Supermarts in hot water: House panel exposes P30 per kilo markup scheme

The House Quinta Committee said Tuesday it will summon major supermarkets and grocery chains to an investigation on Wednesday, amid reports they have been manipulating well-milled rice labels to pass them off as premium rice which sells for as much as P70 per kilo.

Panel chairperson Joey Salceda, who leads the investigation into rice profiteering and price manipulation, emphasized that these retailers have a lot of explaining to do regarding the unscrupulous scheme, which reportedly allows them to earn as much as P30 per kilo.

“We disaggregated market returns and as much as 48 percent of excess returns are at the wholesale to retail level,” he said.

The economist-lawmaker also did not buy the Bureau of Plant Industry and the Grains Retailers Confederation of the Philippines’ alibi that the main driver of the persistently high prices of the staple was consumers’ preference for premium rice.

“We checked the latest reference value and even the highest quality rice from Vietnam is just P41 per kilo after duties. That doesn’t explain why prices are stubborn at P56. And that does not match actual average import prices of P31 per kilo after duties — that is not premium price,” Salceda pointed out.

“So, the next time I get a reason like that, the committee will be forced to remind people that there are consequences to lying under oath,” he warned.

The mega-panel was formed to rigorously investigate the so-called primary drivers of the high cost of essential commodities, mainly rice.

House lawmakers have surmised that the stubbornly high price of the staple grain is merely artificially orchestrated by cartels or is a collusion between rice importers and traders given that there is an oversupply and reduced import tariffs.

They argued that with the excess supply of rice along with the enforcement in July of Executive Order 62, which reduced the tariff on rice imports from 35 percent to 15 percent, the markets should be flooded with rice stocks, leading to a price drop.

House chides DA

According to Salceda, the Department of Agriculture’s (DA) claim of being “powerless” to address the skyrocketing rice prices only “gives license” to price manipulators to run amok and prey on Filipino consumers.

“Rice prices are in something of a death spiral. And with the DA publicly saying it is powerless under the law, price manipulators are even more emboldened to do as they please,” he said.

During last week’s probe, DA Secretary Francisco Tiu Laurel Jr. told the panel they lacked the authority to address the high rice prices and instead urged Congress to pass laws granting them stronger powers against price manipulation, profiteering, and other exploitative practices in the agricultural sector.

Marikina Rep. Stella Quimbo, also a seasoned economist, argued that Section 10 of the Price Act (Republic Act 7581) clearly states that the DA is empowered to conduct investigations, seize necessities, impose fines of up to P1 million, and even initiate prosecutions.

Salceda cites tools

Salceda said they also reviewed the statute books for what tools the DA could use to end rice price abuse.

“We found several laws that have not been fully repealed, including RA 509, which allows the DA a wide range of powers as soon as the President declares a rice emergency. President Quirino did this in 1948, in response to widespread hoarding in the rice market,” he averred.

He pressed the DA to scour the substantial body of laws enacted over the decades and mobilize these laws to end the climate of economic impunity in the rice market.

“We must also use all the organs and powers of the state, from post-clearance inspections of import warehouses to random inspections in markets, to remove the sense that there is no sheriff in town,” he stressed.

Laurel said he was keen on reinstating the regulatory functions of the National Food Authority, including allowing it to dominate the market anew, which was scrapped by the Rice Tariffication Law in order to lower rice prices.