Year-ender: Agribusiness rife with import wars

Two major wars raged in agribusiness this year: One involved the issuance of import permits for farm products and the other concerned imported frozen meat products that were sold in wet markets.

On the issuance of import permits, there were skirmishes in the corn and onion sectors, but so far the farmers seem to be holding their ground.

Battles among producers, traders and the Department of Agriculture (DA) turned especially heated in the case of poultry and pork imports, particularly toward Christmas, when greater consumer demand offered

opportunities for more profit.

Amid all this, the producers observed that Agriculture Secretary Proceso J. Alcala seems to be sincere and pro-farmer, but they are not so sure about the rest of the DA bureaucracy.

In October, Philippine pork producers and feed millers sought permits to import a total of 100,000 metric tons of yellow corn—the main ingredient in livestock feeds—without the 35-percent import tariff.

This, as typhoons and flooding in Southeast Asia hampered deliveries from Thailand and hiked prices of Philippine stocks.

The Pork Producers Federation of the Phils. Inc., through president Edwin Chen, asked DA to allow tariff-free corn importation for six months. The Philippine Association of Feed Millers Inc., through president Norman Ramos, also wrote to Alcala that the 100,000 tons would make up only 13 percent of requirements for local livestock feed from January to March 2012. The volume would not drive down corn prices, Ramos said. Feed wheat can replace yellow corn in hog feeds but not in poultry feeds.

Philippine corn farmers, however, said local corn prices remained relatively stable, and bringing in imports would only further discourage farmers from planting the grain, resulting in a “vicious cycle,” the Philippine Maize Federation president Roger V. Navarro said.

‘Something smells…’

With more than enough onions in December to last the holiday season, an industry group asked government to hold off onion import permits until Ilocos farmers bring their December harvest to market. This, said officials of the Sibuyas ng Pilipinas Ating Alagaan (Sipag), would prevent oversupply and wastage, not to mention a drastic drop in prices that would hurt farmers.

Sipag officials said there were 12,500 tons of onions in storage all over the country around mid-December. This would supply the 8,750 tons of onion consumed per month in the Philippines.

On top of the current inventory, Ilocos farmers are set to produce an estimated 250 metric tons of red onions (shallots) in December. By January, onion farmers in Pangasinan and Nueva Ecija will also start harvesting so there would still be enough supply moving forward.

“(DA) Secretary (Proceso) Alcala has been very supportive of our farmers. We understand that he has to hear others who want an import permit now. But we will be making Ilocos farmers sacrifice if imports are allowed now,” Sipag president Francisco Collado said in a briefing. “If we will just allow imports deliberately, it will be Chinese farmers that will benefit from it. That will not benefit our economy at all.”

Despite positive signals from Alcala, however, Sipag officials remain concerned. This is because, they said, shipping containers with imported onions are already in port areas and just need import permits so that they may start flooding local markets.

Sipag has apparently received reports that import permits are being bid out for up to P500,000 each to traders whose goods are already in ports. In contrast, poor interisland shipping policies create many difficulties for local farmers while smuggled goods enjoy lax regulations, according to Sipag.

Ilocos farmers, meanwhile, have been pleading for government support since they have already lost their garlic industry to garlic imports from China and Taiwan. Sipag said that to promote food sufficiency, the government should regulate the industry and protect what is left of the farming sector.

All-out war

The most heated battles this year were in the livestock sector, to the point where the United Broiler Raisers Association (UBRA) and allied sectors want Bureau of Animal Industry (BAI) director Efren Nuestro out of office.

UBRA president Gregorio A. San Diego Jr. and other livestock industry leaders asked for Nuestro’s removal in a letter submitted to Alcala on Nov. 18, 2011.

San Diego told Alcala in a petition that Nuestro had continued to issue import permits even though inventories remained high and despite records showing shipments from India and similar places that have cases of avian flu (bird flu) and foot and mouth disease (FMD).

The Philippines prohibits the entry of poultry products from countries with bird flu and/or FMD cases.

Ubra vice president Elias M. Inciong said the BAI records show imports even from places like Hong Kong, which is not a producer-country. Philippine records do not match those obtained from the sources or “partner countries” either.

As such, Inciong said, BAI and the National Meat Inspection Service (NMIS) have been “remiss” in their duty to guard against illegal imports, especially those which could bring in diseases that endanger local livestock.

“Below Secretary Alcala, there is dereliction of duty,” Inciong said.

The Philippines, Brunei and Singapore are the only bird flu-free countries in Southeast Asia.

Officials of UBRA said in a briefing that in 2010 alone, chicken farmers and those from allied industries, such as corn farmers and feed millers, lost P10.3 billion in revenue.

Inciong said poultry raisers, already struggling to cope with the high cost of feeds, electricity and inputs, are dying out with huge volumes of imported poultry products being smuggled into the country through the southern backdoor and special economic zones.

