Philippine agriculture

How cold storages can save, empower onion farmers to feed the nation

Lance Spencer Yu
How cold storages can save, empower onion farmers to feed the nation

SOLIDARITY BUY. Several farmers' welfare advocacy groups and community pantry groups unload and pack 1.7 tons of white onions at the Immaculate Heart of Mary Parish Church to help sell the farmers' produce from Pangasinan, on January 10, 2023.

Jire Carreon/Rappler

As traders retain control over the country's limited cold storages, onion farmers are pleading with the government to give them the support they need to negotiate livable farmgate prices

MANILA, Philippines – Even as high onion prices have hit producers and consumers alike, agriculturists see the Philippines has all it takes to be 100% onion self-sufficient. But with a lack of government support in building crucial cold storages, onion farmers are left in misery either watching their harvest waste away or settling for unlivable pay.

Romel Calingasan, the municipal agriculturist of San Jose, Occidental Mindoro, spoke with grit as he bared the grim reality that local farmers face.

During po ng harvest season, wala po kaming nahanap na slot na mga storage facilities dahil ang sabi po, puno na ang mga storage facilities dito po sa Metro Manila, at ganun din po sa amin,” he said at a Senate hearing on January 16.

(During the harvest season, we couldn’t find any slots for storage facilities because they said all the storage facilities in Metro Manila and our area were already full.)

All the cold storages were – inexplicably – full, or at least not available. It turned out traders had reserved many of the facilities months in advance.

That was when onions were left to rot by the side of the road and on the banks of rivers.

Marami pong mga sibuyas ang nagkandabulukan, itinapon sa mga tabi ng kalsada, sa mga gilid ng ilog, na kung saan po talaga pong sobrang panghihinayang ang amin pong naramdaman kasi po talagang pinagkagastusan ng aming mga magsasaka ‘yan,” he said.

(A lot of onions were rotting, thrown to the roadsides, to the riversides. We felt so much regret for all that were spent by our farmers.)

See, like all crops, onions stay fresh only for so long. Once harvested, they need to either be brought to the market within days or kept in cold storage. For farmers who lack access to these facilities, they have little choice but to quickly offload their harvest – for which they had spent months laboring – for whatever they could get.

For farmers in Occidental Mindoro, that meant settling for just P6 per kilo as traders swooped in to take advantage of low prices. It was a pittance or pure waste, never mind a profit.

It’s the cold storages that will spell the difference so that the cooperatives of onion producers will be able to leverage with traders.

Former agriculture secretary William Dar

But perhaps worst of all, Calingasan said, farmers watched as the onions they sold for next to nothing would bleed the wallets of customers dry come December.

‘Yung mga binebenta po sa merkado sa kasalukuyan ngayon na buwan ng September hanggang December…binili sa mga magsasaka namin sa Occidental Mindoro na P8 to P15 lang per kilo. Kaya ganun na lang po ang pagkadismaya ng amin pong mga magsasaka sa amin pong lalawigan,” he said.

(Those sold at the market from September until December…they were bought from us in Occidental Mindoro for just P8 to P15 per kilo. You can just imagine the dismay of our farmers from our province.)

And now with the specter of imports threatening to plunge farmgate prices even lower, farmers are pleading with the government to give them the support they need to negotiate livable prices.

What is a cold storage facility?

The country’s agricultural woes are many and varied, but farmers say a good start is setting up more cold storages – in particular, ones readily accessible to farmers.

But first, what is cold storage, and why do farmers need them?

Like the name suggests, a cold storage facility is a walk-in room kept cool by a refrigeration system. A rudimentary cold storage facility can be set up using a modified air conditioner and double-walled plywood panels with polystyrene sheets for insulation.

Most commercial cold storage facilities are now built as large cooler units using hydrocarbon or freon as a refrigerant.

Fruits and vegetables, seafood products, meat products, and dairy products can all be kept in cold storage to prolong their shelf life. Onions, of course, are among the produce often stored here.

Onions need to be gradually lowered in temperature before being transferred into the cold rooms. The produce is then stored in string bags, which are stacked on top of each other. When done properly, cold storage facilities can extend the shelf life of onions from mere days to as long as six months.

