The Philippine Vegetable Industry Almost Comatose

Jan 14, 2012

The Philippine Vegetable Industry Almost Comatose

By Carlos Aquino

The Philippine vegetable industry has been ill for so many years now but it was only in year 2002 that the pain has been felt. From production to marketing, the Philippine vegetable industry is infected with a complex strain of technological and economic virus. Lacking strength and vigor due to the further weakening of its immunity, the Philippine vegetable industry now finds itself highly vulnerable and susceptible to the attack of the virulent imported vegetables.

What ails the Philippine vegetable industry? What are the threats to its existence? How long can the vegetable industry stay alive? These are just some of the morbid issues that the Philippine vegetable industry has to confront.

The Philippine Vegetable Industry: Not the Ordinary Garden Variety

Ubiquitous, delicious, and nutritious, vegetables not only contribute to the maintenance of a healthy life. The growing of vegetables, in fact, contributes to regional and national economic health as well.

For instance, the Cordillera region is dependent on the vegetable industry. In fact, it is a major contributor in CAR’s (Cordillera Administrative Region) gross regional domestic product.1 Reports bare that when pests affected Benguet’s vegetable industry in 2000, economists noted that the gross regional domestic product (GRDP) of the Cordillera in that year dropped from 16.1 percent to a mere two percent. The vegetable industry’s slow growth the following year was also followed by a GRDP drop to one percent in 2001.2

As Leon Dacanay, assistant regional director of the National Economic Development Authority (NEDA)-CAR, noted, this pattern suggested that Benguet’s vegetable industry had “surprising effects” on the regions growth.3 Dacanay said the impact of the vegetable market’s decline in 2000 and 2001 on those year’s GRDP indicated “how infinitely important the industry is to the Cordillera economy.”

The Bureau of Agricultural Statistics (BAS) said that based on studies in 1999, 4,218 hectares of land (or 10.55 percent of the total land planted to rootcrops and tubers) were devoted to potato production in Benguet and Mt. Province and 4,308 hectares to cabbage, broccoli, and Chinese cabbage or wombok (which is 17.34 percent of the total land planted to leafy/stem vegetables).4 About 2,100 hectares are devoted solely to carrots in the two provinces.

Northern Benguet towns produce 20 tons of carrots and 50 tons of potatoes a day.5 The Department of Agriculture in the Cordillera estimates that for 2000, potato production was 115,840 metric tons (MT); carrots, 69,440 MT; and cabbage, broccoli and wombok, 93,390 MT.6

Over 50 different vegetables are commercially grown in the Philippines (see Table1). In 2001, the vegetable industry contributed about 4.8 percent in total crop production, producing 3,617 MT of vegetables, which accounted for 9.15 percent of the total value of agricultural production.

The industry generates an average of PhP24 billion annually and about US$32 billion in foreign exchange earnings.7

Based on the 1991 Census of Agriculture, there are around 5,737,750 farms engaged in vegetable farming (See Table 2). Many farmers, especially rice farmers, rely upon vegetable growing as a source of additional income. The regions that are responsible in terms of ensuring the country’s vegetable self-sufficiency are Ilocos, Cordillera, Central Luzon, and Southern Tagalog. Benguet farmers supply 80 to 85 percent of these vegetables to Metro Manila markets.8

From Neglect to Privation

Immortalized in the classic Filipino nursery song “Bahay Kubo,” vegetables are perhaps the first food group that innocent tots would memorize, from turnips to string beans, from tomatoes and eggplants to squash, radish, onions and garlic. Yet this would not be enough to propel the popular vegetables to greater stardom. Vegetable production has never been given much attention in the national food security program, unlike the four major/traditional agricultural crops. While vegetables, along with fruits, began to receive government priority for development as commercial crops in the late 1970s, vegetable production, through the years, has been “accorded less attention and support by the government.”9

From a simple horticultural activity (e.g., backyard or home gardening), vegetable production became a major industry through the years. According to the Bureau of Agricultural Statistics (BAS), total production grew from 29,000 tons (valued at PhP2.8 million) in 1930 to 4.8 million tons (equivalent to PhP26 billion) in 1996. By 1998, however, production of major vegetable crops (including rootcrops, tubers, and spices) dipped to 3.6 million metric tons, valued at PhP26.8 billion. The preliminary data released by the BAS in 2002 reveal that total vegetable production declined to 3.3 million metric tons in 2001, with a total value of PhP23.6 billion.

In terms of crop sector development, vegetables are included in the “high value crops” category. Nevertheless, the existence of the High Value Crops Development Act and the formulation of the Gintong Ani for High Value Commercial Crops program of the DA (which became the MakaMASA HVC under the Estrada Administration) mean little to the vegetable industry and the millions of farmers engaged in it. By and large, there is no explicit government policy regarding the development of vegetable farming. Even the country’s legislators admitted, in House of Representatives Resolution No. 507, that “Filipino vegetable farmers are. . . grossly disadvantaged by persistent government neglect in providing support for farm inputs, cheap credit, irrigation, post-harvest facilities and other infrastructures which are given drastically falling priority in the national budget since the mid-1990s.”10

What is clear, nonetheless, is that the above-mentioned HVC development framework adopted by the government features a market-/private sector-led strategy (agribusiness paradigm) coupled with a liberalized trade policy. While government intends to promote the adoption of modern technology in vegetable production, it provides minimal subsidies to vegetable growers.

