. The DA should be helping them," the senator said.

Villar urged the Department of Justice to look into the culpability of the garlic traders. “Whether we buy from local or abroad, garlic is cheap,” she added.

During the hearing, Trade Undersecretary for Consumer Welfare and Business Regulation Group Victorio Mario Dimagiba did not discount the possibility of manipulation of garlic's prices in recent months.

“The facts presented during this hearing show that there was price manipulation… The supply chain is very long to cause a huge increase on the retail price,” said Dimagiba, also head of the National Price Coordinating Council Secretariat.

Dimagiba also admitted that there is no suggested retail price yet for garlic, while Agriculture Undersecretary Emerson Palad said a technical working group is already looking into the situation.

Local garlic production is put at 10,390 metric tons while imports are placed at 28,690 from 2013 to 2014. Monthly demand is placed at 11,919 metric tons.

Price freeze

Sen. Grace Poe, committee vice chairperson, pushed that the government should immediately implement a price freeze on garlic.

“Do we have an agency that automatically implements a price freeze or moratorium on price spikes if it has been found that there is unreasonably high spikes in basic commodities?,” Poe asked during a hearing.

Poe said she saw the lack of initiative on the part of the agencies to be able to control the prices.

It was noted during the Senate committee hearing that the existing market prices of garlic range from P280 to P350 per kilo.

During the hearing, it was established that traders earn as much as 900 percent on sales of imported garlic since the landed cost of garlic from China costs only P17 per kilo, including duties.

Group slams wanton importation

Also, the multi-agri industry alliance Samahang Industriya ng Agrikultura (SINAG) lamented how the local garlic producers are struggling to recover from the 20-year policy of "wanton importation and smuggling" in lieu of domestic production.

SINAG chairperson Rosendo So claimed that importers and traders continue to dictate the market price, which was a result of the overreliance on imports and unabated smuggling for the country’s food needs.

In the case of garlic, So explained that imported garlic are bought by importers at a lower price –- P50/kilo landed cost as compared to P100/kilo farmgate price for local garlic.

“When the local competition has been eliminated or reduced to insignificance, importers, smugglers and unscrupulous traders who now have monopoly control can dictate prices. That’s what happened to our garlic industry,” he said.

As far as Poe is concerned, the government must also provide lasting solutions to help local farmers, including farmers’ cooperatives. She also asked the DA and local cooperatives to provide a list of traders to punish hoarders and price manipulators.

Under Republic Act No. 7581 or the Price Act of 1992, as amended, implementing agencies such as the DA may determine and recommend to the President and enforce price ceiling or control if there is “prevalence or widespread acts of illegal price manipulation, the impendency, existence, or effect of any event causes artificial and unreasonable increase in the price of the basic necessity or prime commodity and whenever the prevailing price of any basic necessity or prime commodity has risen to unreasonable levels.”