An urgent appeal to the President

There is an urgent appeal to the President coming from the international trade committee of the legislated public-private Philippine Council of Agriculture and Fisheries (PCAF). This is to withhold implementation of Executive Order (EO) 171, which extends the lower swine, rice and corn tariffs until Dec. 31, 2023.

A leader said it has a 3D effect: disconnect to disappointment to debacle. There is a disconnect between the direction of agriculture development and specific program implementation; disappointment of farmers and fisherfolk due to the absence of consultation where important facts are supposed to be considered for critical decisions; and a debacle that will aggravate our agriculture decline.

Last Dec. 28, with the competent and dedicated staff of PCAF under Executive Director Nestor Domenden, an international trade committee meeting was held to discuss EO 171. By an overwhelming majority vote (77 percent in favor, 15 percent against, 1 percent abstention), the private sector members passed a resolution requesting the President to withhold the executive fiat’s execution.

The reason is that he may not have been given critical information since agriculture stakeholders have not been consulted over it. The stakeholders argue that EO 171 lacks justification, based on actual facts that transpired between May, when the tariffs were lowered, until today.

Defective reasoning

The rationale for lowering the tariffs in May was that it would curb inflation. This did not happen at all. There is the mistaken assumption that lower tariffs will automatically lower retail price, when price is determined not solely by cost, but by supply and demand. Importers kept the added profits from lower tariffs, the consumers paid generally the same retail prices, and the farmers continued to suffer. These were already demonstrated previously by the Rice Trade Liberalization Law, which had no accompanying safeguards. Consumers paid only 2-3 percent less, while farmers lost 23-25 percent of their incomes.

During the PCAF meeting, Rolando Tambago of the Pork Producers Association of the Philippines cited Philippine Statistics Authority official numbers. The national average swine retail price of P322 in May had dropped to P313 in November, a 2.7-percent decrease. For the same period, inflation rose from 5.4 percent to 7.7 percent, or a 42.6-percent increase. If swine prices decreased by 2.7 percent and inflation increased by 42.6 percent, why blame and punish swine producers for the inflation?

Restoring the original swine tariffs will not cause inflation to spike. Instead, extending the lowered tariffs until the end of 2023 will only push swine producers, who are only now just recovering from the African swine fever, to further suffer. Supply and demand dictate retail prices.

Already, domestic swine supply is increasing, and prices are declining. This is the better and more effective response to inflation. Extending the implementation of lower tariffs will not only derail our increasing domestic production, it will also discourage future swine investments.

Other arguments

The same arguments were made against extending low tariffs for rice and corn. The goal of curbing inflation was not achieved. In addition, it had the adverse effect of increasing poverty and derailing agriculture development.

With regard to rice, Raul Montemayor of the Federation of Free Farmers noted that the other goal of getting more rice from non-Asean countries was not achieved. Insignificant rice volumes were sourced only from India and Pakistan. Furthermore, India is now imposing a 20-percent tax on rice exports, while Pakistan is expected to be a net importer due to domestic supply inadequacy.

For corn, Roger Navarro of the Philippine Maize Federation said: “This tariff extension discourages farmer’s intention to plant, disrupts their incomes, and will result in many ultimately abandoning corn farming.”

During the meeting, the Department of Agriculture was commended and appreciated for future actions to improve farmer consultation. The committee’s only appeal is that the implementation of EO 171 be deferred until important information be given to the President. INQ