The President this week signed Republic Act 12022 or the Anti-Agricultural Economic Sabotage Act. This law imposes stiffer penalties on businesses engaging in smuggling or hoarding of agricultural products. Violators could face life imprisonment or heavy fines worth up to five times the value of commodities involved.
This new law will not free our agriculture from the clutches of inefficiency. It simply raises the risk of doing business with agricultural products.
When one holds on to a dollar position in anticipation of a deteriorating peso exchange rate, the practice, speculative as it is, is prudent business sense. When one holds on to stocks in anticipation of a bull market down the road, this too is considered in the normal course of business. But when one holds on to a stock of garlic in anticipation of better prices, this could be a serious crime punishable by a long jail term.
True, smuggling and hoarding are practices that compound the misery of our consumers. But they happen either because our agriculture does not produce enough or because our cost of production is much higher than elsewhere. The new law addresses neither.
Increasing the penalties for what might be “sane” business practices will not cure the roots of the problem. When there are not enough tickets to be had for a popular concert, scalpers emerge. When there is shortage of food commodities, speculation sets in. It is one thing to penalize the speculation, although better results will be had by addressing the shortage.
This new law elevating speculation in agricultural products to a serious crime shares the same characteristic of legislative culture. Instead of imagining new ways for doing things, we simply resort to raising penalties. This is a lazy way to do legislation.
So it happens that whenever we are confronted with a crime wave, we increase penalties for criminal activity rather than uncover ways to better protect citizens from crimes. This has made our laws reactive rather than proactive.
Faced with the proliferation of illegal drug use, we increased penalties for possession of banned substances. Those found in possession of illegal drugs beyond a certain quantity are deprived the right to bail. Some legislators even want to reimpose the death penalty on drug users.
The tougher laws on drugs did not reduce the menace. It simply caused our jails to be filled up way beyond capacity.
Faced with rampant corruption, we instituted the crime of plunder. Anyone accused of the crime cannot avail of bail and faces a life sentence if convicted. Again, some legislators want the death penalty to be imposed for plunder.
Elevating graft to the status of a heinous crime has not reduced the volume of corruption plaguing our national life. It has encouraged some of our politicians, however, to put the money in atrociously expensive watches or designer bags rather than course them through banks. We have some of the toughest anti-money laundering regulations in place, after all.
As an aside, investigative journalists have linked the abundance of supercars in our midst to money-laundering operations originating from China. The expensive cars, that often appreciate rather than depreciate, are used as some form of “currency” to store value for the criminal syndicates. They are exchanged just like ordinary currency, although in exceedingly large amounts.
Increasing penalties for hoarding and smuggling, the usual scapegoats for our lousy agricultural performance and high food price regime, will score political points. But this will not cure our lousy agricultural performance.
For decades, our agriculture expanded around roughly half the rate of our population growth. That inevitably brought us to the predicament we are in right now – we have shortages of nearly every item of food we need. We are now the world’s biggest rice importer.
People smuggle mundane products such as garlic and onions because there is a desperate market for them. We even import fish. Some of our largest “fishing” companies built their wealth importing scad, which is not consumed in China, to sell at a hefty profit to the domestic market, where this is considered the poor man’s fish.
In agriculture, the problem may be rooted in the way we have broken up the land and ended up with inefficient farms unable to adopt the best agricultural practices that require economies of scale. With our farms trapped in subsistence mode, a more efficient logistics system for the farmers to better retain the value of their produce did not evolve.
No amount of subsidizing hybrid seeds and fertilizers will cure the basic inefficiency of a farm system trapped in subsistence mode. No amount of raiding warehouses suspected of hoarding will enable our agriculture to produce all the food we need. These raids merely offer photo opportunities for our politicians.
In the of case of our fishing industry, we continue to rely on municipal fishermen who sail out in small boats and depend entirely on luck to find the larger schools of fish. They do not have refrigeration facilities nor the logistics network to properly sort out their catch to suit the best buyers.
To put it bluntly: increasing the penalties on hoarders and smugglers will not solve the structural defects of our agriculture and fisheries. It might even have the unintended effect of dissuading aggregators from doing their necessary business linking farmers and fishermen to the market.