DOF backs Neda on higher pork imports, lower tariffs until December 2022

MANILA, Philippines — The Department of Finance (DOF) on Thursday (Jan. 13) pushed for an extension until end of 2022 of validity of an underutilized executive order issued last year raising pork import volume and lowering tariff.

This backed up a call made by the National Economic and Development Authority (Neda) for more imports to slash domestic prices.

In an economic bulletin, Finance Undersecretary Gil Beltran said meat inflation climbed 16.8 percent in 2021, the highest annual price increase across major food items in Filipinos’ consumer price index (CPI) basket since 2012.

“The effects of the African swine fever (ASF) still linger,” said Beltran, who is also chief economist of the Department of Finance (DOF).

He said while the Department of Agriculture (DA) confirmed ASF outbreak in the middle of 2019, “it was in 2021 that the country felt more fully the debilitating effects of the hog infection.”

“Hog production slumped by as much as 23.4 percent in the first nine months of 2021 as compared to the 4.2 percent decline in the same period the prior year,” Beltran said.

“The drastic drop in domestic hog supply immediately translated into higher prices of swine and, subsequently, pork,” he said.

He said in the first 10 months of 2021, backyard hog farm gate prices averaged P155.60 per kilo, which was 38.9 percent higher than 2020 average price of P112 per kilo.

Globally, meat prices were also on an upswing, jumping 12.7 percent last year to reverse the 4.5-percent drop in 2020, Beltran said, citing Food and Agriculture Organization (FAO) estimates.

Expensive pork was the biggest contributor to last year’s elevated meat inflation, which Beltran said accounted for a hefty 1.1 percentage point of the three-year-high, above-target 4.5-percent average inflation rate in 2021.

“Had meat price inflation been half as high, the upper level of the 2 to 4 percent inflation target range would not have been breached,” he said.

Beltran said the Philippines “would definitely need to continue importing pork products to meet demand and immediately compensate for the shortfall in domestic supply as it will take some time to recover decimated hog populations.”

“For perspective, the seasonal peak in pre-ASF hog headcount was 13.1 million in the third quarter of 2018. Hog inventory fell to less than 9.9 million as of the end of the third quarter in 2021,” he said.

Beltran recommended the following:

EO 133 raised MAV, or the import volume ceiling, for pork to 254,210 metric tons in 2021 from the previous 54,210 metric tons. The EO expired in end-2021 as it also stated that balance of MAV cannot be carried over to 2022.

Together with EO No. 134, which lowered tariff for pork imports, higher import volume under EO No. 133 had been expected to lower prices.

But the Department of Agriculture’s National Meat Inspection Service (DA-NMIS) had limited access to imported pork in certain markets.

To address this, the DA last October ordered more pork distributed in areas outside Metro Manila and also in wet markets, institutional buyers and processors instead of just supermarkets in Metro Manila benefiting from pork importation.

Neda reported last week that slow pork importation despite the two Duterte EOs led to a supply deficit of 167,800 MT in 2021, according to DA and Philippine Statistics Authority estimates.

Socioeconomic Planning Secretary Karl Kendrick Chua, also Neda chief, said the proposed extended MAV until the end of 2022 should be recomputed based on projected gap in supply and demand for the year.

TSB
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