Continuity in reasonable prices during and beyond the pandemic

Published August 21, 2021, 7:00 AM

by Atty. Vic Dimagiba

In my capacity as President of Laban Konsyumers Inc. (LKI), I called for efforts to stabilize food prices as producers seek higher prices for their goods, citing global supply chain disruptions of raw materials and higher shipping costs, which have allegedly increased import costs.

From the consumer point of view, keeping prices at bay is the better option. It is important to verify the inventories of raw materials and finished goods. The parties should be transparent that there should be no stock inventory that can lead to windfall profits. For example, there should be offsetting of costs since energy was cheaper last year.

The current proposed amendments of the Price Act being deliberated in Congress will play a crucial role in ensuring reasonable prices of basic necessities and prime commodities during and beyond the pandemic.

Below are the contentious proposals which were submitted by the stakeholders in the recent Technical Working Group of the Committee on Trade and Industry of the House  chaired by Rep. Ria Vergara:

1.  The inclusion of gasoline and diesel in the  items under Basic Necessities in addition to kerosene and household  LPG where  prices are frozen for a period of fifteen (15 )  days from the declaration of an emergency  . The proposal was first made by Laban Konsyumer Inc. and was supported by the Department of Energy.

The oil industry through the Petroleum Institute of the Philippines opposed the inclusion of diesel and gasoline as Basic necessities subject to price freeze and raised a veiled threat of supply shortages during the period of calamity and pandemic;

2.   As proposed by the Philippine Chamber of Food Manufacturers, Inc., in cases of price freeze, the definition of prevailing price shall mean the average price at which any basic necessity has been sold in a given time within the month from the occurrence of any emergencies, calamities and pandemic;

3.  The European Chamber of Commerce of the Philippines recommended limiting the definition of prime commodities only to goods vital to the needs of the consumers for daily sustenance. It should not include discretionary goods such as personal protective equipment, medical devices and select health care products;

4.   The Cement Manufacturers Association of the Philippines opposed the imposition of price freeze to include prime commodities such as construction materials especially cement and all provisions in the Bill that include cement as either a Basic or Prime good, nor the inclusion of cement in any price freeze and price ceiling authorized under the Price Act;

5.  The definition of Suggested Retail Price elicited varied opinions. They are as follows:

a.     The Bill defines SRP as the price issued by the concerned agency to be used as reference in the monitoring of prices;

b.    The Food Chamber and the European Chamber proposed that SRP refers to the recommended price issued by the manufacturers and producers to be used as reference in the monitoring of prices;

c.      The European Chamber added that the proposal should ensure the rights of the manufacturers to adjust prices based on market forces;

d.    The Philippine Consumer Centric Traders Association Inc. held that SRP for basic necessities and prime commodities are unfair to Small and Medium Retail Enterprises. There should be a mechanism to allow margins for small retailers versus the manufacturers ‘SRPs;

e.     The Philippine Retailers Association proposed maintaining the present provision of the Price Act;

(In this regard, it is my opinion that manufacturers or distributors SRPs may be a form of price fixing with the retailers and should be studied in the light of the much later law, the Competition Act).

6.     The National Price Coordinating Council should be given the power to include or exclude Basic necessities or Prime Commodities under the coverage of the Price Act, as well as impose price ceiling, and there is no need to seek the President’s approval ;

7.     The Food Chamber proposed that price ceiling may be imposed if any  basic necessity is found to be monitored at prices higher by 10% of the latest SRP;

8.     Laban Konsyumer Inc., recommended that special SRP may be issued on basic necessities and prime commodities during special seasons like school opening for school supplies and Noche Buena products during the Yuletide season;

9.     The Food Chamber proposed that the National Price Coordinating Council should develop standards and guidelines on reasonable pricing that will serve as a guide to assist manufacturers and producers in setting their products SRPs;

10.  In times of emergencies, penalties for illegal acts of price manipulation should be increased to a minimum P100,000.00.

This Congress has one more session to complete the amendments to the Price Act and align the law to the needs of the current crisis and beyond. In the past thirty (30) years, the Price Act balances the interests of the consumers as well as of business.   This is the best opportunity to strengthen the Price Act to ensure continuing access to reasonable prices of basic and prime goods and assure fair return to business.

Let us put our feet down to counter productive proposals.

Atty. Vic Dimagiba

President, Laban Konsyumer Inc.

Email: [email protected]