FACILITY. The Department of Agriculture turns over a cold storage facility for onions in Palayan City, Nueva Ejica, with a capacity of 20,000 bags. DA Central Luzon.
Why do we need it?

In its Philippine Onion Industry Roadmap, the DA identified cold storage facilities as a crucial support industry to “balance the peaks and trough of onion supply.”

In doing so, cold storage provides three key benefits:

  • Reduces post-harvest losses. The cool temperatures and sheltered environment of cold storages keep the onions from rotting and prevent insects from destroying the crops. Without these facilities, massive wastages – such as what Calingasan described – can occur.
  • Spreads out an oversupply of onions. Because onion production is seasonal while demand is year-round, the excess of onions during peak harvest seasons can be stored and gradually released to the market.
  • Helps farmers get better prices. According to the Food and Agriculture Organization of the United Nations, farmers without access to refrigerated storage have no choice but to dispose of their harvest as quickly as possible before they begin to rot – regardless of the price.

Price negotiations hinge on this imbalance of access to cold storage facilities. Farmers often don’t possess the capital to set up their own cold storages, as a single facility can cost up to P40 million. Because of the prohibitive cost, many facilities are private-owned and contracted by traders that take advantage of the swings in supply. They buy onions at low prices when farmers have plenty on hand during the harvest season, and stockpile them until supplies start running low and prices begin to rise.

Noong mapabagsak nila ang presyo, mamimili sila, ilalagay nila sa cold storage, hindi muna sila mag-i-import. Kaya naging P600-P700 ang kilo ng sibuyas, dahil hawak nila ang lahat ng sibuyas. Napakalinaw na merong cartel,” explained AGAP Representative Nicanor Briones during the Senate hearing.

(When traders manage to crash prices, they’ll buy onions, place them in cold storage, and stop imports. The reason why onions reached P600-P700 per kilo was because they hold all the onions. It’s very clear that there’s a cartel.)

For this reason, former agriculture secretary William Dar pointed out that making cold storages accessible to farmers will help them in negotiating for better prices, as they can store onions on their own until they can get a better payout.

“It’s the cold storages that will spell the difference so that the cooperatives of onion producers will be able to leverage with traders,” said Dar in an interview on ANC’s Headstart.

“If there is the possibility of having cold storages to be given to cooperatives of onion producers, they can hold these until they are able to get better prices in the market. That will give them the leverage to now discuss with traders. Presently, kung wala silang cold storages, ay talagang binabarat ng mga traders (Presently, if they don’t have cold storages, traders will lowball them),” he added.

Former DA secretary: Pricey onions result of poor planning and smuggling

Former DA secretary: Pricey onions result of poor planning and smuggling

Farmers derided the way traders manipulated prices by hoarding onions in cold storages as well as reserving the cold storages for themselves – even if they sat empty. Senator Cynthia Villar revealed that in 2014, she saw how traders cornered and controlled cold storage facilities in Nueva Ecija, cutting out access to farmers.

Nagpunta kami ni secretary (Proceso) Alcala doon. Nakita niya with his two eyes na walang laman ‘yung cold storage kasi naka-reserve sa trader. Ang trader, sila lang ang makakabili,” Villar said during the Senate hearing.

(I went with secretary Alcala there. He saw with his two eyes that the cold storage was empty because it was reserved for a trader. These traders, they’re the only ones who can afford them.)

On top of the imbalance in access, some facilities are just poorly located. Calingasan pointed out, for instance, how a planned cold storage in the municipality of Rizal is 16 kilometers away from San Jose, the largest onion-producing municipality of Occidental Mindoro.

The other planned facility in Sablayan is even farther away at 97 kilometers.

Calingasan is right. Below is a map of Philippine provinces shaded based on how many cold storage facilities they have, and another based on how many metric tons of onions they produced in 2022.

Comparing the two gives a sense of the mismatch between where cold storage facilities are located and where onion production is highest. Most facilities are clustered around industrial centers like Manila, Cavite, and Cebu, even if they have no onion production to speak of.