Diminishing Vegetable Supply: A Symptom of a Virulent Disease

Dr. Flordeliza A. Lantican of the University of the Philippines at Los Baños noted that “because of a limited area for cultivation” vegetable production in the 1950s and 1960s averaged at only 188,000 tons and 235,000 tons, respectively. However, with higher yields per hectare and an increase in area planted. There was a “remarkable improvement in vegetable production” in the 1970s with an average of 438,000 tons, almost twice that of the 1960s level. During the 1980s, vegetable production increased significantly to an average of 4.2 million tons, nearly ten times as much as that of the 1970s. The 71 percent annual growth was brought about by further increases in area cultivated, which rose to 645,000 hectares, and in yield per hectare.”11

The 1990s vegetable production data, however, reveal a disturbing trend. From an average production of 7.53 million metric tons for the period 1990-1996, it reached an average production level of 3.8 million metric tons for the years 1997-2001, almost a 50 percent reduction in volume produced and even less than the 1980s production average. Accounting for inflation, the average value of production for 1997-2001 remained the same as the 1990-1996 level, which stood at PhP27 billion. (See Table 3)

For instance, cabbage production is on the decline in the past years, with an annual average reduction of 13 percent from 1994 to 1998, which can be attributed to the decreasing area planted to the crop. Production hovered at an annual average of 88,200 metric tons for the period 1999-2001.

Even cassava (rootcrop), which exhibited an upward production trend from 1991 to 1997, started to decline in the period 1999-2001, with an annual average reduction of 6.5 percent. The same is true in the case of other rootcrops and tubers, which exhibited an annual production decline of 26.3 percent for the period 1998-2001 after registering a peak harvest of 337,600 metric tons in 1997. Other crops that exhibited a downward production trend are camote (sweet potato) and peanut.

The bulk of the reduction in vegetable production can be attributed to the enormous decline in the cultivation of fruit bearing and leafy/stem vegetables. The average production of fruit bearing vegetables (e.g., ampalaya, sayote, cucumber, eggplant, okra, patola, squash, tomato, upo or gourd) for the 1997-2001 period is 90 percent less than the 1990-1996 average production level of 2.94 million metric tons. In the case of leafy/stem vegetables (e.g., cabbage, cauliflower, kangkong, lettuce, pechay, spinach, camote tops), the 1997-2001 average production figure of 182,920 represents a mere 16 percent of the average production for the period 1990-1996, which is 1.1 million metric tons.

One alarming trend is the decreasing area planted to vegetables due mainly to declining fertility of the land (due to long years of use), and erosion, and perhaps, land-use and/or crop conversion (e.g., shift to planting of ornamental plants). The average area of 596,180 hectares for the period 1997-2001 is 54.47 percent less than the 1990-1996 average area, which is 1.4 million hectares. In 1990, 1.3 million hectares were planted to vegetables (representing 10.24 percent of the total agricultural land) and even reached 1.37 million hectares in 1995. By 1997, however, the area devoted to vegetables greatly declined to 627,700 hectares (equivalent to 4.95 percent of total agricultural lands) and further decreased to 584,100 hectares in 2000. From 1990 to 1996, an average of 10.24 percent of the total agricultural area was allotted for vegetables. For the period 1997-2001, however, the figure declined to 4.99 percent.

Getting Less Profitable

A host of interrelated factors complicate the ailment of the Philippine vegetable industry. From technological limitations to biological constraints, from institutional neglect to climatological factors (i.e., bad weather condition), from pests and diseases to weak/lack of coordination among producers (which sometimes lead to “overproduction”), from spoilage and wastage to decreasing consumption of vegetables, the vegetable industry is frequently besieged by disabling agents that virtually render the small vegetable growers defenseless, helpless, and paralyzed.

An indication that something is terribly wrong with the vegetable industry is that vegetable cultivation has been, through the years, getting less profitable. With high costs of production materials/inputs (partly due to profiteering and usurious practices of informal money lenders) and limited access to capital and relatively low farmgate prices, vegetable growers, by and large, reap lesser net earnings for every peso they have invested (especially in the case of cassava, sweet potato, cabbage, carrots, Baguio beans, potato, tomato, and string beans). (See Table 4)

Apart from the high expenditures on farm inputs (fertilizers, seeds, pesticides), vegetable growers also have to contend with high transportation cost (trucks, airfreight), high cost of packaging materials, high rental on stalls/stands, price fluctuations, lack of market information, and a highly layered marketing channel. Other vegetable farmers experienced some delays in the collection of payment while others pay relatively high commissions to distributors. Moreover, some farmers note that oversupply of vegetables has becoming a problem. On some cases, some growers did not dispose their produce due to low prices and bad road conditions.

