THE Committee on Tariff Related Matters (CTRM) has recommended the extension of reduced tariff rates on select agriculture commodities to maintain the recent gains in inflation reduction, according to the National Economic and Development Authority (Neda).
Socioeconomic Planning Secretary Arsenio M. Balisacan said the CTRM, co-chaired by the Department of Trade and Industry (DTI) and Neda, is expected to present its recommendation to the Neda Board, chaired by the President, next week. Balisacan said Executive Order (EO) 10 was recommended for extension for another year or until December 2024.
“Yes, because we have to sustain the gains in inflation reduction. Because to us, it’s so critical in ensuring that we achieve our objectives. Especially because inflation hurts the poor so much, especially food inflation, it hurts the poor. And as we have seen it, the inflation for the poorest 30 percent is higher than the [all households],” Balisacan said.
He said the government intends to have the extension of the EO approved by the President before the existing one expires at the end of the year.
Under Marcos’s EO 10, the lower tariff rates on imported rice, corn and pork were extended until the end of 2023.
Under existing rules and regulations governing the President’s power on modifying tariff rates, the Neda is the one that will make the necessary recommendation to the President on tariff adjustments.
“Encouragingly, however, inflation continues to fall—now down to 4.1 percent in November 2023, bringing us closer to our target band of 2 to 4 percent and nearer to our peers in Southeast Asia,” Balisacan said in a speech at the 2024 Philippine Economic Outlook of the European Chamber of Commerce of the Philippines on Wednesday.
“Still, we remain committed to bringing inflation down further through inter-agency efforts to address its root causes in the market without relying on a monetary response from our central bank,” he added.
Pros and cons
THE Meat Importers and Traders Association (MITA) urged President Marcos Jr. to adopt the recommendation of the Committee on Tariff and Related Matters to extend EO 10.
“MITA applauds the courage and wisdom of the CTRM in recommending the extension of EO10 covering lower tariff on rice, corn and pork,” MITA said in a statement sent to the BusinessMirror.
“The lower cost of imported rice, corn and pork will bring respite not only to consumers, but also to the livestock and poultry sector who grapple with high costs of inputs,” it added.
MITA argued that African swine fever (ASF) would remain as the “biggest challenge” of the domestic hog industry in producing affordable pork products.
“The experience of the developed countries, and of our Asian neighbors, testify that ASF will be extremely difficult to eradicate,” it said.
“We pray [President Marcos Jr.] will adopt the recommendation and issue a new Executive Order as soon as possible,” it added.
Meanwhile, the Federation of Free Farmers (FFF) reiterated its opposition to the extension of EO 10 arguing that it is high time to revert the tariff levied on rice imports from non-Asean countries to 50 percent since the lowered rates did not benefit consumers.
FFF was one of the oppositors during the Tariff Commission hearing on the proposal to extend EO 10 by the economic managers.
FFF also pointed out that the lower rice tariff rates diminished the national government’s possible tariff collection from rice imports that could have gone to the fund pool earmarked to local rice farmers.
“[It] cost the government over a billion pesos in foregone tariffs since the tariffs were reduced in 2021, and deprived rice farmers of an equal amount in terms of supplemental support based on the RTL provision that tariff collections in excess of P10 billion a year should go to support programs for farmers. Despite this, Balisacan insists on extending the reduction,” FFF National Manager Raul Q. Montemayor said.
“What is his reason? Where is the data that supports his position? If he cannot provide answers, then he is no less liable than a corrupt government official who is stealing money from the government and depriving farmers of much needed support at the same time,” Montemayor added.
High inflation threat
IN a separate briefing on Wednesday, Maybank Philippines said the Bangko Sentral ng Pilipinas (BSP) is expected to keep policy rates at 6.5 percent this year.
Maybank said it expects headline inflation in December 2023 to be within the target range of 2 to 4 percent. In November, inflation slowed to 4.1 percent. (https://businessmirror.com.ph/2023/12/05/inflation-slows-to-4-1-in-november-psa/).
Given this, Maybank maintained its inflation outlook remained 6 percent in 2023 and 3.5 percent in 2024. It also said GDP growth will likely average 5.8 percent this year and 6.5 percent next year, the same forecast it made earlier in the year.
However, it noted upside risks to the outlook stemming from the onset of El Niño and export ban on rice and other food items as well as the potential for a nationwide daily minimum wage hike.
Maybank also noted there is also a possibility that transport costs will increase on account of the Israel-Hamas war. The OPEC also decided to cut an additional 900,000bbl/day of oil output in the first quarter of 2024.
This is on top of the existing voluntary 1 million bbl/day cut implemented by Saudi Arabia. It can be noted that the Philippines remains a net oil and food importer.
Inflation may have slowed in November, but local economists warned that higher rice prices as well as Christmas spending in December may keep commodity prices elevated, according to local economists. (Full story here: https://businessmirror.com.ph/2023/12/06/november-inflation-slows-to-4-1-but-risks-cited/).
PSA data showed that despite the slower headline inflation, certain commodities, such as rice posted an inflation rate of 15.8 percent in November, higher than the 13.2 percent posted in October 2023 and the 3.1 percent posted in November 2022.
Based on the latest data, the three rice varieties being monitored by the PSA showed higher rates in November compared to the October 2023 and November 2022 rates.
Regular milled rice prices increased to P46.73 per kilo in November 2023, higher than the P45.42 per kilo in October 2023 and P39.57 per kilo in November last year.
Well-milled rice, meanwhile, averaged P51.99 per kilo in November 2023. This was also higher than the average of P51 per kilo in October 2023 and P43.86 per kilo in November 2022.
Special rice varieties also showed higher prices at an average of P61.47 per kilo. This is higher than the P60.95 per kilo in October 2023 and P53.53 per kilo in November 2022.
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