Economists back hike in MAV for pork, tariff reduction
THE Foundation for Economic Freedom (FEF) expressed support for the government’s decision to increase the minimum access volume (MAV) for pork and the reduction in tariff on imports.
FEF said these initiatives will help prevent high pork prices from spilling over to other commodities which could further erode the incomes of low-income households.
The group said Executive Order 128 issued by President Duterte is a temporary measure that provides the immediate and short-term intervention to “abnormal circumstances” and that it will be gradually phased out over the next 12 months.
“If pork prices are not brought under control, elevated prices will cascade down to other commodities, and will add pressure on the already shrinking incomes of Filipinos families. We fear that this will exacerbate hunger of poor Filipinos who comprise the vast majority of our consumers,” FEF said in a statement.
FEF said hiking pork MAV to 404,210 metric tons (MT) from 54,210 MT combined with a reduction in pork tariffs to 5 or 10 percent from 30 percent for IN-MAV imports, and 15 percent from 40 percent for outmav could result in tariff revenue losses of P13.4 billion for the government. However, this will be more than offset by cost savings of P61.5 billion for over 95 million pork consumers.
“This is low if we assume a lower prevailing pork price; but prices are now hovering between P350-400 and will break the P400 barrier if the status is maintained. Annual pork consumption of Filipinos is pegged at 15.9 kilograms,” FEF said.
FEF said the recovery of the domestic hog industry from the adverse impact of African swine fever (ASF) will take time but, upon the expiration of the tariff measure, the industry will be back on its feet.
The organization stressed that implementing the increase in the MAV and the reduction in pork tariffs are necessary to address hunger.
FEF said millions of consumers currently have limited room to absorb major price increases in essential goods, as the Covid-19 pandemic has resulted in widespread loss of income and jobs.
“The Filipino people cannot afford to wait for medium to long-term interventions to repopulate hogs locally and overcome ASF,” the group said.
“Refusing to take immediate short-term action will exacerbate the elevated hunger incidence in the country. The immediate task at hand is to give the people access to adequate and affordable food.”
Last week, the National Economic and Development Authority (Neda) maintained on Thursday that the reduction in pork tariffs and the increase in the minimum access volume (MAV) will not “kill” the local hog industry.
In a presentation at the Senate Committee of the Whole, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the temporary reduction in pork tariffs aims to reduce pork prices.
Chua said temporarily reducing pork import tariffs to 5 to 10 percent will bring down the landed cost of pork to around P251 to P222 per kilo. This will translate to retail prices of P128 to P135 per kilo.
The lower prices and the higher MAV would bring down inflation to around 3.8 percent, well within the Central Bank’s 2- to 4-percent inflation target this year, he said.
‘Root of pork crisis’
SENATE President Vicente Sotto III, affirming initial findings of the Committee of the Whole inquiry into the pork supply and price crisis, said ASF was but one aspect of the problem because the situation was worsened by corruption. Specifically, smuggling and misdeclaration, which allowed banned products to avoid inspection to reach local markets.
For instance, the Senate leader lamented the “big blunder” right at the Department of Agriculture (DA), whose Compliance and Regulatory Enforcement Security and Trade Office (CREST-O) had made a presentation documenting the modus operandi in “smuggling and misdeclaration of agri and fishery products.”
Therefore, he added in Filipino, the Bureau of Customs was “correct in saying they’re not the ones to blame largely for the smuggling. The anomaly lies in having imports made to appear as legal but actually include unregistered ones; these are not inspected.”
Sotto noted in a radio interview ASF was discovered back in 2018, and wondered why authorities are cramming until now to cope with the problem. “Perhaps their reaction was understandable in 2018, but why, until now, are they still scrambling? Why are they so alarmed all of a sudden, racing to reduce tariffs and increase [MAV]?”
Citing findings by an investigative group, he noted that certain operators were granted a license to operate cold storage warehouses for imported items said to amount to millions of pesos, but were found to be nonexistent. These were discovered because when the Sanitary and Phytosanitary Import Clearances (SPS-ICS) were checked for various imported agri-fishery products, the cold storage warehouses listed on documents turned out to be either non-existent, or were not equipped for these.
He said this clearly constitutes unauthorized diversion of the imported products. “That is clear, so it consists grave violations of existing Department of Agriculture and legislative orders,” he said, noting this still does not include the complaints of both “local hog raisers and backyard hog raisers.”
He added, “so our question to them was CREST-O, what did you do?” referring to the DA’S Compliance and Regulatory Enforcement for Security and Trade Office.
In CREST-O’S presentation at last week’s hearing, the senators were updated on various modus operandi in smuggling/misdeclaration of agri/ fishery products.
Modus No. 1 involved the “illegal entry of pork and other pork products from other countries, including: Hungary-porcine meal for feeds; Belgium-pork for human consumption; China-pork for human consumption; and, Germanyporcine meal for feeds.”
Modus No. 2 involved spurious accreditation of defunct or non-existent cold storage warehouses.
Modus No. 3 entailed the unauthorized diversion of imported agri-fishery products to other final destination or cold storage warehouses (CSW).
To effectively address the problem, CREST-O submitted to senators these recommendations: 1) Pursue the establishment of a DA Agri/ Fishery products cold examination area; 2) Implement the national single window as databasing of all transactions and documentations of products’ importation; and, 3) Involve DA officials and personnel; Bureau of Customs personnel; importers and brokers; and CSWS in a formal or preliminary investigation, and if evidence warrant, the imposition of appropriate sanctions.
Meanwhile, Sotto added he is not ruling out a third hearing after conferring with Senator Panfilo Lacson, who first filed the resolution for a COW hearing on food security, with special emphasis on the pork crisis.
Sotto is hopeful that after a third hearing, “we can solidify” plans on a best course of action and remedial legislation, “because as you know [these inquiries are in] aid of legislation.”
‘Corruption threatens food security’
LACSON lamented over the weekend “conscienceless” corrupt elements at the DA are threatening “not just the country’s food security but also national security.”
“There is nothing more basic than food, especially in a pandemic. If corruption infects the Department of Agriculture that should be at the forefront of food security efforts, it goes beyond human conscience.”
At last week ’s Senate hearing, however, DA chief William Dar had flatly denied there was any “tong-pats” or kickbacks in the processing of import permits, as Lacson had hinted.
Lacson affirmed his earlier warning that “such corrupt practices— compounded by EO 128 that brings down tariff rates for imported pork products—“may make local hog raisers and those depending on them vulnerable to recruitment by the New People’s Army.”
He warned in the first hearing of the Senate Committee of the Whole on food security that some P5.4 billion is the estimated foregone revenue from lowering tariffs as provided in EO 128.