PRESIDENT Duterte has issued two new orders adjusting the tariff of rice and pork to address the rising food inflation and at same time protect local farmers.
In his Executive Order (EO) No. 135 (s. 2021), Duterte reduced the Most Favoured Nation (MFN) tariff rates for rice, to 35 percent from 40 percent (in-quota) and 50 percent (out-quota) for a period of one year.
He said the measure aims to “diversify the country’s market sources” of the food staple for Filipinos and stabilize its local price.
“The tariff reduction took into consideration the increase in global rice prices, and the uncertainties surrounding the steady supply of rice in the country,” Presidential spokesman Harry Roque said.
However, a major farmers’ alliance said the reduction in rice tariffs spell around P100 million in revenue losses for the government, without ensuring that the savings importers make would benefit the public by way of lower rice prices.
Pork tariffs
Meanwhile, Duterte also issued EO 134 to slightly raise the tariff of pork after he adjusted it last April through EO 128.
EO 128 temporarily reduced the tariff rates for pork meat for a period of one year at a graduated basis, from 30 percent (in-quota) and 40 percent (out-quota) to 5 percent (in-quota) and 15 percent (out-quota) for the first three months; and 10 percent (in-quota) and 20 percent (out-quota) from the 4th to the 12th month.
However, Duterte issued EO 134 after lawmakers opposed such rates —which they noted is too low and will flood the market with imported pork and deepen the misery of local hog raisers already reeling from the impact of African Swine Fever.
Once it takes effect, EO 134 will increase the tariff for pork to 10 percent (in-quota) and 20 percent (out-quota) for the first three months, and 15 percent (in-quota) and 25 percent (out-quota) from the 4th to the 12th month.
“Given the continuing spread of African Swine Fever [ASF] and its adverse effects, the adjusted tariff rates aim to strike a balance between the objective of making pork products available and affordable, and the concerns of all stakeholders especially the recovery of the local hog industry,” Roque said.
ASF killed or led to the culling of 3 million hogs, which severely affected the available supply of pork, driving its prices up and causing inflation.
Rice tariff cut assailed
The lowering of rice tariffs by President Duterte to 35 percent could result in a tariff revenue loss of around P100 million, while pulling down domestic palay prices by as much as P1.5 per kilogram, a farmers’ group said.
Based on the estimates by the Federation of Free Farmers (FFF), importers of rice from India, for example, would save an additional P3 per kilogram due to the tariff cut. However, FFF cautioned that these savings may not be passed on to consumers as importers and traders could easily pocket them.
“In turn, palay prices for farmers could go down by as much as P1.50 per kilo. Government could also lose around P100 million in customs duties, or more, if import volumes from non-Asean countries increase due to the tariff reduction,” FFF said.
FFF argued that the grounds cited by President Duterte in his Executive Order 135 reducing rice tariffs to 35 percent from 40 percent (in-quota) and 50 percent (out-quota) were “baseless and deceptive.”
The group said: “There is no need to diversify the foreign sources of our rice because, under the Rice Tariffication Law, importers are already free to bring in rice from any country for as long as they pass our quarantine regulations. Aside from Vietnam and other Asean countries, we have been consistently importing from nine other countries, including India and Pakistan, and more recently China.”
FFF maintained that there is “no urgent need to augment” the country’s rice supply since the recent dry harvest just ended.
“The Department of Agriculture (DA) in turn has repeatedly claimed that we have ample rice supply and has even announced plans to increase our output by one million tons in 2021,” it said.
The group noted that there has been no significant decline in rice imports while domestic rice prices have remained stable.
FFF said the reduction in rice tariffs is “another slap in the face of the legislature” since Duterte issued the EO a few days before the Congress resumes its session.
“The power of the President to adjust tariffs is an authority delegated by Congress to allow the executive primarily to address urgent problems when Congress is not in session. In the case of rice, there is no emergency that needs to be addressed. The Executive has in fact deliberately played around with the rules to preempt and subvert congressional action,” the group added.