A simple history of the cartels and why we are talking about them

Photo: A rice mill and Bodega in Mindanao

The commodity cartels are as old as trading in the Philippines, spawned by the colonial practice of dividing the archipelago according to the planting of suitable crops and allowing its trade to go to certain favored channels such as encomenderos, or Spanish citizens and Church authorities and families that were given the right to develop and own lands and harvest the produce. 

These elites had access to markets and inputs that ordinary farmers did not have, leaving the mass of Filipinos disenfranchised, and poor, morphing into a culture of want and exclusion that in many ways is still seen today. This was partly the reason for the agrarian unrest that fueled the revolution in 1898.

While this practice of granting exclusive trading rights was abolished in writing upon the exit of Spain, the lucrative trade persisted, taken over by today’s cartels, composed mainly of large traders and agricultural processors (Mostly Chinese millers) who all agree to fix the pricing of certain commodities and influence government agencies (the officials of the National Food Authority are often accused of this) to restrict the import of such commodities (rice, garlic, beef are all imported) in order to keep the local price of the commodities high, for the benefit of the cartels.

With this, the recent move to allow more importation of rice by imposing tarriffs for imports (Tarrification) will allow imports any time, rather then restrict the importtion through imposed quotas that disallow the entry of the products. This is a threat to the cartels, since they will no longer have a handle on how much is imported, which in turn will not allow them from fixing the prices.

Will rice tarrification dismantle the cartels? Maybe not. But you are sure that they are scared of it.