As USDA warns it may backfire, senators chide DA for supply shortfall
President Ferdinand Marcos Jr. on Sunday said the government had no choice but to import thousands of tons of onions to bring down local prices, given the gap between local production and demand.
But for the long term, the President said his administration is looking for ways to increase the production of onions and other agricultural products to avoid having to import them, as he discussed his plans to combat the smuggling of farm products with reporters on his flight to Switzerland for the World Economic Forum.
“Given the production and demand we have in the Philippines, it’s impossible to avoid imports. We’ve tried to get [seized] products from smuggling, but the need was still not met. We had no choice but to import, so that’s what we’re doing,” said Mr. Marcos.
“We have to go back to the onion growers and help them so we can have enough production. That’s where we got into trouble. We got so used to importing that we didn’t address the production side,” he said in a mix of English and Filipino.
Mr. Marcos also said the government would now maintain a two-month buffer stock of sugar as part of measures to ensure a sufficient supply of sugar.
The President and his official delegation arrived at the Zurich-Kloten International Airport at 4:27 p.m., Zurich time (9:47 p.m., Philippine time) via Philippine Airlines Flight PR001, Presidential Communications Office (PCO) Secretary Cheloy Garafil said.
But the USDA Foreign Agricultural Service (USDA-FAS) Philippines warned the Marcos government that plans to bring in imported onion may backfire, as the local harvest has been trickling in this month onward to the full harvest season by February to May.
Also, Senator Imee Marcos said she believes the soaring retail price of onions in the country is a result of poor planning on the part of the Department of Agriculture (DA), which her brother the President heads concurrently.
During the hybrid hearing of the Senate committee on agriculture, food, and agrarian reform Monday, Senator Marcos pointed out that the shortage of onions could have been averted had the DA made timely and “well-projected” minimal importation.
She also suspected that there seemed to be “a level of treachery and manipulation involved” on the issue because the retail prices were inexplicable.
“The price of onions had taken us on this mad roller coaster ride during the last few months. It is apparent that there is an abject lack of planning (on the part of DA),” Senator Marcos said.
Senator Cynthia A. Villar also asked the Bureau of Customs (BOC) to throw identified smugglers of agricultural products in jail, as senators scored the bureau for arresting 10 flight attendants of Philippine Airlines (PAL) for bringing into the country onions from Dubai and Riyadh, Saudi Arabia (see related story on A2 – Editors).
In a report published on January 12, 2023 by the Office of Agricultural Affairs Manila, USDA-FAS noted that the Philippine government has expressly mentioned, in a DA memorandum, that all importation should arrive not later than January 27, 2023, lest late arrivals will not be allowed entry into the local supply chain.
“The extreme conditions attached to the unscheduled quota all but guarantee that it will not be filled and likely will not come close to filling. For the trade that does flow, the government’s conditions greatly favor Chinese supplies despite China not being importers’ favored supplier,” the report read.
The DA intends to bring in a maximum of 3,960 metric tons (MT) of fresh yellow onions and 17,100 MT of red onions for a potential total of 21,060 MT.
The planned importation is expected to subdue prices, which have peaked at P750 per kilogram in select supermarkets and groceries, and at P700/kg in wet markets.
Onions still retail at P350 to P500, thrice to four times more, compared to first quarter 2022 prices.
Retailers are hoping to bring down the price to a range of P200 to P250 by end-February or early March this year.
The DA has resumed issuance of Sanitary and Phytosanitary Import Clearances (SPSICs) from January 9 to 13 in preparation for the January 27 arrival of imports.
“Meanwhile, the Philippines has no scheduled or notified exception for a quota or quantitative restriction on onions in the WTO. Regardless of the limited volume and tight window of opportunity to apply for import permits, several other conditions also apply and reduce the likelihood that the quota will be realized or achieve its intended result of providing price relief to consumers,” FAS said.
At the Senate, Villar, chairperson of the agriculture and food committee, told Customs to set an example. She said all smugglers should be held liable and sent to jail.
The senator recalled that since 2013, they have already identified in the past Senate hearings a certain “Leah Cruz” as a big-time smuggler of onions in the country.
“She should have been arrested,” Villar said.
