Finance Secretary Carlos Dominguez III has called on lawmakers to support President Rodrigo Duterte’s directive allowing increased pork imports at lower tariff rates for a temporary period to address the scarcity in the domestic supply of hog meat and ensure that pork remains affordable to Filipino families already reeling from the economic impact of the COVID-19 pandemic.
Dominguez said the recommendation to the President to temporarily reduce pork import tariffs and increase the Minimum Access Volume (MAV) on pork imports was made by him and the EDC after extensive deliberations and consultations among concerned agencies and the public, with all the tradeoffs considered in the cost benefit analysis done on this major consumer concern.
At the same time, Dominguez, as Chairman of the Land Bank of the Philippines (LANDBANK), said the government, through LANDBANK, will double its support for domestic hog raisers and feed millers by providing them loans for repopulating their stock and for feed milling.
In a letter addressed to Senate President Vicente Sotto III, Dominguez said that as Chairman of the Cabinet’s Economic Development Cluster (EDC), he was taking full responsibility for supporting and recommending that the President sign Executive Order (EO) No. 128, which temporarily modified the rates of the import duties on fresh, chilled and frozen meat of swine and increased the MAV on such imports.
Dominguez pointed out in his letter to Sotto that the period of the tariff adjustment under the EO emphasizes that “this is a short-term effort that does not aim to harm the domestic industry” and is actually “complementary to the programs of the Department of Agriculture (DA) in helping the domestic hog industry to recover.”
“I would like to take this opportunity to urge the Senate to support this measure so that some 100 million Filipinos who eat pork, especially the poor, will not be penalized by high food prices. If left unresolved, poverty and malnutrition will increase,” Dominguez said in his letter.
“Elevated pork prices will add another problem to households whose incomes have already been heavily strained by the COVID-19 pandemic. With African Swine Fever (ASF) raging through farms for almost two years, data show that domestic supply will remain inadequate for the needs of consumers,” he added.
Pork prices in the National Capital Region (NCR) have already reached as high as P327 per kilo in March 2021, which is 59 percent higher compared to last year.
In March 2021, meat inflation increased to 20.9 percent and was the top contributor to overall inflation of 1.4 percentage points, even higher than the 1 percent contribution to inflation of rice at the height of the 2018 rice crisis.
Dominguez said that to resolve the ASF crisis gripping the domestic hog industry, the DA has put in place several programs, among them, repopulating the swine population, compensating producers for losses in culled hogs, and investing in long-term solutions to the problems of the swine industry.
He pointed out though, that these are medium-term and long-term solutions that will not immediately address the current price pressures affecting pork consumers.
Contrary to misperceptions, the DA does not intend to rely on importation alone to solve supply issues in the long haul, Dominguez said.
“Even with increased imports, a large part of domestic demand is expected to be covered by domestic production, which the DA will aggressively support with improved implementation of its hog production assistance and repopulation program,” he said.
Dominguez said the proposed pork import program will only cover 22.8 percent of total domestic consumption.
“The EDC fully understands that its ongoing efforts to support the domestic industry in overcoming ASF and other issues are critical,” he said.
Dominguez said the DA has been helping the hog industry recover since 2019 through various programs including: greater and easier access to credit, implementation of the Bantay ASF sa Barangay (BABay ASF) to strengthen surveillance and quarantine, and the Integrated National Swine Production Initiatives for Recovery and Expansion (INSPIRE) program to repopulate our hog population.
“To allay the fears of our local hog raisers, the MAV Management Committee (MMC) can also issue additional rules and regulations for the MAV allocation to be subject to a quarterly review as an additional measure to avoid imported pork flooding the market and depressing local prices below profitable levels,” Dominguez said.
He said that to immediately address the needs of consumers, the EDC recommended as an emergency measure the temporary increase in the MAV and decrease in tariff rates, which will then be gradually adjusted upward and completely restored to original rates after 12 months.
The move to recommend this emergency measure was not done overnight but underwent a series of executive actions beginning January this year, he said.
Last January 27, 2021, the DA requested for the review of a temporary modification of the most-favoured nation (MFN) rates on meat and swine products during a special meeting of the Committee on Tariff and Related matters (CTRM).
In that meeting, the CTRM unanimously approved the proposal to lower the 30 percent in-quota and 40 percent out-quota tariff rates on pork to 5 percent in-quota and 15 percent out quota for 6 months, and 10 percent in-quota and 20 percent out-quota for the following 6 months.
The Tariff Commission held public consultations with key stakeholders on this proposal and received several inputs from farmer and pork producer organizations such as the Alyansa Agrikultura (AA), Pork Producers Federation of the Philippines (ProPork), Samahang Industriya ng Agrikultura (SINAG), National Federation of Hog Farmers, Inc. (NFHFI), Federation of Free Farmers (FFF), and the United Broiler Raisers Association (UBRA).
“Among those consulted, the Department of Trade and Industry-Board of Investments (DTI-BOI), the Meat Importers and Traders Association (MITA), and the Foundation for Economic Freedom (FEF) expressed support for the proposed reduction (in tariffs),” Dominguez said.
Following these consultations, the MAV management committee, led by DA Secretary William Dar, submitted on February 15, 2021 a resolution for the President’s approval recommending the temporary increase in the MAV quota for pork from 54,210 MT to 404,210 MT as an immediate response to high pork prices.
This proposed increase has factored in already the estimated supply deficit for 2021.
The National Economic and Development Authority (NEDA) Board joint CTRM and technical committee on tariff and related matters (TCTRM) then endorsed the proposal on February 24, 2021 to temporarily modify the MFN rates on meat and swine to the NEDA Board for approval.
“As a result of the public hearings and discussion among the CTRM, the proposal was recalibrated to better help the local industry adjust to increased pork importation. This was reflected in the adjustments to 5 percent in-quota and 15 percent out-quota the first 3 months, and 10 percent in-quota and 20 percent out-quota for the following 9 months,” Dominguez said.
The draft EO on reducing pork import tariffs and increasing the cap on pork imports was circulated to the NEDA Board through a memorandum dated March 5, 2021.
Dominguez said the NEDA Board endorsed the draft EO on March 11, 2021 via ad referendum and transmitted a memorandum for the President (MFP) dated March 15, 2021, recommending the issuance of the EO to temporarily reduce tariffs on pork importation.
An EDC meeting last March 5, 2021 focused on proactive measures to help manage food prices and prevent supply shocks to protect the purchasing power of consumers.
First, the economic managers identified key commodities that contributed to higher inflation rate as a result of government tariffs, low MAV quotas, and non-tariff barriers to trade.
The EDC then instructed the DA and the DTI to work towards the removal of the MAV system and set an appropriate rate of tariff to regulate the importation of agricultural products. Finally, the EDC requested all the agencies to undertake administrative measures to reduce barriers to importation.
“The President’s Executive Order to temporarily increase MAV and decrease tariff rates for imported pork will immediately address the abnormally high pork prices caused by the supply deficit. This will give some 100 million Filipinos who eat pork, especially the poor, access to adequate and affordable food amid the pandemic,” Dominguez said.
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