With limited access to production loans offered by formal moneylenders, the usual practice of vegetable growers is to borrow from informal financiers (who usually engage in usury). For instance, in the upland areas where the majority of the country’s vegetables are grown, farmers cannot or do not avail of the services of commercial banks for lack of collateral, dislike of the bureaucratic practices and red tape, and the lengthy period of processing.12 In fact, the vegetables and rootcrops sector got only an annual average of PhP6.2 billion of production loans from 1990 to 2001 or 16 percent of the total annual agricultural production loans granted for food crops (8.38 percent of the total annual agricultural production loans)—the smallest portion in the food items category (and even in the entire loan pie, excluding forestry). (See Table 5)

It is not only access to loans that the vegetable industry is losing its share. Its portion in household food expenditures, for several years now, has been declining as well. Eventhough vegetable plays a major role in the maintenance of a balanced and healthy diet (being a primary source of vitamins and micronutrients), fruits, vegetable, roots and tubers only ranks 4th in the food expenditure category. In 1988, household expenditure for fruits, vegetables, roots and tubers was 5.7 percent of total expenditures. In 1991 it slightly decreased to 5.2 percent and further declined to 4.9 percent in 1994. By 2000, only 3.9 percent of total household food expenditure was devoted to fruits and vegetables.

For instance, there has been an observed 40 to 60 percent drop in demand/consumption for vegetables in the lowlands since 1999 (which maybe due to affordability, accessibility, availability, health, sanitation and GMO-related issues, change in dietary patterns and marketing/distribution issues). Consequently, the Benguet farmers have been suffering a supply glut crisis, which has left the province, according to the Department of Agriculture-Cordillera, “177 percent sufficient in vegetables.”13

DA Regional Director Elizabeth Versola noted that most farmers have been inclined to sell their cash crops at a loss to Metro Manila markets to cope with the crisis. Worse, unsold vegetables are left to rot in warehouses or fields because “vegetable farmers no longer eat their own products.”14

Another factor contributing to income loss apart from the weak demand is spoilage and postharvest losses. About 30 percent of vegetable production is lost due mainly to inefficient post-harvest handling and processes and an unpredictable seasonality of production.15 In the case of lettuce that comes from the Cordillera, 20 percent gets spoiled upon reaching Baguio due to delays in deliveries (which in turn is due to bad farm-to-market roads, and distance traveled) and absence of cold storage facilities.16 Prof. Franco T. Bawang of Benguet State University has identified four major causes of losses which are the following:17 1) “Losses due to biotic factors or caused by insects and diseases; 2) Losses due to mechanical injuries caused by damage inflicted during harvest and subsequent handling after harvest; 3) Weight loss due to transpiration of moisture from plant tissues; and, 4) Losses caused by abiotic factors or the so-called physiological causes. Under abiotic factors, there are two other causes: 1) Field condition related causes which are disorders or damages on plant tissues which may or may not be noticeable at harvest but later proliferate during handling and storage; and, 2) Postharvest handling or storage related causes which refer to losses due to unfavorable conditions to which the produce is subjected to under sealed packaging or storage.”

Aside from the problems already mentioned above, the industry is also beset by low quality of products, highly expensive machinery and agro-inputs (that are usually imported), limited research and development, lack of modern/appropriate farming technology and varieties, and weak (or lack of) producer organizations that could effectively market the vegetables directly to the consumers. Vegetable farmers also complained of inadequate farm extension and other support services from the government. There is also a need to implement internationally known and acceptable non-chemical treatment for fresh vegetables for control of specific target pests.

From Importation to Destruction

As if the present suffering of the vegetable industry was not enough, the government—because it has liberalized vegetable trade—added another misery to the vegetable industry. Importation.

In line with market access commitments under the Agreement on Agriculture of the Uruguay Round-General Agreement on Tariffs and Trade/World Trade Organization (GATT-WTO), the Philippines has agreed to remove import quotas and other restrictions and to replace these with corresponding tariff rates, which will be reduced at a predetermined schedule. The move to tariffy the quantitative restrictions (QRs) was effected through RA 8178 (Agricultural Tariffication Act) in 1995. The initial bound tariffs for most of the sensitive agricultural products fall within the range of 50 to 100 percent in 1995 and 1996. By 2003 and 2004 all of sensitive agricultural products will be within the range of 10-50 percent. For maize, poultry, hogs, meat products, coffee and coffee products, onion, potato, garlic and cabbage, the QRs will be replaced with higher tariffs equivalent to at least double the final rates applied in 1995. Rice is exempted from tariffication for a period of 10 years.

For vegetables, the Philippines offered to bind tariffs at 40 percent. However, the current applied rate for most vegetables (except cabbage and onion) is seven percent by virtue of Executive Order No. 164, which was issued by President Gloria Macapagal-Arroyo in January 2003.

And so the season of misery of the vegetable farmers rages on.

Rain in trickles would not cause much discomfort. On the other hand, a sustained downpour resulting in massive flooding is a disaster. And the flooding of imported vegetables in the local market (whether smuggled or not) brings havoc to the local vegetable industry and renders the country’s vegetable growers incapacitated.

Gov. Raul Molintas said the vegetable industry in Benguet, which is called the “Salad Bowl of the Philippines,” would collapse if the government keeps it commitments to the GATT-WTO as this would open the domestic market to competition from foreign markets.18

The lifting of import restrictions and the reduction of tariffs over the past few years as part of the country’s WTO commitment enabled the entry of cheap vegetable imports that now threaten to supplant the entire vegetable market in the Philippines.