In the same hearing, the lawmaker said she has been losing interest in leading a probe on the smuggling of agricultural products because the brains behind this illegal activity have been common knowledge.
She has also observed that during ongoing Senate hearings on the issue of smuggling, these people tend to lie low, but they returned to their old ways after a while.
Villar also mentioned other contraband lords in the ports of Subic and Batangas who have been bribing Customs personnel so they can operate with impunity.
On the PAL personnel, Senator JV Ejercito questioned the BOC for arresting flight attendants for carrying one to two kilos of onions for their own personal consumption.
He also berated the same agency for failing to arrest real, big-time smugglers of onions, rice, and sugar.
“The amount of undocumented onions and fruits recently confiscated from crew members of flag carrier airline Philippine Airlines (PAL) is nothing compared to the amount of agricultural goods being smuggled into the country by major cartels,” Ejercito said.
Senator Raffy Tulfo also castigated the BOC for shaming the airline crew but failing to put big-time smugglers behind bars.
Senator Marcos described as “cruel and unusual” the punishment imposed on the flight attendants. She also criticized Customs Commissioner Yogi Felimon Ruiz for not showing up in Senate hearings.
Customs Assistant Commissioner Vincent Philip Maronilla told the Senate panel that his boss went to a very important operation.
Customs authorities recently issued a memorandum, stating that more than 11 kilos of onions and around six kilos of lemon with a combined value of $100 were confiscated from PAL crew members of Flight PR 655 from Riyadh, Saudi Arabia.
The crew members will be charged with violating the Customs Modernization and Tariff Act and the Plant Quarantine Decree of 1978.
Meanwhile, Senate Minority Leader Aquilino Pimentel III asked DA executives to explain why there was an unmet demand of almost 4,000 metric tons (MT) of onions in the country last year despite a reported surplus in 2021.
Pimentel wondered why the DA reported the shortage despite claiming that 11,000 MT of onions were stored in cold storage facilities which was part of a total 53,000 MT of supposed supply in 2021.
“How come the 11,000 MT (of onions) in cold storage – the purpose of which is to lengthen their shelf life – how come it did not help satisfy the reported shortage of 3,859 MT of onions?” Pimentel asked in a mix of English and Filipino.
During the period October 2021 to September 2022, the Netherlands accounted for 48 percent of imports, followed by China at 30 percent and India at 22 percent, the USDA-FAS said.
The bureau surmised that given the time restriction, proximity, and shipping lanes, the measure gives strong favor to Chinese exporters over those in Europe and India.
A 40 percent tariff is assessed on all imports, regardless of origin. According to FAS, the DA will only approve one 25 MT SPSIC for fresh yellow onions and two 50 MT SPSICs for fresh red onion per licensed importer, limiting the number of SPSICs that can be issued to 163 for fresh yellow onion and 326 fresh red onion.
Importers are also restricted to using the Port of Manila-South Harbor, Port of Subic, Port of Cebu, Port of Davao, and Port of Cagayan de Oro while fresh onions are restricted from being stored anywhere other than the accredited cold storage facilities indicated in their respective approved SPSICs.
Transfers to other cold stores are strictly prohibited. Red and yellow onions must also be stored in separate rooms.
“This combination of factors will further impede the ability of imported onions to access and flow through the local supply chain. Importers must maintain and submit liquidation reports to the Bureau of Plant Industry. Any importer that applies for an SPSIC and fails to
deliver will become ineligible for applying in future issuances of SPSICs for onions,” FAS said.
While the House of Representatives called for an investigation of alleged anti-competitive practices, the USDA unit noted that in 2014, the Philippine Department of Justice-Office for Competition (DOJ-OFC) completed 2 separate fact-finding investigations of alleged collusion in the garlic and onion industries.
The DOJ-OFC found, among others, that the lack of clear-cut guidelines and established procedures in determining the allocation of import permits has made the permit system prone to partiality, manipulation, and collusion.
Based on its findings, the DOJ-OFC recommended that the current permit system be removed; adopt impartial standards and clear criteria in the grant of import clearances to legitimate and accredited importers; and amend existing laws to strengthen the powers of concerned agencies.