Potemkin

The Department of Agriculture announced that suggested retail prices (SRP) on rice will be issued next week. At first blush, this seems to be another dubious “solution” to spiking rice prices from the same minds that brought us price caps last year.

For the life of me, I never fully understood what SRP means.

Since we are a market economy, government should never be caught price-setting. Our ingenious bureaucrats found a way to get around that, using the SRP to basically set prices.

“Suggested” is a slippery word in this concept. There should be no penalties imposed on retailers who chose to ignore government price advisories and instead obey market forces.

The prescription of SRPs allows bureaucrats to manufacture photo opportunities showing them to be patrolling market stalls, haranguing or bullying small sellers and otherwise creating a mockery of our market economy. One trade secretary made much political capital of this parody and sought higher elective office peddling himself as “Mr. Palengke.”

In the many years of imposing SRPs, however, government never once managed to stem inflation – especially if an inflationary episode is driven by cost spikes.

We all saw what happened last year when government imposed laughable price caps on rice. Wholesalers forced farmers to sell unhusked rice even cheaper, producing deeper rural poverty. Ordinary rice varieties were re-labelled to skirt around the price caps. More expensive rice varieties became, well, more expensive.

Then government, belatedly realizing the disastrous effects of the price caps on small retailers, offered to compensate them for the injury the policy wrought. We have never been provided a final accounting of the subsidies paid out, but it is easy to assume they ran into the billions. Those billions could have been better spent improving farm efficiency with more lasting effects.

On the whole, the rice caps failed to stem food inflation. They made truly edible rice varieties more expensive. Only the poorly milled, barely edible varieties were put out on the shelves to demonstrate compliance with the price caps. Then government made a show of selling rice confiscated from “smugglers” and “hoarders”