‘Scrapping MAV for agri products to cut prices’
SCRAPPING the decades-old Minimum Access Volume (MAV) system for agricultural products is expected to reduce prices of commodities, government sources said.
In his letter to Senate President Vicente Sotto III on Tuesday, Finance Secretary Carlos G. Dominguez III disclosed that the Economic Development Cluster (EDC) has instructed the Departments of Agriculture, and Trade and Industry to “work towards” the abolition of the MAV system and “set an appropriate rate of a tariff to regulate the importation of agricultural products.
Dominguez also said the key commodities that contributed to higher inflation rate were a result of “government tariffs, low MAV quotas and non-tariff barriers to trade.”
MAV refers to the volume or quantity of a specific agricultural commodity that may be imported with a lower tariff. is is part of the Philippines’s commitment to the World Trade Organization to facilitate trade between countries.
A government source, who attended the said EDC meeting, told the BM that there was a need to review the decades-old MAV system for agricultural products “to determine whether such import restrictions are still relevant.”
“Actually, the instructions were to review to check relevance and then remove or revise accordingly,” the source said.
Sought to clarify the implication of scrapping the MAV system, the source added: “Offhand, cheaper prices if imports are allowed in greater volume during lean months.”
According to the source, the move also does not necessarily entail lower uniform tariffs. “Not necessarily lower, but there will no longer be an in-quota and out-quota tariff. [Just a] single tariff rate,” the source said. Another government source also told this paper that the rationale behind the scrapping of the MAV system was “to remove red tape which is causing inflation to rise.”
e source also recalled that during the EDC meeting there was a mention of having uniform tariff rates along with the removal of MAV, but it was not specified that the move will entail lower tariff rates.
Inflation in the first quarter averaged 4.5 percent, higher than last year’s 2.7 percent. e March inflation print reached 4.5 percent, slower than February’s 4.7 percent, but higher than last year’s 2.5 percent.
e government is targeting to keep inflation this year within the 2- to 4-percent range.
Apart from instructing DA and DTI to start working on the removal of the MAV system, the EDC also requested agencies to undertake administrative measures to reduce barriers to importation.
Certain industry groups like the United Broiler Raisers Association (Ubra) have long proposed the abolition of the MAV as certain in-quota tariffs for some agricultural commodities, like poultry, have reached parity with their out-quota tariff.
In its letter to Sen. Cynthia A. Villar last month, Ubra proposed to abolish both the MAV for pork and chicken as it is the “fastest way to get rid of corruption.” Ubra made the proposal anew following allegations made by Sen. Panfilo Lacson of an alleged “tongpats” (kickback) in the MAV system of the government.
Industry experts told the BM on Tuesday that abolition of the MAV system would help curb technical smuggling as there will be “no incentive to misdeclare when tariffs are uniform.”
However, some industry players told the BM that abolishing the MAV without decreasing the high tariffs for pork and chicken would be useless.