“What is more damaging is that import permits are being issued on the grounds that there are allegedly not enough supplies. There is more than enough supply. It is abnormal that we have so much inventory during Christmas season,” San Diego said.

Industry data showed that there are 10,149.28 metric tons of dressed chicken alone in stock as of the week of Dec. 12, 2011, from 8,698.04 metric tons in the week of December 5 and from 9,040.24 metric tons on Dec. 13, 2010.

UBRA and other livestock groups also want Alcala to suspend DA Administrative Order 26, which is part of the revised rules, regulations, and standards governing the importation of meat products into the Philippines.

Inciong said that AO 26 has become the basis for the issuance of veterinary and quarantine certificates (VQCs), which has become a source of graft.

Nuestro, for his part, has said that not all VQC holders push through with imports, although industry stakeholders have in turn questioned why certificates must be issued to those who may not use such a document.

Nuestro added that there is a ban on products from China, which produces huge quantities of farm products.

To this, San Diego said that chicken, eggs, Peking duck, and other supposedly banned products from China continue to be sold locally.

UBRA officials themselves bought such items—with receipts to boot—from local supermarkets and have reported the incidents to DA officials.

The ensuing anti-smuggling raids, however, showed “surprising” results since the establishments mentioned in the list given to DA seem to have

removed the offending products before the raids.

Industry stakeholders also want the DA to closely monitor the special safeguard duty collections of the Bureau of Customs (BoC), which still uses $0.54 per kilogram as basis for computing duties and taxes for chicken, when it should now be $1. This allows technical smuggling to

continue while legitimate traders suffer, Inciong said.

Inciong also pointed out that there are differences between the records of the BoC’s minimum access volume (MAV) committee and the BAI. Officials of these agencies have not been able to explain the discrepancies, Inciong said.

MAV refers to the minimum volume of farm produce that it will allow to enter into the Philippines at reduced tariffs.

Double whammy

The MAV issue has hit members of the Meat Importers and Traders Association (MITA) who have been following MAV regulations and are already contending with DA Administrative Order 22 (A.O. 22), which restricts the entry of imported/frozen meat products in local wet markets.

AO22, which was implemented on Dec. 12, 2010, confines the handling and distribution of frozen and chilled meat within the cold chain.

MITA president Jesus C. Cham, on behalf of the group, has questioned in writing the rationale of the order and why local warm meat was not restricted.

Cham has called AO 22 a form of protectionism and not a way to promote food safety.

Recently, Cham said the NMIS had also started the “unwarranted confiscation” of imported frozen meat.

“Such irresponsible waste of perfectly good and wholesome food in the light of so much hunger around is unconscionable,” he said.

Meat traders questioned why the NMIS cites AO 22 as its basis for confiscation when the order passed without public consultation. NMIS has also not presented any scientific studies to support AO22.

MITA contends that, contrary to the DA’s claim, frozen meat products are actually safer than local warm meat (meat kept at ambient temperature) since the latter does not pass through the same stringent quality and sanitary standards.

Frozen imported meat products are stored in NMIS accredited and supervised cold stores, kept at low temperature until just before they are sold, are wrapped in plastic film and delivered to wet markets in boxes.

In contrast, local warm pork is exposed, handled with bare hands from the slaughterhouse to the wet market, and is not subjected to freezing at any point before the sale, the group said.

MITA also said that even RA 9296, which promotes meat inspection, does not make any distinction between fresh and frozen meat, but defines meat that has been subjected only to refrigeration (in contrast to freezing) as ’fresh.’ The group said it does not understand why DA/NMIS disregards RA 9296 and does not include local warm meat in AO22.

NMIS executive director Jane Bacayo, meanwhile, said in a statement that some vendors in Metro Manila and nearby provinces are complaining about the increasing presence of frozen meat in wet markets and are questioning their safety.

Hog producers have also complained that the increase in the importation of pork offal is starting to pose a competition to locally produced pork.

Stricter monitoring

MITA has said time and again that NMIS would serve the public better if it focused its activities on eliminating “double dead” meat from the market; enforce regular washing and disinfecting of the wet markets stalls and tools; and prevent unsold leftover stale meat from being processed into longganisa, tocino or marinated/colored to be sold as or incorporated into other processed meat products.

“NMIS admitted during the meeting that the sanitation in the wet market leaves much to be desired and that local warm meat would turn bad by 10 a.m. So should not the NMIS require that meat not sold by that time be condemned?” Cham said.

MITA said that AO22 may well deprive low-income consumers of affordable meat and meat products and thus push up the hunger index; the meat vendors of products to sell and thus reduce their business activities and incomes; the consumers of a wider variety of meat and meat products to choose from; the marketplace of levers to temper the price increases of local meat; the producers of meaningful competition to spur greater efficiency.

Alcala, so far, has not indicated how the DA will respond to calls for sweeping changes in the way BAI and NMIS are performing.

In the meantime, industry stakeholders are keeping their fingers crossed that significant changes will come with the new year.