The Philippine Competition Commission (PCC) yesterday said it will look into the worsening gap between the retail and farmgate prices of rice, focusing on the middlemen as the possible culprit.
Arsenio Balisacan, PCC chairman, told reporters at the sidelines of a forum in Quezon City yesterday administrative and criminal penalties as well as imprisonment await those found to be engaged in rice cartel.
“There is this issue in the market being raised about the possible anti-competitive practices and the observation that the retail prices of rice have not fallen as fast as the (tarrification) law has expected. At the same time, some sectors are saying farmgate prices have also fallen sharply following the tariffication,” Balisacan said.
Balisacan said PCC is also looking at any evidence of collusion among middlemen or traders.
Johannes Bernabe, PCC commissioner, said the rice tarrification has resulted to more supply due to imports which had put pressure on farm gate prices to decrease. However, prices at retail are not falling as fast.
“What we are looking at is, given that there are middlemen, traders, millers, wholesalers who are engaged in the distribution and facilitation of distribution of rice to the end user or retail level, if there is concentration, if there are players who are in a dominant position in certain markets for this middle phased transactions, then (why) is it worsening… the gap between farm gate prices and retail price? If some of them (middlemen) are in a dominant (position) or, worse, if they are engaged in cartelistic behavior, then they will exacerbate (the gap) between farm gate prices and retail prices,” Bernabe said.
On the issue of whether tariffication is a good thing or a bad thing in terms of the unanticipated effects in the market, Bernabe said “we leave that to the policymakers.”
“ What we should be concerned about is if middlemen, because of their dominant position in certain relevant geographic markets, if they are engaged in some cartelistic behavior. (That) should be investigated by PCC and be taken to task for aggravating this price gap,” Bernabe added.
The PCC has been monitoring the rice sector from the different phases in the value chain, from production to milling to distribution and retail.
“We have prioritized certain phases of that value chain. We are looking at the middle phase, so that will involve traders, wholesalers and millers,” Bernabe said.
He added farmers are not in a position to abuse any position they might have because for one they are not organized. “They don’t have any leverage on imposing prices at level which will be sustainable.”
Bernabe added the PCC is also looking retailers as there are certain relevant geographic markets that indicate it is worth pursuing to find out if “there is some anticompetitive behavior that is going on.”
“But the ones who have leverage in this value chain appear to be the middlemen. At this point, we don’t want to say anyone is liable, that there are any guilty parties. It’s just that in the PCC, it behooves us to try and narrow down who it is we should be prioritizing in terms of examining behavior or conduct,” he added.
The investigation on the side of the PCC comes at a time when the Office of the President and Congress have initiated inquiries on the rice situation.
“It has to be investigated and resolved, the PCC has to step up and look at it beyond simply monitoring. We have to be more actively engaged in the conduct of analysis and inquiries,” Bernabe added.
He said once the PCC establishes there is anti-competitive behavior in rice trade, whether it is in the form of cartel or abuse of dominant position, the penalties imposed by the Philippine Competition Act kick in.