Cassandra Casticimo

The Philippines has long been dealing with agricultural issues such as ineffective supply chains, smuggling, hoarding, and the manipulation of the price of commodities such as rice, sugar, and vegetables. Due to natural calamities such as typhoons, the products are damaged leading to an increase in production costs, as well as unstable prices in the market. Therefore, the impact is significant on the inability of Filipino consumers to purchase their needs. 


Recently, President Ferdinand Marcos formally signed Republic Act No. 12022 or the Anti-Agricultural Economic Sabotage Act, as the visible response to these challenges. The purpose of the law is to protect farmers and consumers from illegal activities such as mass smuggling and hoarding that have a significant impact on the agricultural sector. Such violations are considered economic sabotage and carry heavier penalties such as life imprisonment and heavy fines.

Smuggling and Hoarding

Smuggling of agricultural products, particularly rice and sugar is rampant in the country, resulting in an oversupply that harms local farmers. Since January 2022, the Bureau of Customs (BOC) has declared that it has seized agricultural products valued over PHP1.2 billion. A total of 105 seizures have been made over this time, according to BOC spokesman Arnaldo dela Torre Jr., underscoring the continuous problem of agricultural smuggling throughout the nation.

At the same time, hoarding by exploitative traders creates an artificial shortage, which raises prices for consumers. For example, despite an ample supply in the market, onion prices in the Philippines surged to P600 a kilogram at the beginning of 2023, allegedly as a result of hoarding. Prices for local red and white onions in Metro Manila ranged from P420 to P600 per kilogram at this time, demonstrating the serious effects of price manipulation on the buying public.

The new law targets such practices by imposing heavier penalties on those involved.

In September 2023, the BOC filed four criminal cases against three rice traders from Great Harvest Rice Mill Warehouse, San Pedro Warehouse, and FS Rice Mill Warehouse inside the Intercity Industrial Complex (IIC) at Barangay San Juan, Balagtas, Bulacan. They discovered illegally imported sacks of rice worth P505 million that allegedly came from Vietnam, Cambodia, and Thailand.

The criminal cases involve violations of Republic Act (R.A.) 10863, or the Customs Modernization and Tariff Act (CMTA) a law enacted in 2016 to modernize and change the customs tax collection and regulation policies on goods entering and exiting the country. The main objective of this law is to make the processes of the Bureau of Customs (BOC) more effective and efficient by using technology, simplifying steps, and promoting transparency.

Another is (R.A.) 11203, Rice Tariffication Law, this is a law passed in 2019, its purpose is to remove the quantitative restrictions on the importation of rice in the Philippines and replace it with a tax, it allows the unlimited importation of rice as long as the tax is paid which is 35% for countries within ASEAN and higher for non-ASEAN countries.

Of the cases filed, three refer to large-scale smuggling in violation of R.A. 10845, known as the Anti-Agricultural Smuggling Act, it declares that large-scale smuggling of agricultural products is a form of economic sabotage with the objective of protecting the local agricultural sector against the illegal importation of products such as of rice, sugar, and vegetables causing great damage to local farmers.

Supply Chain Shortcomings

The lack of adequate infrastructure for the transportation of agricultural products is a major problem. According to Agriculture Secretary Francisco Tiu Laurel, more than 30% of agricultural products in the Philippines are wasted due to poor logistics systems.

If the Philippines is compared to developed countries, domestic distribution and processing costs are 20% to 30% higher and logistics costs constitute nearly 30% to 40% of total marketing costs. 
Farmers who already face low productivity at the farm level are hit with a setback due to high post-harvest losses, which amount to 48% for fruits, 16% to 40% for vegetables, 14.8% for rice, and 7.2% for corn.

The Department of Trade and Industry (DTI) estimates that logistics expenses account for 24% to 53% of wholesale prices, while shipping and port handling expenses account for 8% to 30%, contingent on the product's route, and roughly 5% of the retail price.

BOC's solution here is to take initiatives to speed up the flow of rice shipments to Manila to avoid delays in its arrival, and the price of rice in the market. Currently, it is estimated that 258 containers of rice at the Port of Manila and 237 here have been released and are only dependent on the payment of taxes and fees. In Manila International Container Port, out of 630 containers, 492 are ready to be released.

Availability of Price Changes

Fluctuating market prices have a significant impact on farmers, often caused by illegal activities that the new law seeks to curb. An analysis conducted by Danilo Ramos, leader of the Peasant Movement of the Philippines revealed that the government imported more than 14 million tonnes of rice between 2019 and 2022, at a cost exceeding 155 billion pesos, or roughly $2.8 billion. As a result of local farmers facing competition from cheaper imported rice, the estimated loss to them was close to 300 billion pesos, or $5.5 billion.

