Pork tariff reduction could kill domestic industry, Villar warns

BusinessWorld
February 22, 2021
CYNTHIA A. VILLAR

SENATOR Cynthia A. Villar said she opposes a proposal to reduce the tariff on pork imports, saying that tariffs should fund programs to upgrade the industry’s competitiveness.

Ms. Villar, who chairs the chamber’s committee on agriculture and food, called the proposed reduction of tariffs “quite alarming as instead of improving the economy this move might kill the industry.”

Kung ako ang tatanungin, hindi ko tatanggalin ang tariff kasi competitive naman sila with the tariff. Ang gagawin ko, kokolektahin ko ang tariff at magpapa-sign ako kay President Duterte ng executive order na ibigay as subsidy to the local hog industry (If you ask me, I would not remove the tariff because domestic producers are competitive when a tariff is charged on imports. What I would do is collect the tariff and ask the President to issue an executive order to subsidize the hog industry),” she said at a Senate hearing.

The Department of Agriculture (DA) has recommended a reduction in the 30% tariff for pork imports under the minimum access volume (MAV) to 5%, as part of a broader campaign to increase the supply of pork, which has been under pressure because of the culling of much of the hog population on Luzon following an outbreak of African Swine Fever (ASF).

It is seeking to expand the MAV to 404,000 metric tons (MT) from 54,000 MT due to the rise in food prices.

It also proposed to cut to 15% from 40% the tariff for the imports beyond the MAV, and is subsidizing the transport costs of hog growers from distant provinces, in order to encourage them to supply Metro Manila and avert a brewing inflation crisis.

“‘Wag mong papatayin ‘yung local industry mo because that is the long-term of the Philippines. Ito short-term lang to eh,” she said.  Pero ‘yung one year na papatayin mo ‘yung industry, baka hindi na maka-recover ‘yan. (You shouldn’t kill the domestic industry because that represents the long-term future. These measures are short term. After one year of these measures, the industry may never recover).”

At the hearing, Agriculture Secretary William D. Dar said the DA will study whether the price ceiling on pork should continue.

“We are going to study (the) Price Act (whether it is possible to discontinue price caps),” he said, after which a recommendation will be made to the President. “So pag-aaralan po namin (We are studying it).”

Senator Risa N. Hontiveros-Baraquel asked Mr. Dar if the DA is contemplating removing the price ceiling on pork and chicken, noting farmers may opt not to sell if they cannot do so profitably, worsening the crisis.

President Rodrigo R. Duterte early this month signed an Executive Order imposing price caps on selected pork and poultry products in Metro Manila for 60 days, on the DA’s recommendation.

The extraordinary measures to deliver extra pork to Metro Manila has triggered criticism over the insufficiency of the volume being transported.

Nicanor M. Briones, vice-president for Luzon of the Pork Producers Federation of the Philippines, Inc., said in a radio interview Monday that demand far outweighs the amounts the DA is planning to ship the target volume of pork to transport in Metro Manila.

“DA plans to bring 10,000 head per week but the demand in Metro Manila is at 10,000 head per day. It is not enough,” Mr. Briones said.

Mr. Briones noted that some dealers have declared a “pork holiday” in public markets because they are unable to sell at a profit if they observe the price caps.

He added that some retailers were not able to receive any supplies from the DA deliveries.

The executive order capped the price of pork shoulder (kasim) at P270 per kilogram, pork belly (liempo) at P300 per kilogram, and whole chicken at P160 per kilogram.

Mr. Briones said if the DA wants to continue with a price ceiling, pork products should have a suggested retail price of P330 to P360 per kilogram.

“If the DA wants to continue the price ceiling, set the SRP at P330 to P360. Pork products will naturally arrive in Metro Manila,” Mr. Briones said.

Ricardo Chan, president of the Manila Meat Dealers Association, said the DA price ceiling plan was inadequate because it did not cover nearby provinces.

In a separate radio interview Monday, Mr. Chan said Bulacan, Batangas, Cavite, Laguna, and Pampanga should also have been subject to price caps.

“The hog traders will sell their produce in those areas at a higher price,” Mr. Chan said.

Mr. Chan said hog raisers are behind the high pork prices and not meat dealers. He said hog raisers were recovering their losses after the ASF outbreak.

Mr. Chan said extending the scope of the price ceiling to Luzon will force hog raisers to bring down their prices.

“If they continue to sell pork at high prices, all of Luzon will not buy pork from them. This will help in solving high pork prices,” Mr. Chan said.

Separately, the Bureau of Customs (BoC) has been alerted to the possibility that smugglers might try to bring in more pork to fill the shortages.

Finance Secretary Carlos G. Domingez III ordered the BoC to guard against incidents of misclassifying pork imports to avoid paying the correct taxes, once the government’s plan to expand the MAV allocation for pork imports comes into force.

A higher MAV will allow more pork imports to come in at the lower tariff of 30%. Those exceeding the threshold will be charged a higher rate of 40%.

“Please take a close look at the potential smuggling of pork… Some pork importers may resort to technical smuggling,” he told BoC Commissioner Rey Leonardo B. Guerrero in a recent Executive Committee meeting at the Department of Finance (DoF). The DA’s proposal to expand the MAV allotment for pork imports is currently awaiting President Rodrigo R. Duterte’s signature.

The DoF said there could be importers that misdeclared edible offal or internal organs of bovine animals like swine, sheep and goats as prime pork shipments to avoid paying higher taxes.

Meat Importers and Traders Association President Jesus C. Cham, the possibility of misdeclaration is not an issue since imports of such products require prior health certification from the country of origin.

“All imports come with an international health certificate issued by the government of the exporting country. This means practically all imports are pre-inspected. For pork, all our imports come from states with strong certification systems. Smuggled pork will come from weak states with weak certification system and we suspect are mostly undocumented,” Mr. Cham said in a Viber message Monday.

Aside from the adjustment of the MAV quota, the Tariff Commission also proposed a lower tariff rate on pork imports within the MAV from countries free of ASF. — Vann Marlo M. Villegas, Revin Mikhael D. Ochave, and Beatrice M. Laforga


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