Tempers Flaring Over Onions Show Marcos Faces Risk on Prices

  • In Business
  • 2023-01-28 00:00:00Z
  • By Bloomberg

(Bloomberg) -- Ferdinand Marcos Jr made a curious move when he became Philippine president-elect in mid-2022: he named himself agriculture minister, pledging to fix the country's food problems.

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The decision showed the political weight of the often unglamorous job, and highlighted the potential risk to the new president. But quick solutions have been hard to find. The Philippines has reported shortages of everything from salt to sugar over the last few months even as the economy grew the fastest since the 1970s last year.

The latest scarce ingredient is onions, which briefly cost more than meat earlier this month. Prices have become so absurdly high that 10 Philippine Air flight attendants were caught bringing the vegetables back with them from the Middle East.

The shortages of basic food staples are being felt throughout the economy and helped propel inflation to near the highest levels since the global financial crisis in 2008. Burger King said that it's all out of onions, Coca-Cola had to suspend some operations because it couldn't get enough sugar, and Marcos this month described the surge in food prices an "emergency situation."

As in much of the world, the cost of food, fuel and fertilizer have all jumped since Russia's invasion of Ukraine early last year. But the Philippines is particularly vulnerable, despite being among the world's biggest producers of rice, coconuts and bananas. The World Food Programme estimates that one in 10 households in the country are food insecure, with those reliant on agriculture most affected.

The government and lawmakers blame greedy traders for hoarding food to create artificial shortages that allows them to jack up prices. When discussing the onion crisis last week, Senator Imee Marcos, the president's sister, said there's "a level of treachery and manipulation involved because these prices are inexplicable."

Farmers seem to agree. Ramon Silverio, an onion producer, said he and others sold their crops at a 60% to 80% discount from the previous years to traders with cold storage facilities. Many growers in the country don't have access to these warehouses that can greatly extend the shelf life of fresh produce.

"These businessmen buy cheaply from farmers and we're left with no choice but to sell. It's suicide for us," Silverio said. Some of the onions were then resold at as much as 600 pesos ($11) a kilogram in Manila, he said, more than seven times the price a few months earlier. "There's no shortage of onions."

Government data indicate that the Philippines produced a bumper onion crop last year. The output of 238,562 tons - the highest on record - should have been sufficient for the domestic market, which consumes about 20,000 tons a month.

Marcos, whose commitment to halve rice prices helped fuel his landslide election win last year, faces the risk of losing public support if he's unable to bring agricultural inflation under control. Historically, food shocks have often spurred social unrest in the Philippines, and they've also created a brisk trade in smuggling basic staples from overseas.

"I don't know if the public will give him a longer honeymoon period," said Jean Franco, a political science professor at the University of the Philippines. "The problems that we have now are really gut issues."

Marcos ordered the agriculture department this month to issue permits to import onions. The country will also buy sugar from overseas. Ultimately, the government wants to lift domestic production but is held back by a range of issues, including inadequate infrastructure to connect farmers to markets. Agriculture output, which accounts for a 10th of the economy, shrank last year.

A full-time agriculture secretary will be appointed once the issues are fixed and the systems are in place, Marcos said this month.

Hoarders who take advantage of the system should be punished as they're a threat to national food security, said Ricardo Diño, an agriculture professor at the University of Camarines Norte. The government should also improve farmers' access to subsidies and cold storage facilities, he said.

"Capitalists are smart, so the government should be smarter," Diño said.

--With assistance from Jeffrey Hernandez.

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