EXPLAINER: Why onions in PH are now more expensive than meat

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Metro Manila (CNN Philippines, January 11) — In the Philippines, a kilogram of onion is about two to three times more expensive than chicken and pork. Why is the price of onion so high?

Here are reasons.

Low supply

Basic economics tells us that when the quantity demanded is greater than the supply, the price will rise. This is the case for onions in the Philippines.

Last August, the Department of Agriculture (DA) already warned that the onion supply was dwindling and it would be insufficient to meet the demand.

Farm industry group Samahang Industriya ng Agrikultura (SINAG) earlier said importation of onions would solve the supply problem, but it would also result in oversupply by January 2023 if the government’s decision would come late.

Dapat nag-angkat na tayo ngayon. If hindi tayo umangkat after 10 days pa baka mag-spill over na ito by January, hindi na makakatulong ito,“ SINAG president Rosendo So told CNN Philippines’ The Final Word in December.

[Translation: We have to import now. If we don’t, after 10 days, it might spill over by January and this will not help.]

Oversupply of onions will result in steep drop in prices, which may be good for consumers but devastating for local farmers.

RELATED: Pimentel: Importation will coincide with local onion harvest 

Smugglers and cartels

As the demand for onions remains high, illegal traders take the opportunity to offer it at sky-high prices.

DA Undersecretary Domingo Panganiban earlier said the agency suspects that a syndicate is hoarding red onions, causing the price of the commodity to rise. 

Over the past weeks, authorities have confiscated smuggled onions valued at tens of millions of pesos, which leads to officials pointing at illegal trading as the main cause of the price hike.

RELATED: ₱78.9-M worth of smuggled agri goods in Manila seized – DA 

Price manipulation

The price of onion reached as high as ₱800 per kilogram last December.

Authorities suspected big companies changed the retail prices to keep up with competitor costs. A House resolution was earlier filed to open investigation into the soaring onion price.

“There are reasons to believe that there is an ongoing control and manipulation of onion prices from farmgate to market retail by big traders, who store onions in cold storage warehouses,” read House Resolution No. 673.

The DA then set the suggested retail price (SRP) for red onions at ₱250 per kilogram. The agency also monitors the markets to see if the SRP is being implemented.

External forces

Another reason is the global inflation due to a number of factors such as the Russia-Ukraine war, extreme weather-caused disasters, and supply chain snags that put a strain on costs of food anywhere.

Filipinos dealt with higher prices during the holidays, with vegetable prices in December at their highest since February 1999, the Philippine Statistics Authority reported.

National Statistician Dennis Mapa noted that onion prices made up 0.3 percentage points of the 8.1% hike in consumer prices.

What now?

To address the supply issues, the DA imported onions despite the warning that it may result in oversupply.

President Ferdinand Marcos Jr., who is also the Agriculture secretary, has approved the importation of 21,060 metric tons of onions, fewer by a thousand MT recommended by the DA. 

Authorities also launched probes into smuggling and cartels after lawmakers filed resolutions against illegal trading.

DA officials will also be investigated in relation to the soaring prices of red and white onions in the market, the Office of the Ombudsman said.