From Gambling to Business: The Case for Fixed Pricing in Agriculture 🤝
** The Reality:** Right now, a farmer is the only businessman in the world who buys everything at retail (seeds, fertilizer), sells everything at wholesale, and doesn't know the price of his product until the moment he sells it.
We have been taught that the "Law of Supply and Demand" is the holy grail of economics. But in agriculture, this law is a weapon used against the poor.
When we let market forces dictate the price of food, we turn farming into a casino. One season, a farmer might strike gold; the next, they lose their land. To save Philippine agriculture, we must shift to a Fixed Price / Contract Growing model.
1. The Failure of "Supply and Demand" in Farming
The free market works for iPhones, but it fails for Onions. Here is why:
The Perishability Trap
If a car dealer doesn't like the price of cars today, he can wait. The cars won't rot. But a farmer? If the price of tomatoes drops to ₱5/kg today, he must sell. If he waits three days, the tomatoes rot and he gets ₱0. Traders know this. They wait for the desperation point to buy dirt cheap.
The "Cobweb" Cycle
- Year 1: Onions are expensive. Farmers get excited.
- Year 2: Everyone plants onions to chase the profit.
- Harvest: Oversupply crashes the price to ₱10/kg. Farmers go bankrupt.
- Year 3: No one plants onions. Price spikes again. The cycle repeats, and the consumer always loses.
2. The Solution: The "Cost-Plus" Pricing Model
Instead of asking "What is the market paying?", we should ask "What does it cost to grow this?"
How It Works
We treat farming like a real manufacturing business.
- Step 1: Calculate the cost of inputs (Seeds + Fertilizer + Labor).
- Step 2: Add a guaranteed profit margin (e.g., 30% markup for a living wage).
- Step 3: Lock that price.
If it costs ₱20 to grow a kilo of Sayote, the buying price should be fixed at ₱30. Regardless of whether there is a surplus or a shortage, the farmer gets ₱30. This guarantees survival.
3. Killing the Predatory Middleman
The "Middleman" thrives on volatility. They buy low from the farmer (claiming "oversupply") and sell high to the city (claiming "shortage").
Fixed Pricing removes their power. If a brand like Duruha commits to buying a farmer's harvest at a fixed price before the seeds are even planted (Contract Farming), the predatory trader has no leverage. The farmer is no longer desperate.
4. Why Consumers Should Want This Too
You might think, "But I want cheap vegetables when supply is high!" But consider the long term:
- Stability: Fixed pricing prevents the insane spikes (like the ₱700 onion crisis). You pay a fair, consistent price year-round.
- Quality: When a farmer knows he will get paid a fair price, he doesn't need to cut corners. He doesn't need to use illegal chemicals to rush the harvest. He can focus on quality because his livelihood is secure.
Quick Comparison
| Feature | 📉 Current "Market Price" System | ⚖️ Fixed / Fair Price System |
|---|---|---|
| Farmer's Risk | Extreme. One bad week ruins a year. | Low. Income is calculated and assured. |
| Planning | Impossible. Pure gambling. | Strategic. Can invest in better tools. |
| Power Dynamic | Traders control the price. | Farmers/Partners agree on price. |
| Consumer Price | Volatile (₱50 today, ₱500 tomorrow). | Stable and Predictable. |
| Outcome | Farmers quit / Poverty. | Sustainable Agriculture. |
Conclusion
We cannot build a food-secure nation on the backs of bankrupt farmers.
If we want the next generation to plant, we must remove the gambling from the equation. We must guarantee that hard work equals a living wage.
The price of food should not be determined by the desperation of the grower, but by the value of their labor.