‘Moderate your greed’ 2.0

Greed is their creed. And the pernicious practices of avaricious businessmen have remained the nation’s woes for so long. They squeeze profit at the slightest sign of production shortfalls and shortage of supply. And these hoarders and smugglers will exact their pound of flesh with money-raking schemes that choke the life out of all of us consumers.

In the wake of consumer woes on the price of rice getting prohibitive the past few weeks, Malacañang finally stepped into the picture. Malacañang issued Executive Order (EO) 39 that puts ceilings on retail prices of rice in the markets. Released last Aug. 31, this took effect yesterday amid loud howls of protest by retailers who bought their rice stocks at much higher prices.

Signed for and in behalf of the President by Executive Secretary Lucas Bersamin on Aug. 31, EO 39 set the price ceiling for regular milled rice at P41 per kilo and P45 a kilo for well-milled rice nationwide.

Digressing from his prepared departure speech before he flew to Jakarta, Indonesia for the 43rd ASEAN Summit, President Ferdinand “Bongbong” Marcos Jr. (PBBM) disclosed more supply of the Filipino staple food is coming with the scheduled arrival starting next week of additional rice supply from abroad.

The total rice supply is “more than enough” for the current 7.76 metric tons (MT) consumer demand. With a surplus end stock of 2.39 MT, it should be more than enough to last the next 64 days.

PBBM restated though he adheres to the free market forces of supply and demand to determine prices and keeping government intervention to a minimum. “But our markets are being manipulated so the government must intervene and that’s what we’re doing – we implemented price ceilings for rice,” the Chief Executive asserted.

The President, who is concurrently the Agriculture Secretary, left instructions to government agencies to come up with a common list of retailers and the corresponding losses they could incur due to the price caps. “We need to explain that this (price cap) is just temporary,” the Chief Executive assuaged the public.

“We cannot see good reasons why the price of rice will increase like this, exceeding P50 per kilo,” a visibly piqued PBBM quipped.

“Now, in our study, the only reason for this is that there are really smugglers and hoarders,” the President declared.

This strongly bolstered suspicions some sectors are using the projected El Niño phenomenon, or long dry period in the Philippines, to depict an impending shortage to drive up prices. Being basically rice eaters in this part of the world, we should look at our neighboring countries like India, Indonesia, Vietnam, Thailand and even China that sell us their rice harvest in excess of their people’s needs.

An astute businesswoman herself, Senator Cynthia Villar, who chairs the Senate committee on agriculture and food, concurred with the temporary imposition of price cap on rice. Villar noted the cost of producing rice in Vietnam is P6 per kilo of palay. “If you multiply it by two, the cost of rice is P12 per kilo. So you can sell it at P25 – you have a 50 percent margin. If you have to pay for transport and taxes, P38 is very reasonable,” she pointed out.

India’s decision in July to ban export of some rice varieties clearly contributed to the sudden increase in the cost of imported rice in the world market. But as House Speaker Martin Romualdez pointed out, imported rice only accounts for 18 percent of total rice consumption in the country and higher cost of buying grains from overseas shouldn’t have a substantial impact on domestic prices, given sufficient inventory.

The House Speaker has repeatedly appealed to traders and has even gone out his way to inspect and raid warehouses suspected to be carrying huge stocks of rice. “At the end of the day, the people – the over 100 million Filipinos – should not be overcharged and go hungry,” the Speaker deplored.

To allay consumer fears over spiraling prices of rice due to alleged shortage, the Department of Agriculture (DA) and the Department of Trade and Industry (DTI) have teamed up to stop the widespread practice of illegal price manipulation, including hoarding of rice stocks by opportunist traders and collusion among industry cartels.

EO 39 lowers the boom on the rice cartels and hoarders who worsen price woes of all of us rice eaters.

Rice hoarders and cartels obviously were not listening when PBBM warned during his State of the Nation Address (SONA) in Congress last July 24. Or, they thought PBBM deadpanned his administration’s threat to go hammer and tongs after rice cartels and hoarders. Now, they know better, that PBBM is serious in what he had set out to do in the remainder of his five years in office at Malacañang.

Many economists view imposing price ceilings as a deadweight loss, a cost to the economy that could be traced back to market inefficiency. Using price caps over an extended period, however, could foster market imbalance and supply shortages. It might even cause more serious problems like engendering a black market.

But when used only as a bridge measure – in the case of EO 39 – it could really provide consumers immediate relief. The government should use this period of time to flush out once and for all these price manipulators. Only then could it have a good short-term impact on consumer prices and tame inflation in the process.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan pointed out EO 39 shouldn’t be viewed as a standalone solution to the sharp increase in the price of the grain despite sufficient inventory. Another measure, Balisacan bared, is “calibrated” reduction of tariffs on rice imports under the Rice Tariffication Law.

With EO 39, PBBM has virtually declared war against rice cartels and hoarders. It is a no-nonsense fight that we must count on for the Marcos administration to prevail in defense of the interests of all of us Filipino consumers.

The Speaker, who is the President’s first cousin, already sounded out as early as February the call to traders behind price manipulation of basic goods: “Moderate your greed.”