DELAYS in arrivals of food imports now stretch to as long as three months, as global shipping problems—a combination of several factors fueling a perfect storm—continue, industry leaders told the BusinessMirror.
The situation poses a huge threat to the government’s plan to flood the market with “cheaper” imported pork.
The global container imbalance and lack of vessels have caused shipments of meat imports to arrive in about three to four months, which could derail the government’s plan to bring in cheaper imported protein sources with its pork tariff reduction and minimum access volume (MAV) increase plans.
“We now are looking at three to four months of arrival. There’s a lot of congestion caused by Covid-19 pandemic. It has created an imbalance in trade with containers going one way and the others returning without a back-load,” Meat Importers and Traders Association (Mita) President Jesus C. Cham told the BusinessMirror.
Cham added that North America is also reeling from the impact of severe winters that have slowed down movement of people, trucks, and cargoes in the West.
Given the current situation, shipping costs have increased with importers only getting to know the additional charges when their shipments arrive in the country, Cham said.
“We will know only of the additional charges when the cargo arrives. And they are delayed. Upon arrival, we will see the destination charges,” he said.
“The CIF cost of a headless pork carcass has gone up to $3 per kilogram from $1.5 per kilogram,” he added.
Cham warned that given the delays in shipments, the government’s plan to reduce pork tariffs to as low as 5 percent for in-quota volume and 15 percent for out-quota volume may not be maximized, with consumers not benefitting from such low tariffs.
For example, if President Duterte reduces the tariff in the following days, then only the shipments already in transit, including those imports by current minimum access volume (MAV) or quota holders, would benefit from the 5-percent tariffs.
“Only the pre-ordered will benefit but the new orders may not, since it takes us now at least three months for new orders,” Cham explained.
“The uncertainty of the tariff reduction also plays a part in the ordering of the importers. If the importer doesn’t feel confident that tariff will be reduced, then he will not order,” he added.
Cham said the government should push through with the reduction of pork tariffs without waiting for the increase of the MAV, which is currently pending before Congress. He insisted that it is only through lower tariffs that imports could influence prevailing domestic retail prices of pork, which have gone up anew to P380 per kilogram level.
President Duterte can already issue an Executive Order modifying the tariffs on pork imports since Congress has gone on scheduled recess since Friday and won’t be back till May 17.
The Cabinet-level Committee on Tariff and Related Matters earlier recommended to Duterte to reduce pork tariffs to 5 percent for in-quota and 15 percent for out-quota for three months, which would increase after to 10 percent for in-quota and 20 percent for out-quota for nine months. The Tariff Commission, based on the documents obtained by the BusinessMirror, earlier proposed a 10-percent in-quota tariff and 20-percent out-quota tariff for one year.
The Department of Agriculture (DA) earlier petitioned for the reduction of pork tariffs to 5 percent (in-quota) and 15 percent (out-quota) for six months. Afterwards the tariffs would increase to 10 percent (in-quota) and 20 percent (out-quota) for another six months before reverting to current tariff rates of 30 percent for MAV and 40 percent for outside MAV.
The BusinessMirror earlier reported that imports from Europe, United States and Canada, which are major pork import sources of the country, are delayed by two weeks to one month due to lack of containers and vessels. (Related story: https://businessmirror.com.ph/2021/03/26/food-shortage-seen-on-global-supply-woes/)
This is worsened by the congestion at transhipment points such as Singapore, Hong Kong and China, industry players told the BusinessMirror.
“We are facing shipping and logistics problems. For example in Europe, there are a lot of delays due to Covid-19 problems and challenges such as lockdowns. We are now encountering two weeks to a month delays in our arrivals,” Royal Cargo Inc. (RCI) COO Jet B. Ambalada told the BusinessMirror.