As stated in Resolution No. 570 of the House of Representatives (12th Congress, 14 January 2003): “the removal of quantitative restrictions and the more than halving of average nominal tariffs in the sector especially since the mid-1990s. . . has caused imported vegetables to flood the domestic market with an almost three-fold increase from 42,000 metric tons (MT) in 1995 to 115,000 MT in 2000, not even counting thousands of metric tons which were smuggled into the country as a result of the more liberal import policies.”19 Among the US$13 million worth of vegetable imports in 2002 were 17,640 MT of onions, 490 MT of cabbage and lettuce, 310 MT of cauliflower and broccoli, 32 MT of carrots, 30 MT of tomatoes and 8 MT of asparagus. Resolution No. 570 pointed out that “local farmers could provide in abundance” the said vegetables “if given the chance.” Other imported vegetables include Portabello mushrooms, Brussels sprouts, red coral lettuce, potatoes, baby spinach, broccoli leaves, yellow and green pepper, ginger, garlic, leeks and celery.20

Resolution No. 507 identified the United States, Australia, New Zealand, the Netherlands, Singapore and China as sources of cheap vegetable imports. These countries, as stated in the resolution, “have heavily protected and subsidized their agricultural sectors to develop them and, indeed, all continue to do so on a massive scale.”

Bureau of Plant and Industry (BPI) director Blo Umpar Adiong, nonetheless, clarified that the country imports only when there is a great demand for it in the special market and the crop is not available in the country. For instance, while the Cordillera growers produce broccoli, cauliflower, celery and lettuce, the importer’s clients demand the Romaine and Iceberg varieties of lettuce. Broccoli, cauliflower and celery bought by the special markets from importers—restaurants, hotels, airlines, catering services and food industries—are of the same variety the Cordillera produces but of better quality because of their freshness and crispiness.21 In addition, Brian Anderson of Pacific Alliance said that “his clients wanted broccoli with a big head and small stem and that Australian vegetables were better compared to locally produced ones.”22

Moreover, Dir. Adiong, whose agency handles all matters pertaining to vegetable importation, pointed out that “importers always consider quality and price.” For instance, local lettuce is priced at more than PhP200 per kilogram while the imported variety costs only PhP90. Although Bukidnon produces the same quality of lettuce preferred by importers (to satisfy the demand of their local clients), its price is relatively higher at PhP110 per kilogram when it arrives in Manila.23

Nevertheless, Dir. Adiong said there was a decreasing trend in the importation of vegetables. From January to September 2001, the total vegetable imports reached 670.8 metric tons, down from 875.2 metric tons in 2000. In July 2002 alone imports reached 67.04 metric tons down from 149.7 metric tons in 2001. for 2002, imports from January to September totaled 518.2 metric tons.24 Vegetables imported were ginger, broccoli, broccoli leaves, cauliflower, celery, carrots, cabbage, potato and lettuce.

Dir. Adiong stressed that the amount of legally imported vegetables constitutes only 0.51 percent of the totality of the same vegetable produced domestically. (See Table 6) Imported in 2001 were 173.72 MT of broccoli, 47 MT of broccoli leaves, which the country does not produce; 41.64 MT of cauliflower; 33.21 MT of celery; 5.43 MT of carrots; 215 MT of potato; and 324.97 MT of a lettuce variety which the country does not produce.

The real issue, according to Dir. Adiong, is smuggling of vegetables, not legal importation. Unfortunately, the Bureau of Plant Industry’s Plant Quarantine Service (BPI-PQS) has no police power to run after smugglers.25

Although confirming that there was smuggling of vegetables like carrots, broccoli, lettuce, cabbages and potatoes, former Agriculture Secretary Leonardo Montemayor said the volume of smuggled vegetables was small and amounted to only 0.17 percent of the total vegetable demand of the country.26

The Smuggling Scourge

“But how about those unreported or misdeclared in ports?” asked Mayor Nestor Fongwan of La Trinidad, Benguet. “What about those that entered our ports without paying custom levies and tariffs?”27 He contended that the Department of Agriculture’s figures on the importation and smuggling of semi-temperate vegetables into the country are just a third of the actual volume that find their way into local markets.28

The agriculture department placed total vegetable imports at about 300,000 kilograms while a La Trinidad task force on vegetable smuggling said the volume of smuggled vegetables from July to 15 October 2002 had reached nearly 900,000 kilograms.29

According to the Bureau of Customs (BoC), it had apprehended cargoes of carrots, onions, ginger and other mixed vegetables for violation of Section 2530 f and m (3,4,5), Book II, Title VI of the Tariffs and Customs Code of the Philippines (TCCP),30 as amended, in relation to BPI rules and regulations, including some cases of misdeclared importations (e.g., declared as apples but found to contain vegetables), a violation of Section 2503 of the TCCP,31 as amended.

The BoC keeps a record of importation of fresh vegetables. Customs officials see to it that imported products are correctly declared and are covered by Permits to Import and Phytosanitary Certificates. They are also tasked to ensure that correct duties are paid before release.

