Fuel tax hike worries farm sector

Stakeholders of the agriculture sector are afraid the second round of fuel tax increases next month may not bode well for food producers since the measure will translate to higher production costs.

Industry leaders who talked to the Inquirer said the fuel tax hike—at P2.44 a liter including value added tax—was a huge blow to farmers who were also consumers since they could not dictate the prices of the food items they buy or sell.

In agriculture, fuel accounts for 30 percent of a farmer’s total production cost on top of transportation costs. In the fisheries sector, it is even higher at 60 percent.

“Agriculture heavily relies on fuel, from the use of fertilizer to small fishing boats,” Philippine Center for Agriculture and Fisheries convenor Omi Royandoyan said. “The fuel tax hike will pull the farmers’ profit margin, and this comes at a time when the country’s agriculture sector is trying to compete with its Southeast Asian neighbors.”

“It will definitely hurt food producers the most because they are also consumers,” Samahang Industriya ng Agrikultura chair Rosendo So said. “The additional fuel tax will not only hurt their livelihood but also their spending.”

United Broilers-Raisers Association president Bong Inciong said the fuel tax would be “an additional burden if market conditions are unfavorable” especially because poultry raisers could not pass on the added cost.

In the country’s supply chain, traders and middlemen control market prices.

The first round of fuel tax hike at P2.50 a liter was not received well by the sector as well.

But for Agriculture Secretary Emmanuel Piñol, the additional excise tax on fuel will not hurt the sector that much.

“The prices of fuel have gone down considerably and the additional fuel excise tax, I think, will not be greater than the reduction on the price of fuel,” he said.

“There is always that possibility [that traders would take advantage of the increase in fuel prices]. That’s always the risk but we have instituted measures that would ensure there would be stable prices in the market,” he added.

The country’s economic managers earlier recommended the suspension of the fuel tax increase amid rising inflation, but this was withdrawn following the continuous decline in oil prices.