When there is widespread smuggling, the smuggled products distort the prices of local products. When imported products are cheaper, it causes losses to local farmers which causes their income to fall. There is an excess of less expensive rice on the market as a result of rice being smuggled into the nation at reduced costs from nearby countries. Despite their increased production costs, local farmers are forced to decrease their prices in order to compete with the influx of illegal rice. Because they are unable to sell their rice at a sustainable price, many local farmers end up losing money, which lowers income and causes hardship for farming communities. This hypothetical situation demonstrates how smuggling can impair regional agriculture sectors and interfere with farmers' ability to make a living.

In 2020, the Philippine Statistics Authority reported that the average daily income for male farm laborers was P335.00, which was higher than the average daily wage for female farm workers, who were paid P304.60. Of all the regions, Central Visayas had the lowest daily wage rate at P276 and Calabarzon the most at P399.08. It became difficult for them to invest in their lands and production.  

In 2020, the Philippine Statistics Authority reported that the average daily income for male farm laborers was P335.00, which was higher than the average daily wage for female farm workers, who were paid P304.60. Of all the regions, Central Visayas had the lowest daily wage rate at P276 and Calabarzon the most at P399.08. It became difficult for them to invest in their lands and production. 

In the Philippines, agricultural smuggling hit PHP 3 billion in 2023. More than PHP 230 million worth of agricultural items that were being trafficked were found within the first nine months of this year. This points to a significant issue that hurts nearby farmers, skews market pricing, and jeopardizes the availability of food. It is imperative that this issue be resolved in order to safeguard the agriculture industry and provide equitable competition for regional farmers.

Other agricultural laws

The Rice Tariffication Law (RA 11203) aims to stabilize rice prices in the country. By adopting a more liberal import policy, the government seeks to increase supply and lower prices. However, while cheaper rice benefits consumers, local rice producers face significant challenges. Competing with imported rice has led to declining incomes and strained livelihoods for many local farmers. To address this, additional support measures for the agricultural sector have been proposed to balance the needs of both farmers and consumers.

The Anti-Smuggling Act (RA 10845) was enacted to prevent illegal agricultural imports, which threaten the livelihoods of local farmers. While the law is a key step toward protecting local agriculture, implementing it remains difficult. Smuggling continues to affect the sector, as it increases the availability of cheaper imports, driving down local prices further. Although the act could help to reinforce prices and improve the quality of local products, its success depends heavily on strong enforcement.

Additionally, the Anti-Agricultural Economic Sabotage Act was introduced to penalize actions that undermine agricultural policies. This law complements RA 11203 and RA 10845 by targeting illegal activities that harm farmers and disrupt the market. Its effective enforcement is critical to promoting investment in agriculture, protecting farmers' livelihoods, and ensuring a fair marketplace. By reducing the impact of illegal operations, the law aims to create a more reliable supply of high-quality agricultural products, benefiting consumers and contributing to food security and economic stability.

Expert Opinions and Feedbacks

Regarding the Anti-Agricultural Economic Sabotage Act, experts have expressed differing views. The omission of farmers and producers from the Anti-Agricultural Economic Sabotage Council as permanent members is one of the law’s shortcomings, according to former Agriculture Secretary Leonardo Q. Montemayor, even though the legislation is an improvement over its predecessor. He emphasized how crucial it is to include these parties in order to have stronger representation.

Raul Q. Montemayor, National Director of the Federation of Free Farmers, similarly noted that the new law's harsher penalties will be useless if smugglers and hoarders are not appropriately caught and prosecuted, as was the case with the previous legislation.

William D. Dar, a former secretary of agriculture, underlined that the law's success depends on its unbiased, politically independent execution. Additionally, he commended the "whole of government" strategy, in which the President chairs the council, saying it is essential to strengthen the administration of law.

Stakeholders who felt that enforcement should only come from independent law enforcement agencies attacked the Department of Finance's membership in the enforcement group, claiming it jeopardizes attempts to keep the Bureau of Customs operating with checks and balances.

Nonetheless, economics professor Leonardo A. Lanzona of Ateneo de Manila University contended that the Philippines' dependence on imports stems from the country's inability to produce enough food to meet its demands. Although lowering rice tariffs should have made smuggling less profitable, he pointed out that raising domestic production is the long-term answer. He felt that rather than establishing councils, government money would be better used to subsidize farmers.

However, according to Marie Annette Galvez-Dacul, Executive Director of the University of Asia and the Pacific (UA&P) Center for Food and Agribusiness, the success of the new anti-smuggling law depends on the honesty and leadership of those enforcing it, the success is depends on having capable leadership and sound implementation.

By tackling the issue of smuggling, the Anti-Agricultural Economic Sabotage Act seeks to increase domestic production, foster a more stable agricultural environment, and motivate farmers to increase their capital expenditures. The legislation does not provide price stabilization, even if its goal is to minimize preserving and smuggling. Instead, successful enforcement and ongoing initiatives to assist local farmers are what will determine its success. Additionally, more customers may support locally made goods if unlawful actions are stopped.