La Trinidad Councilor John Kim said diced carrots, potatoes and green peas are squirreled in by unscrupulous traders. These products are misdeclared as diced vegetables thus avoiding quarantine procedures.32

Former Agriculture Secretary Leonardo Montemayor said the BPI has not issued any permit for the importation of carrots. “The carrots are smuggled from China,” he bared.33

“What’s worse is the farmers have also to contend with the influx of vegetables from Europe,” former Agriculture Undersecretary Ernesto Ordoñez added.34

Bureau of Customs statistics showed that some 72 containers of vegetables, pork, chicken and other meat products worth PHP45.07 million were apprehended between 1 August 2002 and 15 February 2003. Vegetables worth PhP39.6 million accounted for the bulk of the apprehended products.35

Benguet Gov. Raul Molintas and Mt. Province Gov. Sario Malinias blamed BPI Director Blo Umpar Adiong for the massive importation of vegetables, which they claimed was killing the local vegetable industry. They accused the agency director of favoring the interests of importers instead of protecting the interests of the local farmers. The two governors, along with 13 municipal mayors of Cordillera, even called on President Macapagal-Arroyo to immediately dismiss Adiong for alleged irregularities in importation, which they branded as technical smuggling.36

“The local vegetable industry is dying due to the unabated influx of imported vegetables from foreign countries,” the Cordillera local government officials lamented.37

Councilor John Kim, who is also a member of a government task force investigating the vegetable industry crisis, said the foreign vegetables almost caused the industry’s collapse. “It was the BPI’s indiscriminate (issuance of) importation clearances which allowed importers to go straight to the overseas producers at the expense of local farmers,” he asserted.38

Huge Losses

It is not surprising, therefore, that the Philippine vegetable industry is losing millions of potential revenues because the government, whether wittingly or unwittingly, is allowing it. And it will continue to lose billions of potential sales unless the government arrests the spate of vegetable smuggling and halts the liberalization of vegetable trade (e.g., applying seven percent tariff on imported vegetables instead of the 40 percent WTO-bound rate committed by the government in 1995).

The deluge of imported vegetables (whether smuggled or not) in the markets of Benguet, Mt. Province, the Cordilleras, Pangasinan, Central and Northern Luzon, and Metro Manila poses considerable risk and gross disadvantage to the nation’s small vegetable growers. The presence of foreign vegetables (which are usually sold at “dumped” prices) in the domestic markets effectively erodes the market share of local producers and technically disenfranchises them. It spells lower sales and, eventually, financial troubles for local vegetable growers.

In fact, vegetable farmers in La Trinidad, Benguet “were surprised when their big buyers from Metro Manila suddenly dropped them like hot potatoes.” Reports from the DA said vegetable buyers from Metro Manila began to import temperate vegetables like carrots, potatoes, cabbage, cucumber and even lettuce from Taiwan and China.39 Some farmers and trading post stall owners in La Trinidad have also been forced to close shop. They said they could not keep up with the high rentals due to market loses.40 Another report bared that rotting vegetables in Benguet and Mt. Province, amid a surge of cheap imports, have reached alarming proportions.41

La Trinidad Mayor Nestor Fongwan also said carrot orders from Metro Manila have either stopped or decreased. Imported carrots sell cheaper than local varieties causing traders and dealers to shift to the imported variety.42 Furthermore, Rep. Samuel Dangwa (Benguet) said that the mayors of Benguet have complained that even their trading posts in La Trinidad were now selling the imported vegetables.43

No less than the former Agriculture Secretary, Leonardo Montemayor, admitted that: “Based on our ocular inspection of wholesale markets in Divisoria and Balintawak, we had validated the claim that Benguet vegetables are indeed experiencing reduced trading movement.”44 Aside from this, he also discovered that vegetables from Taiwan and China (and labeled “to Japan”) that were brought into the country without the necessary quarantine permits are being sold in retail stalls at much lower prices than those of locally produced vegetables.

Montemayor confirmed that imported vegetables were being sold in retail stalls at lower process than those of locally produced vegetables, especially those that are coming from Benguet. The former DA secretary, in a press statement, bared that “these foreign-sourced vegetables sell from PhP16 to PhP20 per kilo as compared to the locally produced veggies ranging from PhP35 to PhP40 per kilo, thus virtually killing the local vegetable industry.”45

However, price estimates in Baguio City markets showed that “prices actually plunged for carrots, cabbages and potatoes” (August to October 2002 period).”46

Reports have it that in the first week of August 2002, when buyers from Metro Manila began refusing Benguet vegetables, the retail prices went down to PhP15 a kilo for potatoes and PhP20 a kilo for cabbage (from a high of PhP60 a kilo for potatoes and cabbage at PhP50 a kilo during the typhoons in early July 2002).47 In the case of carrots, the price in La Trinidad dropped as early as July 2002, from PhP20.00 to PhP4.00 per kilo, which is way below the PhP10.00 break-even price.48

Mr. Ed Mora, the chairperson of the Sandigan at Ugnayan ng Magbubukid sa Pilipinas (Sumapi), added that the farmgate prices of onions, garlic and cabbage in the last three years were the lowest in recent memory. The price of garlic went down from PhP98 per kilo in 1999 to PhP47 in 2001; onions from PhP40 to PhP25 and cabbage from PhP10 to PhP6 in the same period. The reason: competition from foreign producers.49

Vegetable farmers in Benguet, who have been protesting the continued importation of vegetables, cried that this was adversely affecting their income.50

Lulu A. Gimenez, information and education officer of Apit Tako (an alliance of Cordillera peasants), said the crisis is so different from earlier times when, even during rainy season, producers would pocket as much as PhP50,000 for a mere half-hectare’s harvest. “The past week’s depression in prices of highland vegetables is thus abnormal,” she said.51

