EDITORIAL — 200 percent mark-up

Between the farm gate and the retail outlet, how come the price difference is so wide for many agricultural commodities? This question has often been asked by farmers and consumers in connection with basic farm products such as rice, sugar, onions, pork, poultry items and even salt.

With the resumption of sessions of the 19th Congress, lawmakers are trying to put together pieces of this puzzle. A hearing of the House of Representatives committee on trade and industry indicated that between the farm gate and the retail outlet, middlemen mark up prices by as much as 200 percent.

That’s a lot of profit, which could explain why retail prices refuse to come down even when farmgate prices for items such as eggs crash, or when imported sugar and pork flood the market. Is it sound business management or unfair practice bordering on economic sabotage?

The House panel intends to find out. Whether the inquiry will lead to anyone being held accountable or reforms being implemented, however, remains to be seen. There have been numerous congressional inquiries on supposed cartels hoarding and manipulating supply and prices of commodities such as rice and onions, with alleged culprits even publicly identified and grilled by lawmakers. Yet how many people have actually faced prosecution for the offenses?

Retailers told the House panel that their mark-up is only eight percent, and 10 percent for frozen items. So why are the prices so high? Food inflation has consistently accounted for the largest chunk of the high inflation rate since the start of the Marcos administration. Middlemen have long been among those blamed for high retail prices. The government has been promising to implement reforms in the supply chain, particularly by reducing the number of middlemen.

So far, however, the only significant action along this line has been the rollout of Kadiwa outlets for heavily subsidized agricultural commodities, wherein farmers can sell their crops directly to the government. But there is only a limited number of Kadiwa stores. Apart from unmasking any person or group imposing unreasonably high mark-ups on farm products, long-term structural reforms are needed to address this problem.