A 2020 report by the Cold Chain Innovation Hub highlighted the lack of cold storage facilities near farms, concluding that “the current lack of post-harvest facilities and cold chain practices are resulting in major post-harvest losses in the crops sub-sector.”

What needs to be done?

The lack of cold storages has constantly held back their municipality from reaching its potential as a top producer of onions in the country, Calingasan said.

Last year po ay nakapagtala ng 3,485 hectares of onion production sa aming bayan. Wala pa po sa 5% ng aming production volume ang amin pong nailagay sa mga storage facilities. ‘Yung 95% ng aming production, ‘yan po sapilitang naibenta po sa mga buyers ng P8,” the municipal agriculturist said.

(Last year, we recorded 3,485 hectares of onion production in our area. Not even 5% of this production volume was placed in storage facilities. The other 95% of our production we were forced to sell to buyers at P8.)

What can be done to combat this? Farmers’ groups highlight two ways: first, to set up more cold storages dedicated to farmers, and second, to create stronger policies against exploitative behavior – be it by traders, importers, or smugglers.

“Definitely, there is a shortage of cold storage, but government will have to establish new ones exclusively for farmers’ – and not traders’ – use,” said Raul Montemayor, national manager of the Federation of Free Farmers Cooperatives Incorporated. “My understanding is that cold storage space is reserved in advance by traders, so farmers have little access to these.”

However, building more cold storages alone will not eliminate the problem. Montemayor pointed out that come harvest time, most farmers are pressured to sell their crops quickly to repay their agricultural debts. Waiting around for better prices may mean that famers won’t be able to get loans anew in time for the next planting season.

“They need to sell their harvests immediately to pay off debts and generate money for their needs,” he told Rappler on January 17.

Hence, it’s also necessary for the government to also provide inventory financing, which means that farmers would be able to borrow money against any onions that they have stored.

“These should be completed by inventory financing and market linkaging, so farmers will eventually be able to sell to final buyers without having to go through middlemen,” Montemayor said. “If there is no inventory financing, only a few farmers and co-ops will avail of the cold storage because of their immediate cash needs. So, it has to be planned out well, which the DA is not good at.”

As onion prices fall ahead of imports, farmers’ livelihoods, lives at risk

As onion prices fall ahead of imports, farmers’ livelihoods, lives at risk

Market manipulation also continues to be a problem, as the DA itself identified in its Philippine Onion Industry Roadmap. Tackling this requires the government to crack down on exploitative practices and allow timely imports.

“There must be a strong policy regarding storage and market release of onion as it affects market pricing. Hoarders wait for higher market prices. They are not disincentivized to do this because payment for storage is fixed at six months minimum,” the DA wrote.

Montemayor explained that during the February to April harvest time, traders compete for farmers’ harvests, with prices based on their projection of current and future prices at the wholesale level. Ideally, traders place crops in cold storage to last until the next harvest, with stocks being trickled into the market as needed.

The supply of onions in cold storage, however, begins to thin out by the end of the year, Montemayor said, with imports often filling the gap.

“By November, stocks will be in short supply, and prices will go up if imports are not allowed to come in. It is very possible that the smugglers or cartels are also pressuring the government not to allow imports, so that supply will be tight, and they will be able to sell their smuggled or stored stocks at higher prices,” he said.

The DA has ambitious plans to address the pleas of farmers, setting a lofty goal to construct 105 new cold storages by 2025 – at least, according to its roadmap. It remains to be seen if and how the DA will carry this out.

This hasn’t stopped farmers, who have already overcome challenge after challenge, from boldly proclaiming they have what it takes to lead the country down the road to onion self-sufficiency.

Kami tataya – ako, bilang municipal agriculturist ng San Jose – kaya ko pong itaya ang lugar po namin para mag-supply ng sibuyas,” Calingasan said. “Ang kailangan lang po talaga ay support ng national government, particular po sa cold storage facilities.

(As the municipal agriculturist of San Jose, I can bet that our municipality will be able to supply onions. All we really need is support from the national government, particularly for cold storage facilities.) – Rappler.com

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