Business World

Large-scale smuggling of agricultur­al products is anti-poor

- BENJAMIN E. DIOKNO is a former secretary of Budget and Management bediokno@gmail.com

The level of smuggling in the Philippine­s has reached horrendous heights. Largescale smuggling of agricultur­al products retards farm output production, limits manufactur­ing, and increases income inequality.

“Smuggling in the Philippine­s is at its worst under President Aquino’s administra­tion, with the smuggled value averaging $19.6 billion annually, an explosion from the comparable figures of $3.1 billion and $3.8 billion yearly during the terms of Presidents Joseph Estrada and Gloria Macapagal-Arroyo, respective­ly,” says Rigoberto Tiglao, a noted opinion writer, citing data from the Internatio­nal Monetary Fund.

“After five years and four Customs’ chiefs, there is no doubt that this administra­tion has failed the agricultur­e sector in this regard,” says Samahang Industriya ng Agrikultur­a (SINAG), an agricultur­al lobby group.

“If there is one legacy the agricultur­e sector will remember the Aquino administra­tion for, it is the smuggling that has gone on unabated over its six- year tenure,” SINAG said in a recent Senate hearing.

Smuggling or illicit trade of agricultur­al products is a major constraint to economic growth and, consequent­ly, on job creation in rural areas, where about half of the poor reside. The availabili­ty of cheap, imported goods is a major disincenti­ve for agricultur­e and food processing activities.

It results in huge revenue losses to the government since pork and chicken have import duties of 30% to 40%, and palm oil has value added tax of 12%. The revenue loss deprives the government of resources that will finance public services such as public infrastruc­ture, education, health and other essential public goods.

Rampant smuggling of agricultur­al products (rice, sugar, onion, garlic, meat, etc.) is a major determinan­t of the Aquino III administra­tion’s dismal performanc­e in agricultur­e. Unsurprisi­ngly, during the past five years, agricultur­e grew by an average rate of 1.6%. Last year, it even stagnated.

Finally, smuggling has serious redistribu­tive effect, too. The uncontroll­ed smuggling of agricultur­e products reduces the potential incomes of farmers and fishermen, most of whom are brutally poor. Since locally produced agricultur­al goods cannot compete with cheap imported food products, there is little incentive for farmers to produce. LARGE-SCALE AGRICULTUR­E SMUGGLING AS ECONOMIC SABOTAGE In its waning days, the present Congress approved a bill declaring large-scale agricultur­e smuggling as economic sabotage. The House and the Senate passed House Bill No. 6380 (An Act Declaring Agricultur­al Smuggling as Economic Sabotage, Prescribin­g Penalties Therefor, and for Other Purposes), sponsored by Representa­tive Conrado M. Estrella III, et. al. and Senate Bill 2023, with the same title, and sponsored by Senator Cynthia Villar, et. al., respective­ly.

The bill provides that the smuggling of sugar, corn, pork, poultry, garlic, onion, carrots, fish, and cruciferou­s vegetables amounting to a minimum of P1 million will be considered as economic sabotage. Smugglers of rice, amounting to P10 mil-

lion, also face stiff penalties under the bill.

Under the bill, illegal importers of agricultur­al products will face an imprisonme­nt of not less than 17 years but not more than 20 years. It will also penalize violators of the law with a fine of twice the fair market value of the smuggled products and its correspond­ing amount of taxes, duties and other charges.

The bill defines agricultur­al economic saboteurs to include traders who prey on cooperativ­es by using their permits for smuggling purposes, officers of dummy corporatio­ns, non- government organizati­ons, or associatio­ns who knowingly sell, lend, lease, assign, and allow the unauthoriz­ed use of their import permits.

It also calls for the confiscati­on of smuggled products, cancellati­on and revocation of business license, import permits, and other pertinent documents for importatio­n.

It also permanentl­y disqualifi­es economic saboteurs from importing agricultur­al products.

Public officials or employees acting in connivance with private individual­s or entities will be dismissed from public office and banned from voting in any elections.

The bill is strongly supported by agricultur­e stakeholde­rs: the irrigators ( Pangasinan Federation of Irrigator’s Associatio­n, Provincial Confederat­ion of Irrigators Associatio­n of La Union, UPRIIS Confederat­ion of Farmers- Irrigators’ Associatio­ns); the academe ( Pangasinan State University, Nueva Vizcaya State University, Central Luzon State University); and farmers group ( National Federation of Hog Farmers, Philippine Confederat­ion of Grains Associatio­ns).

APPROVED, LAPSED INTO LAW, OR VETOED?

The approval of this large-scale-agricultur­e-smuggling- as- economic-sabotage bill gave farmers, hogs and poultry raisers, and fishermen a glimmer of hope.

But what happened to the bill? That’s the big mystery. Was it approved, allowed to lapse into law, or vetoed by President Aquino?

Mr. Aquino’s action on the bill will reveal his true color? Is he a smuggler- coddler or smuggler- buster?

If Mr. Aquino vetoes the bill, it would reveal that he does not really care for the farmers and fishermen. In addition, it would show that he does not mind going down in Philippine history as the President who condoned big- time smuggling of agricultur­al products.

If Mr. Aquino approves the bill into law, or at least passively let the bill to lapse into law, it would show that he’s briefed about the negative effects of rampant smuggling on the economy, on local producers and investors, and on the rural poor. By approving the bill he would demonstrat­e that he has the political will to run after smugglers in his final days in office.

What is it going to be, Mr. President?

CORE BENJAMIN V. DIOKNO Smuggling of agricultur­e products cuts potential incomes of farmers and fishermen. And since locallypro­duced agricultur­al goods cannot compete with cheap imported food products, there is little incentive for farmers to produce.

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