For months, consumers of different backgrounds have been baffled by the current high price tag of Philippine onions which is almost three times more expensive than chicken and pork. The onion price—related news has apparently been a staple of every news outlet in the country whether local or national. So why do we have pricy onions in the market?
Here are some reasons.
Low supply and demand;
Basically, economics 101 is telling us that when the quantity demanded is greater than the supply, the price will rise; well this is the case for onions in the Philippines.
As early as August last year, the Department of Agriculture (DA) already said that the onion supply was dwindling and it would be insufficient to meet the local demand.
Earlier, the Samahang Industriya ng Agrikultura (SINAG) said that importation of onions would solve the supply problem, but at the same time will result in an oversupply by January 2023 providing that the government’s decision would come late.
Rosendo So, SINAG president last December in an interview said that ”We have to import now. If we don’t, after 10 days, it might spill over by January and this will not help”
“Oversupply of onions will result in steep drop in prices, which may be good for consumers but devastating for local farmers” So added. .
Unabated smuggling and cartel-influence trade are also a big factor which further exploit the high demand for onions forcing its price higher. Illegal traders take the opportunity to offer it at sky-high prices.
Previously DA Undersecretary Domingo Panganiban said that the agency suspects that a syndicate is hoarding red onions, causing the price of the commodity to rise. The official is right on the target.
News over the past weeks shows authorities have been on the offensive mode apprehending and confiscating smuggled onions which are valued at tens of millions of pesos. This leads to officials pointing at illegal trading as the main cause of the price hike. However, critics questioned as to why there’s no smugglers being prosecuted despite there clearly being a crime committed? “May krimen, ngunit walang kriminal?” Thus, the smuggling continues.
Whenever there’s a shortage, price manipulation is not far away;
Apparently, last December, the price of onion reached as high as ₱800 per kilogram which was unprecedented. Authorities suspected big companies changed the retail prices to keep up with competitor costs. An effort by congress via a house resolution was earlier filed to open investigation into the soaring onion price.
According to House Resolution No. 673. “There are reasons to believe that there is an ongoing control and manipulation of onion prices from farm gate to market retail by big traders, who store onions in cold storage warehouses,”
The DA then set the suggested retail price (SRP) for red onions at ₱250 per kilogram. The agency also monitors the markets to see if the SRP is being implemented. But even the governments’ put up a suggested retail price and go on the length to punish those who will not follow the SRP, still, it can’t influence the prevailing market price of onion which is beyond what is suggested.
External forces are another reason why they are skyrocketing , even onions. global inflation due to a number of factors such as the Russia-Ukraine war, extreme weather-caused disasters, and supply chain snags that put a strain on costs of food anywhere.
Meanwhile, the Philippine Statistics Authority (PSA) reported that during the holidays, Filipinos dealt with higher prices, with vegetable prices in December at their peak since February 1999.
PSA;s Dennis Mapa noted that onion prices made up 0.3 percentage points of the 8.1% hike in consumer prices.
This weekend, the agriculture department said that the government will import onions despite the warning that it may result in oversupply, ostensibly to address the supply issues. President Ferdinand Marcos Jr., who is the current DA chief has approved the importation of 21,060 metric tons of onions, fewer by a thousand MT recommended by the DA.
On other fronts, the government launched investigations into smuggling and cartels after lawmakers filed resolutions against illegal trading. DA officials will also be investigated in relation to the soaring prices of red and white onions in the market, the Office of the Ombudsman
Until then, whatever happens to the investigations, still at the end of the day, both consumers and the local onion producers will continue to bear the brunt of the high price of onions. Some sectors, for a long time, pointed out that the government should support the local agri sector by pouring badly needed budgets as well as support services to help boost local production, so that the country will not depend on imports. This on top of that the government should seriously address the issues of smuggling and cartels that for a long time ravaged the local market, raking hundreds of millions of profit in the process.