Compromise reached on pork import tariffs, volume

The country’s economic managers and lawmakers finally reached a compromise on Wednesday on the rate of reduction in the tariff on pork and the cap on the volume of imports that will be slapped with lower duties, known as the minimum access volume (MAV).In a statement, the Department of Agriculture (DA) said the MAV on pork was set at 254,000 metric tons—lower than the original proposal of 404,000 MT—from the current level of 54,000 MT.

The tariff on pork imports under MAV was slashed to 10 percent, from the current 30 percent, for the first three months of implementation. It will be raised to 15 percent in the succeeding months.

For pork imports outside MAV, the rate was slashed from the present 40 percent to 20 percent for the first three months and 25 percent in the succeeding months.

The compromise, however, will still have to be approved by the President.

Quick resolution

Once approved, Executive Order No. 128 will have to be amended to reflect the agreed-upon tariff rates, which will be in effect for 12 months.

“Given that we have reached a compromise, we will act without delay to reflect the features of the compromise in corresponding executive issuance,” Agriculture Secretary William Dar said.

“We appreciate the quick resolution of this issue. A problem of this scale, when incomes and job opportunities have declined, needs immediate and urgent action,” Dar added.

Earlier, Senate President Vicente Sotto III said that in deciding on the issue of pork importation and tariff, they had to balance efforts to ease inflation and the protection of the local swine industry.

Socioeconomic Planning Secretary Karl Kendrick Chua said lower pork tariffs and bigger imports had to be sustained for the benefit of the consumers.

“Price stability and food security during the ongoing pandemic should be given the highest priority. The temporary measure will also buy time and enable the local hog industry to repopulate their stock, without sacrificing the purchasing power of households, especially those who lost their jobs and income amid the pandemic,” Chua said.

“Meat has been persistently the top contributor to inflation this year, hence we urgently need to temporarily augment our pork supply through importation. Retaining the status quo will cause 100 million Filipinos to suffer longer from high food prices,” he said in a statement.

The government earlier reported that while headline inflation was steady at 4.5 percent in April, meat prices climbed 22.1 percent year-on-year mainly as pork inflation jumped 57.7 percent.

Acceptable to growers

Hog raisers belonging to the National Federation of Hog Growers Inc. found the compromise acceptable.

Federation president Chester Warren Tan said the agreement was “not a win-win solution, but reasonable.”

“We can accept this. At least this would give us a fighting chance to survive and compete,” he said.

Samahang Industriya ng Agrikultura chair Rosendo So described the compromise as a “victory,” adding that the initial proposals of the DA and the economic managers were enough to kill the industry.

While hog raiser groups welcomed the compromise with lukewarm optimism, the country’s biggest importer group doubted that the imposed tariff rates and the MAV would be enough to depress meat prices immediately.

Request for extension

The Meat Importers and Traders Association (Mita) earlier wrote to some senators and Cabinet secretaries requesting to extend the implementation of the compromise rates over the next five years against one year.

In doing so, consumers would be assured of a steady supply of affordable pork, it added.

“One year is definitely too short. Five years is a realistic outlook that producers and political leaders should accept,” said Mita president Jesus Cham.

“Even local hog practitioners and professionals will agree that if a vaccine [against African swine fever] is discovered today, it would take two to three years to fully recover. As it is, ASF is still spreading as seen from the reports of BAI (Bureau of Animal Industry),” he added.

“The main beneficiaries should be the economy and the consumers. Importers have always been the last priority except at this time when importation is the only option,” he further said.

Nicanor Briones, vice president of the Pork Producers Federation of the Philippines, said there had been no question on how long the revised policies must be put in place.

He added: “If that happens, no one will produce anymore. Piggeries will close. Livestock stakeholders, not only those engaged in livestock but even those who are producing corn and poultry, will unite against that. We will boycott.”

Reduced gov’t revenue

Last week, Finance Secretary Carlos Dominguez III told senators that while lower pork import tariff would reduce government revenue at a time when collections were weakened by the pandemic-induced recession, this will be offset by easing food prices resulting in savings for meat-consuming households during these harder times.

Dominguez was also hopeful to bring down pork price levels with EO 128 to about P215-225 per kilo, similar to levels in 2018 to 2019.

According to Dominguez, “EO 128 appears to be a painful solution—our revenue will drop by P13.68 billion.”

“However, lowering the price of pork will save our consumers P67.38 billion. These gains of consumers dwarf the foregone revenues by P53.7 billion. Clearly, this is a tradeoff beneficial to the entire country,” the finance chief said. —With a report from Ben O. de Vera