Consumers: Burdened by  “cartels” shenanigans?

A few days ago, President Ferdinand “Bongbong” Marcos Jr. lifted the government-imposed price ceiling on rice. The lifting, supposedly, was anchored on the fact that several measures were already in place and carried out to boost production and ascertain adequate supply of the staple grain.

It is indeed, appropriate to lift it. In fact, in the first place, it should not have been imposed. Undeniably, price control (in this case price ceiling) is not at all the right prescription to address soaring prices brought about by supply shortages. Why? First and foremost, the rise in prices will create an incentive for farmers to augment production. If the government put some price caps, this incentive to augment supply diminishes. Therefore, instead of solving the supply concerns, price controls will only worsen it.

To stabilize prices of basic commodities like rice, supply must be adequate. This should not have been a problem as all presidents (since PBBM’s father term) emphasized agriculture in their respective terms. Unfortunately for us, rice sufficiency remains elusive. Simply put, all these years, the agriculture sector’s performance remained dismal or miserable.

Truth be told, in all Investment Forums held year after year, agriculture was always highlighted. Moreover, annually, the Board of Investments (BOI) releases the Investment Priorities Plan (a list of promoted areas of investments eligible for government incentives). And year after year, incentives for agriculture are always there. Honestly, never in the country’s history that a president failed to enjoin investors to invest in agriculture. Yet, nothing positive has happened so far.

We can only surmise that something is not done right and quite deliberate in this sector that led to the predicament that we are in right now. As an example, it is noteworthy to recall that somehow some investors heeded the call to invest in agriculture. It is quite revolting, however that, for one, a decade ago, while a foreign investor (Thailand’s Charoen Pokphand Foods Corp. or CP) heeded the call, the local players (National Federation of Hog Farmers Inc., party-list groups Abono and Agham, The Agricultural Sector Alliance of the Philippines Inc., the Pork Producers Federation of the Philippines Inc., the Sorosoro Ibaba Development Cooperative and the Association of Philippine Aqua Feeds Millers Inc.) in the same sector, instead of learning from its cost-efficient technology (that, to our benefit, can bring prices down) has asked the Supreme Court to withdraw the tax breaks given by the government through the BOI.

To recall, the BOI granted CP (after complying with existing requirements) a six-year tax holiday and a 30-percent tax incentive covering the importation of corn and other raw materials for its plan to develop a P2.32-billion integrated production project. Notably, agriculture is in the BOI’s Investment Priority Plans (IPPs) since 1986. It is open to both foreign (more stringent) and local investors.

Thus, this vehement reaction of the local players was quite appalling. First and foremost, CP fully complied with the existing requirements and poured in capital and constructed their plants in Luzon. So that, we may ask, is it appropriate for this government to withdraw the very same incentives that made them (CP) decide to pour in their hard-earned money? On the other hand, with the local players’ businesses threatened by CP’s existence and the strength it may have due to the bestowed incentives, why haven’t they complained right after it was approved.

Remember, since 1986, these perks were already included in the IPP. Why didn’t these local players raise a howl then for its inclusion in the IPP? They should have lobbied then that agriculture should instead be included in the Negative List (a list of businesses a foreigner can’t own or have limited ownership), not in the IPP.

That was over a decade ago, and we haven’t heard or read anything about the outcome of it (the complaint). Probably, some potential foreign investors in the agricultural sector are right behind our doors but are not about to knock at all. The reason is very simple. That some cartels probably exist and policy makers are flip-flopping depending on their (cartels) wishes.

In the meantime, as foreign investors are standing by and some local businessmen are allegedly forming “cartels” to drive their profit (by hoarding) rather than production output through modern technology (to be cost-efficient), consumers shall bear the brunt of their (cartels) malfeasances.