Buy-local quota needed to support PHL dairy producers, industry says

THE GOVERNMENT needs to impose a buy-local quota for companies dealing in dairy products to support domestic milk producers, an industry association said.

The Philippine Chamber of Agriculture and Food, Inc. (PCAFI) proposed a buy-local quota of at least 5% for milk processors and traders.

PCAFI said that its recommendation is in line with Section 17 of Republic Act (RA) No. 7884, which requires commercial milk processors and traders to procure a fixed portion of their requirements from the local milk supply, with volumes to be determined by the National Dairy Authority (NDA).

“Under this condition, we recommend requiring the commercial sector to secure their milk supply from local sources for at least 5% of their total requirement, either in full or on a staggered basis, over a certain fixed period,” it added.

Section 17 of RA 7884, the law that created the NDA, states that dairy cooperatives and the commercial sector must mutually agree on a level of local milk sourcing three years after the law becomes effective.

In the absence of an agreement, the NDA will determine the local-purchase level.

“Processors who purchase locally produced milk from dairy cooperatives in excess of the volume prescribed by the Authority shall be accorded tax credits equivalent to 10% of the value of the excess volume purchased,” according to the law.

PCAFI said the Philippines imported $1.6 billion worth of milk, mostly in powder form, from the US, New Zealand, and Australia last year.

“The Philippines continues to produce less than 1% of its requirement, 44 years after the congressional passage of a law known as the Dairy Industry Development Act and followed by the National Dairy Development Act of 1995,” it added.

If it is impossible to comply with the law, PCAFI said that the government may require the commercial sector to establish its own dairy farms or impose a special safeguard duty on imported milk products.

“If the argument is that the local production is not enough to supply such a volume of milk as required, the commercial processor or user shall establish their own dairy farm in the Philippines to supply their requirements and not import from other countries,” PCAFI said.

“Or if the imported milk is not sourced locally as required under RA 7884, a special safeguard duty should be imposed on imported milk products by commercial importers as provided for under RA 8800 (Safeguard Measures Act) in order to allow the development of the dairy industry,” it added.