‘Tariff cut to hit both hog and corn production’

LOCAL hog raisers and corn farmers have cautioned the government that lowering pork tariffs may discourage domestic pig production and consequently impact corn producers as demand for the feed material could be dampened.

National Federation of Hog Farmers Inc. President Chester Warren Y. Tan told the Businessmirror that domestic pork producers would hesitate to continue restocking their farms if the government lowers pork tariffs since locally produced pork would be at a disadvantage against cheaper imports.

“The first one to be affected would be the producers. They will hesitate or stop producing. And if they stop producing this year, that will result in a one-year gap in the production cycle,” Tan said in an interview.

“And we do not want that to happen because as we estimated, it will take us about 5 to 7 years to return our production to pre-asf levels. We are now in our second year and if we stop producing, then it will delay our recovery,” Tan added.

Tan said both local producers and importers are now waiting for Duterte’s decision on the recommendation of the Cabinet-level Committee on Tariff and Related Matters (CTRM) to reduce pork tariffs.

The Businessmirror earlier reported that the Cabinet-level CTRM is set to submit its recommendation to Duterte to lower pork tariffs to 5 percent for MAV and 15 percent for outside MAV for three months. (Related story: https://businessmirror.com.ph/2021/03/01/ govt-rushes-pork-tariff-cutas-local-raisers-protest/)

The rates would subsequently increase to 10 percent (MAV) and 20 percent (outside MAV), respectively, for the duration of nine months.

Agriculture Secretary William D. Dar told the Businessmirror that the CTRM, which advises the President on tariff-related matters, “hopefully” submits the recommendation this week as the proposal is part of the government’s measures to bring down pork retail prices below P300 per kilogram.

“It is crucial if he will sign an executive order or not. If he pursues tariff reduction, then the industry will take two steps backward,” Tan said.

Duterte can only modify the tariff rates on pork imports through the issuance of an executive order when Congress is in session, as stipulated by existing laws.

If Congress will not go into an emergency recess in the following weeks, then Duterte may have to wait until March 27, the calendared date for Congress’s recess, for him to be able to bring down pork tariffs.

Tan said only 30 percent of the hog raisers in Luzon are still in operation; and about 90 percent in the Visayas-mindanao regions. This, after more than a year since the fatal African Swine Fever (ASF) caused disruptions in the domestic industry.

He added that they estimate about 5 million pigs out of the total 14 million herd nationwide has been lost due to ASF and Asfrelated actions, such as culling and stoppage of production.

Impact of stop-production

“IF our producers see that the government’s programs are good, then they will continue to produce and recover. But if the market will be flooded with imported pork and the producers see that they won’t be able to compete against imported pork during Christmas or early next year, then they will stop,” Tan said.

Worse, Tan said, if hog raisers reduce or stop their production this would result in an adverse ripple effect on the whole value chain, with corn farmers at the losing end as well.

“This will impact the farmers of corn, coconut oil, and rice bran because these byproducts are sold to the livestock sector. If a lot of swine producers stop production, then demand for these commodities will decline,” he said. “They will lose the market. no one will be able to absorb their supply, thus, it will result in oversupply and plunge in prices.”

Philippine Maize Federation Inc. (Philmaize) President Roger V. navarro said they still oppose the reduction of pork tariffs as they want to avert more problems in the agriculture sector.

navarro added that demand for yellow corn will further dampen if the remaining hog raisers in the country reduce or stop production.

He estimated that demand for yellow corn has declined by 30 percent in the past year due to hog production reduction, due to ASF concerns, as well as cuts in broiler output.

“And this will affect the farm workers. A lot of farm workers will be displaced,” navarro told the Businessmirror.

If the government reduces pork tariffs, then corn farmers would be forced to diversify or shift to other crops to make ends meet, navarro said.

However, he pointed out that farmers will not be able to earn the same income they earn from corn farming if they venture into other crops such as cassava and rice.

navarro explained that farmers planting corn are able to harvest twice in a year due to the short cropping season but crops like cassava would take about 9 months and more.

“If things get worse, no one will plant anymore and farmers will just wait for their 4Ps cash subsidy,” he said.