TALKS on the implementing guidelines of the increase in minimum access volume (MAV) of pork or MAV plus have progressed, with the MAV Advisory Council recommending that the 200,000 metric tons be equally imported and sold across 12 months.
MAV-AC members told the BusinessMirror that the consultative body has approved at least three recommendations for consideration of the MAV Management Committee (MAV-MC), which will have the final say on the implementing rules and regulations of the pork MAV+. The BusinessMirror learned that the MAV-AC, voting 7-2, recommended to divide the importation and distribution of the 200,000 metric tons of pork MAV+—as ordered by President Duterte’s Executive Order (EO) 133—across 12 months or about 16,666 MT per month.
Furthermore, the MAV-AC approved the proposal to allocate the 200,000 MT pork MAV+ accordingly: 25 percent to regular MAV licensees, 25 percent to local pork producers and 50 percent to other interested eligible importers. Likewise, the consultative body recommended that importation per company shall be limited to 500 MT per month, subject to its actual utilization and distribution of the applied volume.
8 months or 12 months
ONE of the sticking discussions during the MAV-AC meeting on Wednesday was whether the MAV+ volume shall be divided across eight months or 12 months.
Meat importers proposed, and this was supported by meat processors, that the volume be allocated across 8 months, as EO 133 stipulated that the increase in MAV is only for MAV year 2021, which started last February and will end in January 2022.
However, local pork producers pushed that the MAV+ be divided across 12 months in parallel with the 1-year tariff reduction.
The body voted on the matter, with 7 members favoring the 12-month division instead of the 8-month allocation.
The 7 members that voted in favor of the 8-month allocation were: representatives from grain sector, hog sector, other MAV products sector, non-meat processing sector, consumers sector, sugar sector, and national agriculture and fishery councils. The two members that supported the 12-month allocation were the meat traders and meat processing sector representatives.
Meat Importers and Traders Association President Jesus C. Cham, who represents the meat traders in the MAV-AC, said the EO was clear that the increase in MAV is only effective for the MAV year.
Cham told the BusinessMirror that allocating the MAV+ across 12 months would mean “less supply and more chances for higher prices” especially as the country is approaching the -ber months.
Cham noted an urgent need to bring in imports since the country is continuously reeling from the impact of African Swine Fever (ASF) which continues to spread nationwide, thus, exacerbating the country’s pork deficit.
“I hope the management committee chooses the right mechanism and overrules the recommendation. Besides, it is clear in the EO that it says MAV year, so why insist on 12 months?” he said.
However, Nicanor Briones, Pork Producers Federation of the Philippines Inc. chairman, argued that dividing the pork MAV+ across 12 months would help in mitigating the anticipated impact of higher imports on local production.
Briones explained that EO 135, which amended the tariff rates, was the latest executive order issued by Duterte; hence, its effectivity of one calendar year must be followed instead of the EO 133 timeline.
However, sources told the BusinessMirror that Department of Agriculture (DA) officials present at the MAV-AC meeting told the members that the EO on tariff reduction and MAV+ are two separate matters, thus, with distinct timelines.
Briones disclosed that Cham proposed the arrival of the 55 percent of the MAV+ within the next three months—something that Briones said would be too detrimental to the hog sector.
“Besides, they can always import through the out-quota which has a minimal tariff difference with the in-quota. Imported pork is cheap anyway,” Briones told the BusinessMirror.
“The 12-month allocation is the best we can do to protect the pork producers and avert oversupply. It will also somehow mitigate the [sense of] discouragement among producers to restock amid influx of imports,” he added.
Raul Q. Montemayor of the Federation of Free Farmers, who represents the grains sector at the MAV-AC, backed the proposal of Briones to avert an oversupply in the country “since the out-quota imports are unlimited” anyway.
Montemayor told the BusinessMirror that they also agreed that MAV licenses for the MAV+ will only be issued upon presentation of bills of lading, meaning, the imports are ready to shipped from the country of origin.
Allocation, distribution
THE MAV-AC also agreed to recommend the allocation of MAV+ per type of importer: 25 percent for pork producers, 25 percent for importers and 50 percent for other eligible parties.
The MAV-AC voted on the matter unanimously, which was a proposal coming from the DA. Last, the MAV-AC will recommend that importers would have a volume limit of 500 MT per month. However, Cham said the issue of volume limit per importer was not clarified and argued that the limit shall be for the whole year and not per month. Cham said allowing companies to import again under MAV+ may result in dominance by certain companies, thus creating a cartel that may defeat the purpose of the measure.
“That issue was not clarified, but doing the math it seems unlikely. Theoretically one company can import 500 x 8 = 4000 metric tons. 50 companies can take control/dominate,” he said.
“My secondary goal is to not to have cartels arise. If cartelized, then price targets would be at risk,” he added.
Cham said he earlier proposed that the MAV+ allocation must be on a “first-come, first-serve” basis since there is already a 500 MT limit per company, instead of dividing the total volume across pork producers, existing MAV licensees and other interested parties.
For his part, Briones said pork producers that import under MAV+ must not have any limits to their import volume, as a way of helping them recover losses from ASF.
Industry sources told the BusinessMirror the MAV-AC did not have any recommendation on whether to allocate further the MAV+ according to the regions of the country. Earlier MAV+ guidelines obtained by the BusinessMirror showed there was a proposal to allocate the MAV+ across Luzon, Visayas and Mindanao.
The MAV-AC recommendations will be subject to the approval of the MAV-MC, which Duterte had directed to “ensure that the allocation of the volume importation is fair and open to all qualified importers of pork meat” and in accordance with existing rules and regulations regarding MAVs.
Duterte’s EO took effect last week but is still pending implementation pending issuance of the final guidelines approved by the MAV-MC.
Image credits: Daniel Acker/Bloomberg