The government's imposition of a P125 per kilo suggested retail price for red onions was completely ignored by retailers. PHOTO BY BEN KRITZ

There is bad faith somewhere

I AM going to make a brief comment on a topic that I had told my boss I would stay away from, but only because it may have some relevance to the main subject of today’s column.

Over the past couple of weeks, there has been much wailing and gnashing of teeth among some parties in the media over the abrupt termination of the regular column in the Philippine Star by Ramon Tulfo. The cutting of the paper’s ties with him was allegedly, at least according to him, caused by his calling the attention of first lady Liza Araneta Marcos to the possible involvement of her brother in smuggling activities, including the onions that have seemed to become the Philippine economy’s kryptonite. Others, including his own brothers, have refuted this claim, while both the first lady and Philstar have remained silent on the matter. That is their right, and under the circumstances and given who is involved, it is probably the sensible thing to do.

What I find laughable in the apoplexy provoked by Tulfo’s firing is the contention by his supporters that Philstar should be regarded as some sort of public institution that is morally bound by the amorphous principles of “press freedom,” rather than simply being a beneficiary of them. That is not how things work, and those who are complaining the loudest about it, who have years and sometimes decades of experience in this business — the keyword here being “business” — ought to know better.

We columnists tend to have fairly grandiose ideas about our own talent, knowledge and importance, but the sometimes unpleasant reality is that for any newspaper or other sort of media outlet, opinion columns are not strictly necessary to carry out its most important business objectives. An opinion column (and by inference, the columnist who creates it) is merely a value-adding asset. Of course, it can add a great deal of value, and its potential to do so makes trying to acquire and retain the asset a good idea. But just as with any other asset, a column is subject to constant cost-benefit analysis, and if at any point that ratio becomes unfavorable, the sensible business decision is to cut the losses, or avoid potential losses, and dispose of it.

Philstar made a business decision, and is under no compulsion to publicly explain it or the information that went into making it, any more than any other private enterprise has to explain how it utilizes or disposes of its own assets. It is no different than discovering that the grocery store you usually shop at has decided to stop carrying your favorite brand of canned tuna; if you don’t like it, then shop somewhere else. If you don’t like the Philstar revising its roster of columnists, then get your news and commentary from another newspaper. Simple as that.


The controversy over Tulfo’s being shown the door (again) by a major daily newspaper is pointless and not worthy of public attention, and probably would not have been given any had it not implicitly touched on the number one hot topic in the country, the baffling lack of supply and high price of the common onion, a problem that is assumed to be caused by rampant profiteering.

Last week, the Department of Agriculture (DA) imposed a P125 per kilo “suggested retail price” on red onions, after the recent import of a couple of thousand tons of the common vegetable failed to bring down prices that have been stuck north of P300 in most places for months.

Although the SRP is usually a euphemism for “price control,” in this case retailers seem to have taken the word “suggested” as scripture, and made absolutely no attempt to even come close to honoring the P125 price.

As a story in this paper on Thursday explained, there is no obvious reason why this should be the case. As representatives of farmers’ groups pointed out, the production cost of domestic onions generally ranges between P17 and P25 per kilo, while the landed cost of imported onions is about P35 per kilo. The farmers’ representatives suggested a farmgate price of approximately double that was fair to the farmers, and adding another P20 to cover storage, handling, and transport costs means that the cost to traders ranges from P54 to P70 per kilo.

The implication of all this is that a P125 per kilo retail price is certainly doable. A generous 50-percent margin added by the trader and another P20 per kilo, which is probably an overestimate, to cover the retailer’s overhead costs would mean the retailer would at worst break even, or could earn up to P24 per kilo in profit. It’s not great, but it is not out of scope for basic food staples, which typically generate profits through volume rather than margins.

But, as has already become glaringly obvious, the SRP on onions is being universally scoffed at, even among big, mainstream retailers who are far less sensitive to price than small market vendors.

There is bad faith somewhere, and I suspect it is not among the retailers, who are the ones who interact directly with consumers and would be the first to be subject to return fire from the public if they are suspected of price-gouging. I would put the blame on the DA and the Department of Trade and Industry for their stubborn insistence on “suggested retail price.” Retailers have very little leeway in setting prices, and farmers are complaining as loudly as ever about low farmgate prices, so it is quite obvious that the problem lies in wholesale or trade prices. Imposing an SRP and expecting that to trickle upward to correct prices at earlier steps in the supply chain is accomplishing nothing. Whether that is a nefarious choice with ulterior motives and intended for other, unknown beneficiaries or just an extremely stupid choice is something someone will have to figure out.

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