By Sheldeen Joy Talavera, Reporter
THE competitiveness of farm produce has suffered due to the pandemic, with smaller merchants bowing out of the farm-to-table supply chain and leaving the field to entrenched middlemen, analysts said.
A regulatory framework is needed that encourages competition “can reduce the costs associated with negotiating and monitoring transactions by increasing the number of potential trading partners and reducing the bargaining power of dominant firms/middlemen,” Ateneo de Manila economics professor Leonardo A. Lanzona said in an e-mail.
According to Mr. Lanzona, many small- and medium-sized retailers “who used to contest the market (with) the dominant firms” shut down during the pandemic.
“It is crucial then for the government to restore and bring back the power of these small merchants and even the farmers themselves to gain access once again to the market,” he said.
Mr. Lanzona said that the Department of Agriculture (DA) can provide a centralized database of potential trading partners to reduce the cost of market matching.
Sonny A. Africa, executive director of think tank Ibon Foundation, said in a Viber chat that providing affordable infrastructure and logistics, raising farm incomes, and regulating “profit-seeking private interests” are essential for economic development.
“They are bound by currently underdeveloped public infrastructure and logistics systems which increases costs and, eventually, prices,” he said.
“Their scale and sophistication is bounded by a domestic market that is far below its potential size because of persistent poverty and severe inequalities in income and wealth — which constrains cost reductions from economies of scale,” he added.
John Paolo R. Rivera, an economist at the Asian Institute of Management, said that eliminating middlemen will stabilize prices of commodities.
“[It] will make agricultural produce cheaper because some unnecessary costs of intermediation will be reduced or eliminated,” he said via Viber.
Mr. Africa, however, said that middlemen have a negative reputation because traders have abused their market power over producers.
“Intermediaries will always be an essential part of any supply chain,” he said.
He said that the government should have “a more substantial and responsible state intervention” to correct abuses in the supply chain which may also lead to lower prices.
Even though it provides a direct farmer-to-consumer supply chain, Mr. Lanzona said that the DA’s KADIWA program has disempowered small retailers.
“The KADIWA stores have appropriated the same markets once dominated by these small retailers,” he said.
President Ferdinand R. Marcos, Jr., concurrently the Secretary of Agriculture, has been expanding the KADIWA store network. To date, the network consists of 308 outlets, pop-up stores, and KADIWA-on-Wheels routes, according to the DA’s Agribusiness and Marketing Assistance Service.
“Instead of creating the environment that will lead to greater competition, the KADIWA increased the power of dominant firms by quashing the relatively larger merchants that can compete with these larger firms, thus destroying permanently the supply chains that have been in existence before the pandemic,” said Mr. Lanzona said.
Mr. Africa dismissed KADIWA as “a public relations gimmick more than anything else” if left with insufficient resources.
He added that the program has only reached 1.2 million households or not “even 5% of the families in the country” and 250,000 farmers and fisherfolk, or about 3% of direct rural producers.
“The hyped subsidies to farmers and fisherfolk may help the handful who are reached but are also mainly public relations exercises because they are far from what the sector needs to substantially increase rural productivity,” he said.
