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Philippine Agriculture and the Law of Supply and Demand

Prices and Inflation

Prices, what are they? Let’s take commodities. Fish and rice have no monetary value in them. They are things in this world gathered or grown by man. It’s the same with ore, metal, machines manufactured from them, or a tree, lumber and a boat, not to forget mention of crude oil. So, why is rice P35.00 to P52.00 per kilogram, while fish is P80.00 to P200.00 per kilogram?

That’s right. A fish swimming in the ocean does not cost a cent! It was man who needed them that put value in them. They are what he thinks is due him to produce them; what those commodities mean to him. The value placed on commodity is HIM, and subsequently between him and another who is interested in the commodity – the consumer, who agrees with him.  For example, a farmer thinks his sack of rice is worth P500.00. But it is worthless and rotten rice if nobody agrees with him. 

Simple fisherman and simple farmer have come a long way. Each has become an organized, complex world by himself. Fisherman then is now both fishing boat owner and his employees (workers), while farmer is now landowner and his workers. The value on commodity is now THEM, or the sum of all those people to include fisherman or farmer.

Farmer needed fish. Fisherman needed rice. They exchanged or traded.

Between fisherman and farmer, or between them and their consumers, had developed the trader who has also progressed into another organized world himself. He made it convenient for producers and consumers, adding his own value to the values already placed on the commodities – a gain or profit for his own personal keep. The end value is now the sum of all the three of  them – farmer, fisherman and trader [plus value added tax by the State].

That trader has become too powerful playing both ends, and how State treats and handles the matter, are political issues that I guess are different subject matter.

Inflation, what are they? They could not be product of disagreement-agreement among the fishes in the ocean. They are product of personal interests and conflicts, product of endless contest for gain between social forces. There is a race for gain between social forces, something that runs in seemingly endless spiral.

Let’s start with what is there at present without going through the hen-or-egg thing. Let’s take the fisherman and the farmer for example. For all reasons, like inflation, they need to push high. Normally, trader, buying low selling high, absorbs his loss but eventually passed it on by also selling high to recover. By selling high, trader in effect feeds inflation perpetuating the cycle. Inflation is one normal, natural occurrence in capitalism.

[While some States have managed well their social conflicts while others cannot, well, I guess  is a separate matter.]

By the way, American Chambers of Commerce is presently in town to look into allegation of smuggling of used luxury vehicles in the Cagayan Freeport. Everyone wants a car and everyone dreams of owning a luxury vehicle. But this is harder time for Filipinos so I guess more and more of them have gone for used car mostly from Japan and Korea, which may be bad news for American car manufacturers and commerce [and their sectors].  There is demand so there follows supply.

But where’s Philippine agriculture and the law of supply and demand in there? Yeah, before I forget. Well, we have been in effect telling our farmers that they are not worth their sugar; that the world has a glut of them. So, why would they be producing more? For example, Bayawan City territory is 65 thousand hectares, a room wide enough for three (3) sugar/ethanol mills; Mabinay town can have one (1) – all them where there is none. People are not in there, for one reason, simply because there is no money for them there.

Presently we have one Ethanol plant standing in Calatrava-San Carlos area in Negros Island. Another has been planned for Binalbagan–Isabela area. There must be others, hoping for some favorable time in the future.  As traditional Filipino politics has put it, weather-weather lang or life is just a seesaw(?)

Development and progress as we are getting them are bullshit rhetoric. In the country they are by-product of economics which is very dependent on partisan politics, or political squabbles that is very unique Filipino.  A progressive economy to be brought about by a Biofuels revolution is, in fact, just a dream for Filipinos at this point in time.

If nobody is coming to invest, why should not State, through PNOC for example, invest in there by itself? The State can put up plants and operate them non-profit to put some gains into the pockets of farmers and consumers, prime motivating our sleepy agricultural sector. But then again, this is wishful thinking at this point.

The State is just a horse and will always be a horse. The problem is we don’t have a cart in this part of the world where everybody can have a ride. So, fisherman, farmer, trader, consumers (to include all other sectors) – which of them do you think seats on horseback enjoying the ride, folks?

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  1. […] Philippine Agriculture and the Law of Supply and Demand […]

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