Elizabeth Agpad-Verzola, regional director of the Department of Agriculture-Cordillera blamed the country’s membership in the GATT for the abnormality.52

Undeniably, the influx of imported vegetables is causing farmers in Benguet, the country’s prime vegetable production area, and other parts of the country to incur heavy losses. Gov. Raul Molintas of Benguet said the importation of vegetables is causing damage to farmers, booth holders and traders amounting to PhP3.5 million a month in La Trinidad alone.53 Other reports place the income losses of local vegetable farmers due to smuggling of vegetables at an average of PhP25 million a week.54 For the period April-October 2002, Councilor John Kim of La Trinidad, Benguet, chair of the council’s committee on agriculture, said that the imports and smuggled Chinese vegetables have displaced PhP21 million worth of Cordillera-grown produce from Metro Manila and Cebu markets.55 Also, Rep. Samuel Dangwa (Benguet), in a privileged speech, said that vegetable farmers in his province lost PhP20 million in August 2002 after the DA and the BPI allowed Rustan’s Supermarket and Truckerbag Inc. to import 3,000 kilos of carrots and 5,000 kilos of assorted vegetables from Australia.56 Senator Manuel Villar, on the other hand, bared that vegetable producers in Benguet have already lost PhP2 billion in failed transactions between July and August 2002 because of the dumping of at least a million kilograms of vegetables from Australia, New Zealand, and the Netherlands.57 Gov. Molintas warned that if the imports continued, the local industry will lose more than a billion pesos a year and thousand of farmers’ families in Benguet and Mt. Province, Pangasinan and other vegetable-producing provinces in the country will be displaced.58

Senator Villar warned that at least PhP6 billion a year will be lost by the local vegetable industry and tens of thousands of growers will be displaced if the unabated influx of foreign vegetable continues. As Senator Villar strongly puts it, “The entry of cheap vegetable imports is killing the local vegetable industry.”59

House Resolution No. 507 warned, “the livelihood of hundreds of thousands of Filipino vegetable farmers and their families, the domestic vegetable industry and the country’s food security are gravely threatened by the cheap imports undermining local vegetable production.” Estimates have it that the vegetable industry crisis is affecting 250,000 farmers or about 1.25 million people in Benguet and Mountain Province alone.60 But Gov. Molintas said more could be affected by trade liberalization because the vegetable belt of the Cordillera extends to Benguet’s neighboring provinces like Mt. Province and Nueva Vizcaya.61

Without import restrictions, the local vegetable industry may collapse when push comes to shove. Beset with a multitude of technological, financial and infrastructural problems (lack of credit, poor farm-to-market roads, absence of storage facilities, and expensive inputs and machinery), Filipino farmers are expected to experience undue hardships, while their counterparts in Australia, Northern America or Europe wallow in riches.

Searching for a Remedy

To immediately address the vegetable importation problem, the DA has formulated a number of strategies.

In October 2002, amid the gush of foreign-produced vegetables in the local markets, former Agriculture Secretary Leonardo Q. Montemayor ordered the immediate implementation of Republic Act No. 8800, also known as the Safeguard Measures Act, which intends to protect local agriculture products against imported surges in view of the reported entry of vegetable from foreign sources, and at the same time actively support the initiatives of the local vegetable industry led by the Benguet Vegetable Industry Stakeholders. The former DA chief likewise “requested the Department of Finance-Bureau of Customs to investigate and, if warranted, curtail the illegal entry of imported vegetables” as part of the government’s continuing effort to address the technical smuggling of vegetables.62

One measure to curb smuggling, according to the DA, is to subject imported vegetable to pass through the “red lane” at piers and airports for tighter inspection, and to allow DA and the custom bureau to share data on the list of vegetable importers, volume and value imported and import permits issued.63

Another plan of action was to “ask the Vegetable Industry Stakeholders in Benguet, which accounts for majority of vegetables being sold in Metro Manila, to coordinate closely with the DA-CAR field units to undertake market intelligence and monitoring activities” so that members of the vegetable industry “who commit trading malpractice could be reported to the appropriate authorities.64

Aside from this, the DA also intends to distribute this year “some 9,000 kilograms of good quality vegetable seeds and other planting materials and implement an PhP11 million intensified training program to enable vegetable farmers to improve their production and help them sell their crops.”65

Aimed at strengthening the local vegetable industry and enhancing its competitiveness in the domestic and overseas markets, the initiative, according to the former DA chief, “has been drawn up in the face of the growing threats posed by a surge in vegetable smuggling and sudden price decline of local semi-temperate vegetables due to entry of cheap imports.”

In addition, Montemayor said the “DA’s High Value Commercial Crops unit, Agricultural Training Institute, Agribusiness and Marketing Assistance Service, and its Bureau of Agricultural Research shall train farmers on rapid multiplication technique, nursery establishment for potato cutting and production of crucifers and seed potato.”66

In order to strengthen marketing tie-ups, the DA aims to “empower vegetable producers to link directly with end-users and institutional buyers by having the Bureau of Post-Harvest Research and Extension provide them with a reefer truck in the first quarter of 2003, and helping them establish trade ties with supermarkets, restaurants and fast-food chains.” In addition, the agriculture agency will implement a “diversified farm income and marketing development program which will carry out institutional strengthening and reforms within the DA to enable it to provide small-holder agricultural development and market infrastructure support for farmers.”

