Saturday, October 12, 2019

The Invisible Hand and the Bleeding Hearts

I attended a two-day seminar on the Philippine Competition Act last week and during the Q&A portion, someone asked the Philippine Competition Commission chair about his earlier statement that the rice tariffication law* was a good example of competition at play. He was asked if he really believed that, considering the hardships that our local farmers were now experiencing with the lowering of palay prices. 

I don't remember if the commissioner answered, but one of the speakers, an economist from the US Federal Trade Commission, replied that the rice tariffication law was indeed ultimately good for the consumers because it would give them the lowest price for the best goods. She emphasized that all the players would be forced to compete at optimum level making the consumer benefit and have a higher purchasing power.

She continued that if our local farmers could not compete, then it was up to the government to fill in the gap and make them competition-ready. Do they need more training? Maybe they need better equipment and more support in the form of low-interest loans or ready markets? The speaker stressed that there were many ways to help our farmers and putting a tariff on rice importation was too much government intervention and that we should allow the invisible hand of supply and demand to dictate the prices. 

I am not privy to government programs to help farmers, but I would like to believe that our government will not let our farmers flounder, leaving them in the proverbial dust to fend for themselves.

With that aspect hopefully taken cared of, I then wondered if consumers can do something as well. We are, after all, a very powerful force to reckon with since we have the buying power that can literally move markets.

As it turned out, some groups already took action by creating a platform that will allow farmers and consumers to directly interact with each other, so that farmers can quote their prices without countless middlemen needlessly inflating the prices. 

One such group who refused to let things just be and let the Invisible Hand dictate our farmers' future, is Session Groceries, a Baguio-based grocery delivery service that sources fruits and veggies directly from farmers and then delivers them to Metro Manila, Pampanga, Cavite and Laguna.


Session Groceries recently tied up with Mindoro rice farmers, collecting pre-orders so that the Mindoro farmers would be able to dictate their prices for milled rice and not be forced to sell their palay at the lowering farmgate prices (because the influx of imported rice has created more supply than demand for rice).

I tried ordering from the Session Groceries app a few weeks ago and I found it very easy to use, my low-level tita skills were not taxed. Payment options are through BPI or BDO bank deposit. I think cash on delivery is also available, but don't quote me on that. Delivery fee is separate though and has to be settled by cash upon delivery.

We ordered 5kg of sinandomeng rice at Php235.00 or Php47/kg, which is similar to the price we pay from the rice trader in our condo compound. We also included some veggies and a rosemary plant with our order. The delivery fee to our Paranaque address was Php240.

My husband is the one who cooks in our family and he had this to say about our Mindoro rice:

Akala ko OA ang mga tao when talking about the rice from Session Groceries but totoo pala. It is a superior rice and much better than the sinandomeng I regularly buy. Makes you wonder kung anong klase yung ini import sa atin kasi this definitely is some of the best I've ever had and I don't like to waste praise. Sure ka pa it's not that plastic crap from China at maka tutulong ka pa by buying direct from framers. I think sure ball na ang success ng advocacy nila kasi in order to succeed they MUST provide a better product than what's available. Otherwise it's just a more hassle way of buying stuff. They can't just rely on people's empathy kailangan superior product din and they have it here.
Personally, I'm a rice plebeian and I can't really tell one variety from the other. I only notice and mind when the rice is tough and "hiwa-hiwalay" because I like my rice soft and fluffy. But I did notice that our rice was soft and extra yummy, and I had to exercise control not to go for second servings.

Anyway, I try not to be a bleeding heart and try not succumb to appeals to emotion. That's why I placed an order with Session Groceries with the full intention of not making a repeat order if it couldn't measure up to the other delivery services. Advocacies are well and good, but if you're in business, you can't rely on bleeding hearts to sustain your bottomline. That's not a good business model.

But Session Groceries did deliver, figuratively and literally, so please meet your new regular client.

An important thing to take note about Session Groceries though is that it doesn't do daily deliveries and only delivers once a week. Weekly orders have a Wednesday cut-off, then delivery is done every weekend. If you don't make the cut-off, then your delivery will be slated for the next weekend.

Also, since the Mindoro rice is pre-ordered and the farmers will have to prepare the orders they received, delivery is done every few weeks and not on a weekly basis. As of this writing, the next Mindoro rice delivery is scheduled on October 27.

As a consumer, this means that you have to adjust your grocery needs accordingly so that you can incorporate the scheduled deliveries into your household budget and routine.

For my household, I'm thinking we can do bi-monthly orders, ordering veggies and fruits twice a month and rice once a month. I haven't fully figured it out yet but it should be easy enough to work out.

Another advantage of ordering from Session Groceries is that it doesn't use plastic in any of its packaging, wrapping fruits and veggies in newspaper while the 5kg rice we ordered was packaged in an eco-bag. So this is another win if you're trying to cut back on plastic usage for yourself and your household.

A friend just sent a message that farmers from Nueva Ecija and Pangasinan will be selling rice (sinandomeng at Php1125 for 25 kg or Php45 per kg) at the Salcedo Saturday Market. If you're in the area, you can pick up your weekly or monthly rice allocation there.

Maybe that US economist had it right all along, maybe allowing the Invisible Hand to dictate market prices is a good thing because low prices are good for the consumers. But if I may add, when it comes to our farmers, the Invisible Hand should work with the Bleeding Heart because equity is not just about equality as some sectors need a little more help than others.

The law of supply and demand envisions an even playing field where all players can compete fairly. However, the reality is that the playing field is never even when it comes to our farmers that's why government intervention and private participation is needed to ensure that they survive, that they flourish, and that they are incentivized to continue producing the food we all need to survive. We owe them that much.



*Republic Act 11203 or the Rice Tarrification Law liberalized rice imports by removing quotas on rice importation, allowing the law of supply and demand to dictate the market.

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