Philippines: Onion prices now twice higher than chicken, here’s why

Manila: Good news, the price of onion has gone down to Php500 per kg ($9.11) as of January 11, 2023. A few days ago, in the midst of a supply crunch, it soared to Php700 ($12.87) — more than double the price of meat.

At that level, it was higher than the mandated daily minimum wage of Php570 in the capital. Even at Php500/kg for onions, it's no time to celebrate.

Contrast that with India’s Lasalgaon Mandi (wholesale market) in Maharashtra’s Nashik district, where in November farmers protested the extremely low prices of onions — to a meagre Rs7 to Rs10 ($0.086) per kg, based on local media reports.

In Cebu, central Philippines, some price gougers jacked it up to Php750/kg ($13.63) on Jan. 3. That’s a price-gap ratio of about 150:1 between the Philippine and Indian onions.

What explains this huge difference?

Bringing onions produced by farmers in India, or anywhere else, to Philippine consumers is easier said than done. The import route is a rather complex system — involving traders, Customs and the Department of Agriculture (DA).

The story behind import controls, and the reasons behind them, is scantly touched in the current public discourse. It's the elephant in the room. But so is local production, and distribution.

Meanwhile, local consumers must simply ride the wave of overpriced onions.

How much is the current price?

As of Wednesday, Jan. 11, it was Php500 in some public markets, or Php125 for a 1/4-kg pack. Until Monday, Jan. 9, red and white onions were being sold for as high as Php600 ($10.88) per kilogram — or about $5 per pound — based on the agriculture department’s monitoring of Manila-area market prices.

That’s double the price of chicken and 25%-50% more expensive than beef, according to the same market monitoring estimates.

What’s caused the price spike?

A multiplicity of factors — the Russia-Ukraine war that saw fuel prices skyrocket, supply chain snags, extreme weather events. Inflation in the Philippines hit a record 14-year-high in December, with onion making up 0.3 percentage points of the 8.1% uptick in consumer prices, the Philippine Statistics Authority stated in a January 5 report.

It’s not just inflation, though. The business sector, for its part, blames the Department of Agriculture (DA) for inaccurate supply projections despite warnings last year.

Given the country’s tropical climate and unpredictable knock-on effects of extreme weather patterns, the task of projecting yields by Philippines Bureau of Agricultural Statistics (BAS), an agency under the DA, has been greatly impaired.

What’s the weather got to do with it?

The Philippines lies in the "ring of fire" side of the tropics — particularly in a region of the world where traditional agriculture is increasingly under threat.

At least 20 typhoons visit each year. In recent months, the country has seen regular and deadly episodes of torrential rains/flooding, too, especially in the breadbasket regions of Mindanao.

Is it true traders have cartelised the onion trade?

Former Department of Agriculture (DA) secretary Emmanuel Piñol and senators suspect the price spike is the handiwork of local trade cartels.

Piñol cited that during the peak harvest season, onions are oftentimes bought from farmers for as little as Php20/kg. The produce, he said, is then "hoarded" to be sold at the exorbitant rates.

What about import controls?

It’s the biggest factor in the current situation: a blanket onion import ban imposed by agriculture officials in the runup to peak December holidays had a knock-on effect on present prices.

It turned out the decision to keep onion imports out was based on inaccurate crop yield projections by agriculture statisticians, local media reported. Under such circumstances, price gouging by opportunistic hoarders has been normalised.

So the import control lever used by DA officials supposedly to protect farm-gate prices in the first place has triggered a runaway price spike it's now trying to prevent.

In the case of onions, the effect of an import ban imposed ahead of December holidays has cascaded throughout the Christmas and the New Year. As early as August, agriculture officials already warned of possible shortages of onion and garlic — when the local red onion variety jumped to Php140 ($2.54).

However, the department then resisted importations — insisting that based on their crop yield estimates, existing local supply would be “sufficient”.

The tune has changed

On Monday, Jan. 10, red onion prices were still ranging from Php480 to Php600 per kg in Metro Manila. A senior Department of Agriculture (DA) official told the Philippine News Agency (PNA) that he expects onion prices to drop to around Php100 (about $1.82) per kg — but only upon the approval of what he called an "importation plan". 

Asked if retail prices would drop to Php200 or Php150, DA Assistant Secretary Rex Estoperez told the agency he expects it would even “go lower than that”.

Estoperez cautioned, however, that the government should “execute careful intervention and strict border measures for importation to protect both consumers and farmers.”

It’s the same official import control prerogative used to impose prohibitively high vehicle import taxes in the Philippines as a way to “protect” non-existent Filipino carmakers. This leads to uncompetitive and high cost of transport in a country reeling from already high food prices.

Onion and garlic are staples of local cuisine in the Southeast Asian nation. Imports of agricultural products are tightly controlled through DA, guided by its in-house statisticians.

The mandate to protect the agriculture sector is strong: agriculture accounts for about 9.6% of the country’s GDP and employs about 25% of the population.

However, local farmers also warned that as holiday consumption spikes, a tight supply could trigger a price spike. The import ban decision, driven by inaccurate yield projections, proved punishing.

Now, Agriculture Assistant Secretary Rex Estoperez told Bloomberg that the imports will be a “temporary solution.”

He expects new supply arriving no later than the first week of February, providing a price-arresting measure before domestic harvests pick up between March and May.

Imports

To augment dwindling domestic supply, Manila authorities announced over the weekend the country now would allow the importation of 22,000 tons of onions, a move seen likely to help soften prices in March.

Between now and then, Filipino consumer swould have to make do with overpriced onions — or skip using the vegetable altogether in their daily cooking.

Another solution is for the government to establish (or fund) more cold storage facilities, and encourage local farming of the vegetable.

“Onion, both white and red, could be grown in several parts of the country and even farmers in Mindanao had tried planting the crop before, but the deterrent had always been the instability of the buying price,” Piñol stated in a Facebook post.

Mindanao is  the country’s bread basket, due to its vast, fertile tracks less prone to typhoons. But lately, it has been beset by floods.

For now, Filipino consumers simply need to put with the interplay between the traders, importers, Customs, import regulators — inherently impossible to track — and the climate going berserk.