The government is pinning its hopes on importers to augment the expected pork shortfall in the country as the African swine fever (ASF) continues to ravage the nation’s hog population.
Presidential spokesperson Harry Roque earlier said that Filipinos were at risk of a 400,000 metric ton (MT) shortage this year. In a phone interview, Agriculture Undersecretary William Medrano said members of the private sector would be given allocation to bring in the needed supply.
Based on prevailing world prices, the estimated volume needed is valued at P60 billion at $3 a kilo.
Industry insiders who talked to the Inquirer speculated that this could explain the government’s moves to cut tariffs and expand the pork allocation under the minimum access volume (MAV) as a means to encourage importers.
The Department of Agriculture (DA) earlier announced that it was planning to raise the MAV allocation for pork to 388,790 MT from 54,000 MT.
Similarly, a 12-month tariff reduction has also been proposed. The DA recommended that pork imports under MAV be imposed a 5-percent tariff for the next six months and a 10-percent tariff for the succeeding six months from the current rate of 30 percent.
For pork imports outside MAV, the DA suggested that tariffs be reduced to 15 percent for the next six months and 20 percent in the succeeding six months from the current 40 percent.
The Philippine Association for Meat Processors Inc. said they welcomed the agency’s call for more imports to depress prices and fill in the needed supply. However, the group clarified that they were also urging hog producers to go into the importation business to keep their businesses afloat, citing the several loan programs that the government opened to farm owners affected by ASF.
Two-tier tariff policy
The ongoing pork shortage, if unplugged, can put pressure on the country’s overall inflation, although the effect may not be as dire as it is for rice, said Ramon Clarete, dean of the University of the Philippines School of Economics.
Despite price ceilings imposed by President Duterte on pork—currently between P270 to P300 a kilo—the DA’s price monitoring reports showed that some prices in public markets were still beyond the given price points.
Prices of pork as of this week ranged from a low of P270 to a high of P350 a kilo. Weeks before, prices have shot up to as much as P420 a kilo.
A group of prominent economists earlier discouraged the government from imposing price control on pork, suggesting instead the reduction in tariffs and increasing the allowable volume of imports.
The Philippines maintains a two-tier tariff policy for sensitive agricultural products, including pork. All imports outside of the MAV are taxed at a higher out-of-quota rate. Presently, the out-quota and in-quota tariff rates on pork are 40 percent and 30 percent, respectively.
“This tariff quota system requires complicated administration. If the difference is just 10 percentage points, why don’t we just unify those tariff rates so we can save on administrative costs? However, unifying the tariff rate on pork imports at 30 percent is high. Lowering that tariff to 10 percent or 5 percent can better generate significant household savings and will eventually make our hog industry more competitive,” the Foundation for Economic Freedom, said in a Feb.5 letter to Agriculture Secretary William Dar. INQ