Making food more affordable in PHL
PHilippine industry leaders have appealed to the president in July 2022 to focus on the agriculture value chain by reducing the number of middlemen to ensure the affordability of food prices (See, “Agri leaders: Cut middlemen layers to lower food prices,” in the Businessmirror, July 11, 2022). They noted that the presence of these middlemen prevents many Filipinos from having access to nutritious food. The industry leaders made the comment following the release of the findings of the State of Food Security and nutrition in the World (SOFI) 2022, which indicated that over 75 million Filipinos were unable to purchase nutritious food as of 2020.
One of the observations of industry leaders is that there is a huge gap between the farmgate price of commodities and retail prices. The chairman of the Philippine Association of Fish Producers Inc. noted that the retail price of bangus or milkfish is nearly twice its farmgate price because of the five to six layers of middlemen in the commodity’s value chain. In July 2022, the group noted that the farmgate price of bangus reached P110 to P115 per kilogram but it was sold for P200 to P210 per kilogram in wet markets.
This pricing gap is also evident in other commodities, such as vegetables and fruits. Among the reasons cited by industry leaders behind the big disparity between farmgate price and retail price are the steep cost of transporting the commodities to consumers as well as the lack of postharvest facilities. In the case of the bangus industry, raisers need cold storage facilities and processing plants so they don’t have to sell their milkfish at a loss.
In the case of vegetables, the public relations officer of the League of Associations at the La Trinidad Vegetable Trading Post indicated that the vegetable value chain has 7 to 8 layers of middlemen. Chief among the problems of vegetable producers is the lack of transportation system that will allow them to bring their produce to urban areas like Metro Manila. And when the typhoon season rolls around, consumers would have to pay steeply for this lack of transportation system in the form of expensive highland vegetables.
Middlemen, users, and traders who buy farmers’ produce at very low prices exist because they provide what out planters need, including transportation and production capital. More often than not, planters and other food producers are forced to bite the bullet and take out onerous loans, and then sell their products at a loss because they lack access to the basic requirements of producing food and transporting it to consumers.
The president has assured that his administration will undertake a comprehensive review of the agricultural value chain and “reconstruct” it. Fixing the ills that have plagued the farm sector for many decades cannot be done overnight, but we hope that the current administration will make significant strides in crafting feasible strategies that will make food more affordable.