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Thursday, April 18, 2024

Longer low-tariff regime for food imports backed, but…

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THE Department of Agriculture (DA) backed the extension of lower tariff duties on certain imported commodities to ensure steady food supply and ease inflation, but acknowledged—as pointed out by a lawmaker and farm groups—that the lower tariffs thus far have worked only marginally in bringing down local prices. The DA also sees the need for a periodic review of the tariff order in order to strike the right balance between helping consumers and protecting local producers.

In a statement on Monday, Sen. Grace Poe said that, while government efforts to bring down prices are laudable, the extension of Executive Order No. 171 now “is no more assurance that prices will go down soon as it is just extending what is,” referring to her observation, shared by stakeholders, that market prices have not substantially gone down despite the entry of imports.

At the same time, Poe stressed that “we need to craft policies that take on a longer view of the situation with a wider perspective.”

The Office of the Press Secretary (OPS) earlier revealed that President Marcos Jr., concurrently the agriculture chief, has greenlit a proposal to prolong the duration of lower tariff rates on corn, pork, coal and rice under EO 171 until December 2023. (Related story: https://businessmirror.com.ph/2022/12/19/lower-tariffs-on-food-items-coal-to-cool-inflation-balisacan/)

The extension of the lower tariff rates will take effect once Marcos issues a new EO ordering such a measure.

In a separate development, high-ranking DA officials explained that the extension of lower tariffs stipulated under EO 171 is imperative as a short-term measure to ease price pressures brought about by lackluster domestic production.

However, the officials, including Senior Agriculture Undersecretary Domingo F. Panganiban, stressed that implementation of lower tariff rates, which is expected to last until December 2023, must be regularly reviewed to determine its efficacy.

Panganiban proposed that the lower tariff rates must be scrutinized every quarter starting January.

Mid-term review

Meanwhile, Agriculture Undersecretary Mercedita A. Sombilla disclosed that there will be a mid-term review of the lower tariff rates to assess local and global conditions.

Sombilla explained that the DA is doing its best to balance importation and local production to resolve the country’s food supply problems, particularly on skyrocketing prices.
          

Economic managers of the current administration have unanimously endorsed the extension of EO 171, deeming it imperative to temper spikes in food prices amid accelerating inflation.

Various quarters of the agriculture sector have reacted to the news that the lower tariff rates on certain agricultural products have been extended.

The Meat Importers and Traders Association (Mita), in a statement, said the extension of lower pork tariffs is a “recognition” by the government of the existing “threats” to the country’s food security.

“In addition to coal, the government should seriously consider to extend the low tariff on feed corn indefinitely and on pork for five years,” Mita said.
  

“Low power cost and low feed cost are essential for our poultry and livestock sectors to produce affordable meat. Let us take these initial steps towards global competitiveness,” it added.

Little impact

However, the Philippine Chamber of Agriculture and Food Inc. (PCAFI) remained firm that the lower tariff rates on agricultural imports have not yielded its intended impact of lowering food prices for Filipino consumers.

PCAFI said “only” the traders and importers are benefitting from the lower tariff rates.

“EO 171 is still in effect up to Dec. 31, 2022 and yet we see prices skyrocketing. How can you say then that the extension of EO 171 up to December 2023 will bring down prices?” it said.

“Encouraging imports will result in the killing of our local production of pork, corn [including poultry relying on corn as feeds] and rice industries,” it added.

For her part, Poe stressed the need for lawmakers to “take an honest look at EO No. 171 and see if it achieved its goals of lowering prices.”

She recalled that “for rice, the aim was to bring down the cost from countries outside of ASEAN,” even as she cited the point of agriculture groups that “rice from outside of ASEAN, specifically Pakistan, can still come in at lower prices even without bringing down the tariff.”

Poe also noted concerns of the Federation of Free Farmers and SINAG over the revenue loss that lower tariffs mean to government.

“For pork, did it really bring down prices?” she asked, recalling that “the issue last year was the volume of importation and the Senate had to step in for the concerns of hog raisers to be heard.”

The senator reminded officials that National Meat Inspection Service data showed imported pork inventory is still 30 percent more than last year’s and remains above 100,000 tons; and importers have said that they have been stockpiling ahead of the expiration of EO 171.

Profiteering?

“We need to see if there was profiteering,” she stressed, noting that “SINAG has been complaining of the drop in farmgate prices of pork yet retail prices were hardly moving,” adding that the extension of EO No. 171 now “is no more assurance that prices will go down soon as it is just extending what is.”

At the same time,Poe said that, “beyond consumer prices, we also need to look at this in its entirety—the challenges affecting local production, the friction costs, consumer preference, and the livelihood of our people.”

She asked:  “Do we want to permanently depend on imported food products and subject food prices to fluctuations in the foreign exchange or do we want to be self-sufficient?”

She also proposed that “measures that bring down prices for consumers must go hand in hand with measures that will support food producers going forward,” noting that “food producers are also consumers themselves and many of them have already taken a hit in the past two years.”

She stressed the need to “punish the syndicates of hoarders and smugglers” tagged as the reason for soaring prices of agriculture products, including rice and onions.

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