The program, “which will require foreign funding, will also strengthen private sector market linkages and producers’ associations and will consist of intensified farm and fishery trade promotion in areas like Cordillera, Bukidnon, Panay Islands, and Cebu.”67

Nonetheless, after all that has been said and will be done, “the Department of Agriculture is not keen on supporting moves to raise the tariff on semi-temperate vegetable imports from seven to 40 percent as a means to help local vegetable farmers cope with stiffer foreign competition brought by liberalized global farm trade.”68

It is indeed lamentable that in these times of economic hardships there exist rampant unfair trade practices, specifically those involving dumping and outright smuggling of vegetables. The government must correct these unfair trade practices so as not to place the local vegetable industry in a grossly disadvantaged position, which may result in its demise. However, the solutions offered by the government, as they stand now, are mere palliative measures, or worse, they may end up as another lip service.

Yes, the government must rigidly and strictly enforce RA 8800 or the Safeguard Measures Act. Moreover, the government must now include some vegetable products, which directly competes with imports, under the sensitive list of commodities (e.g., cauliflower, broccoli, cabbage, lettuce, carrots, turnips, radish, cucumber, celery, spinach). Yes, these moves are necessary but not sufficient to totally rehabilitate the badly injured, hopelessly crippled Philippine vegetable industry.

If the government can protect the local petrochemical industry (by issuing EO 161, series of 2003, which suspends tariff rate reduction on petrochemical products), then there is no reason why it cannot protect the local vegetable industry.

Unfortunately, the entire Philippine vegetable industry is now fast approaching a comatose state. And before all the Filipino vegetarians hear the eerie flatline sound, the government must now act quickly, wear its surgical gloves, prepare the instruments and start the economic and political operation needed for its survival. The prophylactic operation could be messy but it is worth the risk.

