FAST BACKWARD: Rice cartel, circa 1927

FAST BACKWARD: Antonio Figueroa

Rice cartel, which is synonymous to control, smuggling, hoarding and monopoly of rice, is a centuries-old commercial trick designed to gain profit through inequitable competition.

During American rule, the government suffered losses from rice monopoly. To cover the deficit, appropriations were included in the annual budgets. In the 1923 budget, entries covering losses due to rice control (por perdidos en el control arroz) included actual loss (1921), authorized loss (1922) and estimated loss (1922). In the graph titled Comparative Statement, the actual loss was pegged at P202,121.89, while the authorized and estimated losses were P380,000 each.

Rice control during American Occupation, like today, was largely blamed on the Chinese, especially in the retail of the staple. An article in the August 1927 edition of The American Chamber of Commerce Journal, explains the practice vividly:

“Merchandizing rice in the Philippines is practically controlled by Chinese. They control importing, storing and milling, and retailing too to a great extent as they do widely throughout the orient, being able to organize effectively in order to do so. Their average gains in the rice trade vary from 12 to 14 per cent, which is not an exorbitant profit, 12 per cent being the legal rate of interest.”

Rice cartel is not new, though. During the war, the list of opportunists was not limited to the usual culprits; it also included public officials. In a wartime headline, the Japanese-controlled ‘Tribune’ came up with a strong warning, making rice hoarding a hostile act and rice speculators subject to punishment under the Imperial martial law.

“Determined to give full support to the government in the execution of its rice policy, the Imperial Japanese Army… will consider any attempt to speculate in rice as a hostile act punishable under martial law…

“’The Army’s policy is to deal rigorously with these activities in accordance with military law, considering them hostile acts which adversely affect, directly or indirectly, the military operations of the Army, thus [the need] to liquidate the sinister groups which disturb national peace and order…

As reason for the soaring of the rice price, a section of the public is reported to mention that Japanese firms are buying the cereal at high prices in the provinces. We take this opportunity to state that the rice thus purchased is to be supplied to Filipino employees of the firms.

“Needless to say, the companies have bought at a justifiable price. Hence, we regret to hear the report that the chiefs of some municipalities and barrios in the provinces are taking advantage of the purchase by Japanese firms to induce sellers to offer exorbitant prices to the purchasers… At the same time, any Japanese firms engaged in unjustifiable purchase without permission by military authorities will be punished strictly…

“As a fundamental measure to bring down the rice price, military authorities plan to import rice in large quantities from abroad. We earnestly desire that, trusting the policy of the Philippine government, the Filipino people will collaborate with it without being utilized by speculators for their selfish purposes.” (Paragraphing mine.)

The issue of rice hoarding—this time linking the November 1964 elections—also caught the attention of the government, especially reports of critical rice shortages caused by rat infestation in Mindanao and other regions.

The more significant development was the order of defense undersecretary Alfonso Arellano to Philippine Constabulary chief, Brig. Gen. Segundo Velasco “to coordinate with the [Rice and Corn Administration] in enforcing the law against rice hoarding and to locate the supposed sizeable carry-over of the huge rice importation of the [Macapagal] Administration if the total 595,000 metric tons was actually imported.”

Official records indicate that in 1961, RCA imported about 289,000 metric tons, which was less than half the 1965 procurement, with a sizeable carry-over the following year.

Felomino G. Domingo, in a June 1966 article (‘Rice and Corn’) in ‘The American Journal of Chamber of Commerce,’ explained that “it was surprising that only an insignificant quantity of the left-over of the huge 1965 importation could be located. Could it be that the stated amount was only on paper and not actually imported? Could credence be given to reports that RCA rice was given away free to the voters during the last elections? An accounting is in order.”

In short, there was obvious rice hoarding.

Recently, rice hoarding was linked to illegal importation (smuggling) and price manipulation. On April 21, 2016, the Coalition of Filipino Consumers tagged Davao city mayor Rodrigo Duterte (then presidential bet), son Paolo, former National Food Authority administrator Lito Banayo and Davidson Bangayan, alias David Tan, for being involved in the billion-peso rice smuggling at the Davao Port.

The justice department, in 2017, declared the case submitted for resolution based on the refiled complaint of the NBI dated August 29, 2017. More than a year later, the department indicted Bangayan and five others (minus Duterte and Co.) for “conspiring to rig the bidding of rice imports to increase the market price of rice in 2014.”