Extend low tariffs on MDM, govt urged amid price hikes

LOCAL meat processors are urging President Ferdinand R. Marcos Jr. to extend the lower tariff rate on mechanically deboned meat (MDM) of poultry to temper price increases in processed meat products due to rising costs of inputs.

The Philippine Association of Meat Processors Inc. (PAMPI) said the country continues to reel from low levels of raw material supply, worsened by global economic challenges such as high crude oil prices and the peso depreciation.

PAMPI said the industry’s supply of processed meat products remains “adequate” but inventory levels of some member-companies are below the ideal inventory of at least 30 days.

The group attributed the thin supply of other members to the struggle in sourcing raw material supplies, particularly MDM of chicken, which it noted is also currently at “low” levels of inventory.

The local meat processing industry has been scrambling to source chicken MDM abroad after the Philippines imposed blanket bans on numerous European countries with confirmed bird flu outbreaks, which were also the industry’s key suppliers of the raw material.

The PAMPI noted that the recent lifting of the ban on Belgian poultry products provides a huge relief to the industry; however, the overall supply problems will continue to persist as most of the suppliers remain banned.

Belgium is the Philippines’s second top supplier of chicken MDM after the Netherlands, which remains banned from exporting poultry products until today. (Related story: https://businessmirror. com.ph/2022/07/01/da-liftstemporary-import-ban-on-belgian-poultry-products/)

The group disclosed that the price of chicken MDM remains “high” today, “holding” at a level that is triple than prepandemic quotes.

Longer time

DUE to this, the group urged Marcos, who is also the concurrent Agriculture Secretary, to extend the 5-percent tariff on poultry MDM, including chicken, “for a longer period of time.”

“We hope that President and concurrent Secretary of Agriculture Bongbong Marcos will protect the processed meats industry by way of reduced import duties for our raw materials or what we refer to as industrial input tariff to ensure affordable meat protein for the people,” PAMPI said in a statement sent to the Businessmirror.

“Our sector has consistently demonstrated our availability to keep prices within reach of the masses, and we are helping ensure the country’s food security,” PAMPI added.

The lower tariff rate on the imported raw material was extended by former President Duterte until December 31 of this year. The tariff rate on chicken MDM will revert to 40 percent starting January 1 next year, based on Executive Order 123 series of 2021.

The group also proposed that the Department of Agriculture (DA), under Marcos’s leadership, adopt a “risk management” approach instead of a “zero-risk approach” in dealing with global animal health issues, such as bird flu.

The group reiterated its longstanding recommendation that the DA follow the rules on regionalization and zoning set by the World Organisation for Animal Health (WOAH) in dealing with disease outbreaks instead of imposing a blanket ban on concerned countries.

“Both the DA and the industry must continue to explore additional country sources of safe and high quality raw materials that do not pose a threat to the local livestock sector,” PAMPI said.

Price increases

PAMPI revealed that some member-companies may have to seek another round of price increases before the Department of Trade and Industry (DTI) to cope with challenges such as rising costs of inputs, the weak peso and skyrocketing crude oil prices.

“Unfortunately, the price increases allowed by the DTI last May was still not enough to temper the impact of the increasing costs of raw materials, and the effects of the Ukraine-russia conflict particularly on the prices of gasoline, which also affects logistics and movement of goods,” it said.

“The government can help by protecting the processed meat industry through retention of the industrial input tariff for a longer period of time, and adopting more business friendly policies towards its stakeholders. This is critical while the local industry also tries to recover,” it added.

The group explainead that the industry is affected by rising oil prices as well as the increasing costs of electricity and other fuel alternatives. The group added that the industry is also on the receiving end of the weakening of peso— that has fallen to P55 to a dollar since a lot of its raw materials are imported. On Thursday, the local currency hit the 56 level.

“Until the local agricultural sector is able to meet our required quantities and specifications, we remain dependent on imported raw materials and this further compounds our problems. Interest rates have already gone up and are projected to go up further,” PAMPI said.

“We hope the agriculture policy and regulations become more supportive to doing business so that in turn, we can help the government’s food security program,” it added.