Smugglers exploiting loophole in palm oil import rules, House panel told

SMUGGLERS are exploiting a quirk of the tax rules by declaring their palm oil imports as intended for processing as animal feed, which allows their shipments to enter tax-free, legislators said at a House of Representatives hearing on Monday.

The importers then end up using their palm oil to make cooking oil, thereby evading the tax on palm oil imports intended for human consumption, PBA Partylist Representative Jericho Jonas B. Nograles said at a Ways and Means committee hearing.

“The livestock industry only requires about P50 billion worth of imports of palm oil, we’re importing P300 billion,” he said.

Resource persons from the poultry and livestock industry told the committee, which is chaired by Rep. Jose Ma. Clemente S. Salceda of Albay, that their preferred feed does not typically use much palm oil.

“We’re rather surprised about the volume because palm oil, especially for… the poultry industry, is not a priority feed component,” United Broiler Raisers Association President Elias Jose M. Inciong said.

The industry’s preferred raw material for feed is coconut oil, which is widely available in the Philippines. He added that palm oil, while cheap, carries safety concerns.

“You have this concern about contaminants and the safety of your animals when you use palm oil,” Mr. Inciong added. “I don’t think it has merit. If you talk to animal nutritionists, they would prefer at any given time coco oil.”

He also said palm oil imports are adding to the distress of coconut farmers.

National Federation of Hog Farmers Chairman Chester W. Yeo Tan said “in the swine industry, a big percentage is given to coco oil, while the use of palm oil is very minimal.”

Agriculture Undersecretary Ariel T. Cayanan told the committee that inspections of palm oil shipments can determine whether they are food grade or feed grade.

According to data presented by the Bureau of Customs, palm oil imports amounted to 1.2 billion kilograms in 2021 from 910 million in 2016. For feed grade palm oil, imports rose to 176 million last year from 5.7 million in 2016.