Collusion, cartel blamed for high garlic prices-A A +A
Wednesday, September 3, 2014
GOVERNMENT investigators ruled out shortage in the supply of garlic as reason behind the sudden increase in the price of the spice in recent months.
Instead, the Department of Justice's (DOJ)-Office of Competition said in a 32-page report released on Wednesday a cartel cornered the bulk of importations and was able to dictate prices.
According to the DOJ, importation of garlic in the Philippines is controlled mainly by at least four individuals and they have created several dummy entities accredited by the Bureau of Plant Industry (BPI).
For instance, a certain Lilia Cruz, also known as Leah Cruz, cornered at least 75 percent of the country's total garlic importation under questionable means.
"Interviews with BPI officials and three accredited importers revealed that Cruz is behind all eight farmers' cooperatives and associations which are members of NGAT (National Garlic Action Team). Furthermore, she has created several entities to maximize the number of SPSIC (Sanitary and Phyto-Sanitary Import Clearance) that she would get," the report said.
In 2013 alone, more than 300 SPSICs were issued to cooperatives, associations and importers affiliated with Cruz.
There are also reports received by the DOJ indicating that she owns a trucking business and maintains her own warehouse and storage facility.
"If this importer controlling 75 percent of importation passes on expensive garlic to wholesalers, such cost will be carried through the supply chain until ultimately, the retailers bear the brunt of the high cost," the DOJ said.
The National Bureau of Investigation (NBI), an attached agency of the DOJ, is also looking into the possibility of filing charges against some importers and officials of the BPI, who may have been in collusion with the unscrupulous traders.
BPI officials allegedly ensure that importation is limited only to a select group such as Cruz's when legitimate importers should have been given the chance to take part in the importation.
"BPI officials have even gone to the extent of revalidating expired permits in two occasions involving hundreds of SPSIC, an act without legal basis," the report said, adding there are allegations that importers remit P50,000 to BPI for every SPSIC released.
Overall, the DOJ said lack of transparency and clear-cut guidelines in the BPI permit system aided the establishment of a garlic cartel, which is punishable under the Price Act (Republic Act 7581) and Revised Penal Code.
The DOJ recommended that the NBI should pursue all leads and gather more evidence to prosecute the importers and BPI officials who are liable for the price manipulation.
It also called for the removal of the power of the BPI to issue import permit as its main mandate is to issue SPSIC to prevent entry of plant pests in the country. BPI should not be concerned with volume of imports or determining financial capacity of importers, the department said.
Fair standards and clear criteria must also be adopted in the grant of these SPSIC to legitimate and accredited importers to avoid favoritism.
The DOJ said the Department of Agriculture (DA) should consider either the abolition or reconstituting it only as a policy team and not as an allocating entity.
NGAT is tasked to investigate the surge in garlic prices but investigation showed some of its members, particularly the farmers' cooperatives controlled by Cruz, took part in the cartel.
"Farmers are not encouraged to engage in importation and should instead focus on crop growth with the assistance of DA," the DOJ said.
It also asked Congress to give DA and BPI the power to enter the storage facilities of wholesalers and traders for inspection as this would help stop inaccurate estimates on supply, which may result in hoarding and anti-competitive activities.
Further, current and future importers should be required to execute a waiver allowing the DA and BPI to inspect their stock rooms.
The price of garlic rose dramatically in June, with price hovering between P300 and P400 per kilo in major markets in Metro Manila.
For this report, the DOJ monitored the white garlic variety the prices of which increased from P164.59 per kilo in June 2013 to P287.06 in June 2014, for an increase of 74 percent within a one-year period.
Garlic supply in the country relies on imports, usually sourced from top producer China, India, South Korea, Myanmar, United States, Singapore, Thailand and Australia.
The Philippines has been more import-dependent beginning in 2002 with foreign produce taking up 52.24 percent of garlic supply in 2012, according to the Philippine Statistics Authority (PSA). (Sunnex)