Philippines: After spike in onion prices, garlic is next — now at $7.26 per kg

Manila: Following a huge spike in onion prices in the Philippines, a similar problem is now affecting another important produce — this time, it's garlic.

The herb witnessed a significant surge in retail price. Locally-grown and harvested bulbs now fetch up to Php400 ($7.26) per kg. That’s more than double the price of chicken, and two-thirds of the daily minimum wage in the capital.

The average wholesale garlic price in the world market is $1.16 per kg (about Php64 per kg) as of January 29, 2023.

To curb hoarding — a practice that keeps prices artificially high — the government has started a massive crackdown, raiding several warehouses that yielded tonnes of garlic.

Price surge

In general, a garlic crisis can occur when there is a shortage of garlic supply — causing prices to increase dramatically. So far 

Disruptions in the supply chain or trade restrictions could potentially lead to a shortage and subsequent price increase. In recent weeks, however, hoarders and profiteers had also been blamed for the unusually high price of the vegetable.

Police have found some 300 tons of illegally imported onions and garlic worth Php135 million ($2.45 million) in raids in Manila and Malabon, the Philippine National Police (PNP) said on Sunday.

As early as August 2022, however, the Philippines’ Department of Agriculture (DA) had already issued forecast that the supply for the full year of 2022 would fall short of the expected demand of 146,850 metric tons.

This is in contrast with the country’s total garlic availability estimated at about 83,000 metric tons — equivalent to a“supply gap” of over 63,000 metric tons.

Illegal importers, hoarders busted

Over 90 per cent of garlic consumed in the Philippines are imported, particularly from China. Hoarders had been blamed for the price spike — first in onions, and now in garlic.

On Sunday (February 19), Philippine authorities seized 300 tons of “smuggled” onions and garlic worth ₱135 million in raids in Manila and Malabon, the Philippine National Police (PNP) told local media.

The operation was carried out in response to reports of illegal importation and hoarding of agricultural products — particularly locally produced onions and garlic.

Police Brig. Gen. Romeo Caramat Jr., directof of Criminal Investigation  Criminal Investigation and Detection Group (CIDG), said their team seized 40 to 50 tonnes of imported onions and garlic worth an estimated Php40 million from 23 warehouses — mostly in Tondo and Binondo in Manila.

A raid in a warehouse in Barangay Catmon, Malabon, yielded 250 tonnes of imported onions and garlic worth Php95 million, police told local media.

The enforcement actions carried out after the Letters of Authority were issued by Bureau of Customs Commissioner Bienvenido Rubio, Caramat said.

The warehouses had been “sealed and padlocked,” said the national police, adding that investigations are also ongoing to establish the individuals involved in the alleged smuggling and hoarding of onions and garlic.

Crackdown on hoarding, price gouging

As for onions, the government is coming down hard on overpriced onion sellers, citing seven retailers on Wednesday for selling onions at higher than the suggested retail price of Php125 per kg.

Philippine garlic production has been on the decline while demand remained relatively stable across the country.

A farmer's gropu has assailed the Department of Agriculture for being deficient in keeping tabs of supplies, and in forward planning for the timely arrival of imports. Local harvests usually start only in March.

The climate in the Philippines is a key factor that hinders garlic production, though a key challenge is logistics. Because the Philippines is an archipelago, there are certain snags in shipping agricultural products across the country. This creates a disconnect between farmers and their target markets.

Despite declared supply shortage last year, some provinces reported an oversupply of garlic — but the crops were left to rot — presumably owing to the logistical challenges, a lack of buyers, or both.

Rise in China’s garlic exports 

Meanwhile, China’s exports of garlic to a number of Southeast Asian countries including Indonesia, Vietnam, Malaysia and the Philippines has seen an increase — after the lifting of epidemic control measures toward the end of last year. In the first 11 months of 2022, China’s garlic exports registered a growth of 5.35% compared with the same period of 2021.

Remarkably low prices — down 30% year on year — contributed to this growth, even though they started to climb back up in December.

Food security

Rep. Jose “Joey” Salceda, congressman from the 2nd district of Albay, has told a recent forum that the Philippines could face food insecurity.

Salceda raised alarm bells over the jump in corn prices, which were 16 per cent higher than the same period last year, and double the record-high inflation rate of 8.7 per cent in January.

High corn prices, Salced said, drove up the cost of fish and livestock that use that grain as feeds.

Lower import tariff sought

He said that corn accounted for 42 per cent of the costs of cultured fish and 48 per cent of the costs of meat.

The lawmaker suggested lowering the import tariff on corn to 5 per cent — or increasing the minimum access volume — currently set at only 18 per cent of total domestic demand.

That would temper the prices of meat, fish and eggs, he explained.

Rising food prices could cut into wages and savings, Salceda said. Private consumption, which accounts for 70 per cent of the Philippines’ GDP.