Endnotes
1 Vincent Cabreza and Desiree Caluza, “ ‘Pattern’ shows Cordillera region dependent on veggie industry,” Philippine Daily Inquirer (PDI), 21 October 2002, p. A-17.
2 Ibid.
3 Ibid.
4 Nathan Alcantara. “WTO-GATT to affect vegetable farmers,” PDI, 2 July 2001, p. A15.
5 Artemio Dumlao. “Imported carrots killing country’s veggie capital,” Philippine Star, 24 August 2002, p. 16.
6 Nathan Alcantara. “WTO-GATT to affect vegetable farmers,” PDI, 2 July 2001, p. A15.
7 Dr. Flordeliza Lantican. “Vegetables: Promising Opportunities,” in The Food and Agriculture Centennial Book, Rolando T. Dy, editor, University of Asia and the Pacific, Manila, 1998, p. 50.
8 Frank Cimatu. “Importation killing Benguet veggie industry,” PDI, 19 August 2002, p.A-14.
9 Lantican 1998, p. 52.
10 House of Representatives, 12th Congress. “Resolution No. 507 –Resolution Directing the Committee on Agriculture, Food and Fisheries to Conduct an Inquiry, in Aid of Legislation, on the Adverse Impact of the Government’s Agricultural Liberalization Policies on the Domestic Vegetable Industry, on Vegetable Farmers and on Their Livelihood and to Recommend Appropriate Remedial Measures Thereof,” 14 January 2003.
11 Lantican 1998, pp. 50-51.
12 Amos S. Beta-a, “An Overview of the Different Problems of Farmers in the Philippines and Benguet Province,” paper presented at the Small Farmer’s Organization and Vegetable Marketing Improvement” series of seminars held at La Trinidad, Atok and Buguias, Benguet, 20 September-23 October 1986.
13 Vincent Cabreza, “Cordillerans urged to eat veggies to held farmers,” Philippine Daily Inquirer, 22 April 2002, p. A-16.
14 Ibid.
15 Eleno A. Magno, Jr. “APMPO’s Program Thrust in the Vegetable Industry,” paper presented at the Small Farmer’s Organization and Vegetable Marketing Improvement” series of seminars held at La Trinidad, Atok and Buguias, Benguet, 20 September-23 October 1986.
16 Blo Umpar Adiong, “Traders find Australian veggies cheaper and of better quality,” Philippine Daily Inquirer, 13 October 2002, p. A10.
17 Prof. Franco T. Bawang, “The Physiological Causes of Postharvest Losses in Vegetables,” paper presented at the Small Farmer’s Organization and Vegetable Marketing Improvement” series of seminars held at La Trinidad, Atok and Buguias, Benguet, 20 September-23 October 1986.
18 Nathan Alcantara, “WTO-GATT to affect vegetable farmers,” PDI, 2 July 2001, p. A15.
19 House of Representatives, 12th Congress. “Resolution No. 507,” 14 Janaury 2003.
20 “Talk of the Town: Are Pinoy farmers losing the salad wars?” PDI, 13 October 2002, p. A10.
21 Ibid.
22 Blo Umpar Adiong, “Traders find Australian veggies cheaper and of better quality,” Philippine Daily Inquirer, 13 October 2002, p. A10.
23 Ibid.
24 Othel V. Campos, “Import of veggies down; smuggling rampant—DA,” Manila Standard, 7 November 2002, p. A-3.
25 “Legal veggie importations minimal—BPI,” Philippine Star, 25 November 2002, p. 18.
26 Frank Cimatu, Maurice Malanes, and Yolanda Fuertes. “Mayor says veggie entry into RP under-reported,” PDI, 22 October 2002, p. A-16.
27 Ibid.
28 Ibid.
29 Editorial. “Debilitating imports,” PDI, 2 November 2002, p. A-8.
30 Sec. 2530 (Property Subject to Forfeiture Under Tariff and Customs Laws) states that: Any vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be subject to forfeiture:
Secitons f and m are as follows:
f. Any article of prohibited importation or exportation, the importation or exportation of which is effected or attempted contrary to law, and all other articles which, in the opinion of the Collector, have been used, are or were intended to be used as instrument in the importation or exportation of the former.
m. Any article sought to be imported or exported:
(3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article.
(4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article.
(5) Through any other fraudulent practice or device by means of which such articles was entered through a customhouse to the prejudice of the government.
31 Sec. 2503. Undervaluation and Misdeclaration in Entry. — When the value of the imported articles shall be so declared and entered that the duties, based on the declaration of the importer on the face of the entry, would be less by twenty per centum than should be legally collected, or when the dutiable weight measurement or quantity of imported articles is found upon examination to exceed by ten per centum or more, the entered weight, measurement or quantity, a surcharge may, in the discretion of the Collector be collected from the importer in an amount not less than the difference between the full duty and the duty based upon the declaration of the importer, nor more than five times of such difference: Provided, That in cases where the Collector decides to waive imposition of any surcharge in excess of one hundred pesos in any entry, his action shall be subject to review by the Commissioner.
32 Othel V. Campos, “Import of veggies down; smuggling rampant—DA,” Manila Standard, 7 November 2002, p. A-3.
33 Ibid.
34 Ibid.
35 Ernesto M. Ordoñez. “Farmers lead the way,” PDI, 21 March 2003, p. B7.
36 Gerald G. Lacuarta. “For ‘killing’ veggie industry, officials want BPI exec’s head,” PDI, 3 November 2002, p. A-7.
37 Ibid.
38 Vincent Cabreza, “Importers agree to buy local veggies,” PDI, 31 October 2002, p. A-14.
39 Frank Cimatu, “Importation killing Benguet veggie industry,” PDI, 19 August 2002, p. A-14.
40 Thomas F. Picaña. “Cordillera farmers ask GMA to pluck RP out of GATT,” Manila Times, 27 August 2002, p. A4.
41 Ramon Lazaro. “Veggies rot as imports surge,” TODAY, 30 October 2002, p. 4.
42 Ibid.
43 Christine O. Avendaño. “More solons rap vegetable imports,” PDI, 12 November 2002, p. A5.
44 Department of Agriculture, “DA chief acts to stop illegal entry of imported veggies,” 15 October 2002, press release.
45 Ibid.
46 Frank Cimatu, Maurice Malanes, and Yolanda Fuertes. “Mayor says veggie entry into RP under-reported,” PDI, 22 October 2002, p. A-16.
47 Frank Cimatu, “Importation killing Benguet veggie industry,” PDI, 19 August 2002, p. A-14.
48 Ernesto M. Ordoñez. “Farmers lead the way,” PDI, 21 March 2003, p. B7.
49 Editorial. “Who speak for the consumers?” Manila Times, 5 November 2002, p. A-6.
50 Frank Cimatu, Maurice Malanes, and Yolanda Fuertes. “Mayor says veggie entry into RP under-reported,” PDI, 22 October 2002, p. A-16.
51 Thomas F. Picaña. “Cordillera farmers ask GMA to pluck RP out of GATT,” Manila Times, 27 August 2002, p. A4.
52 Ibid.
53 Efren Danao, “Gov’t can’t stop vegetable imports, says DA official,” Philippine Star, 14 November 2002, p. B-6.
54 Othel V. Campos, “Import of veggies down; smuggling rampant—DA,” Manila Standard, 7 November 2002, p. A-3.
55 Vincent Cabreza, “Importers agree to buy local veggies,” PDI, 31 October 2002, p. A-14.
56 Christine O. Avendaño. “More solons rap vegetable imports,” PDI, 12 November 2002, p. A5.
57 Rey E. Roquejo, “Imported vegetables cost Benguet P2B, says Villar,” Manila Standard, 4 November 2002, p. A-2.
58 Gerald G. Lacuarta. “For ‘killing’ veggie industry, officials want BPI exec’s head,” PDI, 3 November 2002, p. A-7.
59 Ibid.
60 Editorial. “Debilitating imports,” PDI, 2 November 2002, p. A-8.
61 Nathan Alcantara, “WTO-GATT to affect vegetable farmers,” PDI, 2 July 2001, p. A15.
62 Department of Agriculture, “DA chief acts to stop illegal entry of imported veggies,” 15 October 2002, press release.
63 Department of Agriculture. “DA bares action plan to strengthen the veggie industry,” 7 November 2002, press release.
64 Department of Agriculture, 15 October 2002, press release.
65 Department of Agriculture, 7 November 2002, press release.
66 Ibid.
67 Ibid.
68 Department of Agriculture, “DA not keen on raising veggie import tariff to 40 percent,” 24 March 2003, press release.

 (Originally published in: Focus on the Philippines No. 4, http://focusweb.org/oldphilippines/content/view/25/6/)