Agriculture Secretary Emmanuel F. Piñol is amenable to reducing the tariffs on corn imports as a measure to lower production costs of livestock and poultry sectors to eventually bring down the prices of meat in the market.
“It cannot be zero,” Piñol told the BusinessMirror when asked whether he is open to a proposal floated in the industry to allow tariff-free corn importation.
Piñol said he would only agree to lower the tariffs on corn if the revenues collected from the duties would go into a funding similar to the proposed rice competitiveness enhancement fund. And the tariff collections would be used to improve the corn sector’s productivity, he added.
“I would agree to lower it on the condition that we would also create a corn tariffication enhancement fund. All the revenues from the corn imports would go to the fund which would be used for the corn sector,” he said.
As for feed wheat, Piñol said the tariffs are already low but he did not give a categorical position on the possible reduction of duties on the produce.
The country slaps a 35-percent tariff on corn imports within the minimum access volume, while those outside the quota are levied with 50-percent duty.
Both feed-wheat imports and wheat-flour imports are subject to a 7-percent duty, according to a Global Agricultural Information Network (GAIN) report.
The GAIN report noted that feed-wheat imports are exempted from the 12-percent value-added tax (VAT). Milling and feed-wheat imports from signatories to the Asean-Australia-New Zealand free-trade agreement are duty-free.
On the other hand, milling-wheat imports are exempt from tariffs, but are subject to a 12-percent VAT on the subsequent flour sales, payable at the time the wheat was imported, according to the GAIN report.
Budget Secretary Benjamin E. Diokno said the economic managers are keen on reducing the tariffs on corn and wheat to 5 percent.
Rising corn prices
Livestock and poultry industry stakeholders have disclosed that their production costs have been increasing due to more expensive raw materials, particularly in feeds, such as corn.
United Broiler Raisers Association (Ubra) President Elias Jose Inciong told the BusinessMirror that corn prices in the country have gone up to the vicinity of P19 per kilogram from P13 per kg.
“Our cost of production is really increasing due to higher oil prices, worsened by higher excise tax on fuel and weak exchange rate of peso. All of these contributed to higher costs of our inputs,” Pork Producers Federation of the Philippines Inc. (ProPork) President Edwin G. Chen told the BusinessMirror.
Chen said his group is backing the proposal of feed millers for a tariff-free corn importation to have access to cheaper raw materials.
“I called PAFMI [Philippine Association of Flour Millers Inc.] and they said they wrote a letter to [Agriculture] Secretary [Piñol] requesting permission for duty-free importation of corn from neighboring countries such as Indonesia and Malaysia,” he said.
“And yes, of course, we are supporting that proposal,” Chen added.
PhilMaize opposition
However, Philippine Maize Federation Inc. (PhilMaize) President Roger V. Navarro told the BusinessMirror that his group is vehemently opposing the proposed tariff reduction on corn imports as it is detrimental to local farmers.
“This is the start of the demise of the corn industry in the Philippines. We will see the ultimate death of the industry in the future,” Navarro said.
“We vehemently oppose this for reasons that the corn industry has been liberalized but no subsidies have been given to corn farmers,” Navarro added.
If the government pushes trough in cutting the tariffs, Navarro echoed Piñol’s position that the duties collected from the imports must be allocated and used for the development of the local corn industry.
However, for Navarro, the tariff revenues should go to the government’s Corn Development Fund (CDF) instead of establishing a new fund.
“For so long a time there is a sector being neglected [by the government] and that is corn,” he said. “If ever they are pushing with [tariff cuts] then put the revenues to the CDF.”
The PhilMaize head warned that the possible influx of corn imports at reduced tariffs could discourage farmers to plant for the next cropping season, which effectively cuts the country’s local output.
“Planting intentions will be zero. And corn farmers would be forced to lease their lands to multinational for production of banana or pineapple,” Navarro said.
Navarro also pointed out that there is also a disconnect between the farm-gate price of corn and its retail price. Farm-gate prices are currently around P14 per kg.
Furthermore, Navarro said the production costs of corn farmers have gone up as well particularly their expenses on labor, fuel and other inputs.
Invest
Chen also urged the government to invest in the country’s livestock and poultry sectors if it wants to ensure lower prices of meat.
“Other countries are heavily subsidized. And that is what the government should also do if it really wants to bring down the prices of [goods], not only in fish and meat,” he said.
“The government should give support to livestock and poultry sectors which are driven by the private sector. The two subsectors account for 33 percent of the country’s agriculture production but budget allocation is only about 1 percent to 2 percent,” Chen added.
Piñol said he is also proposing that the tariff revenues from meat imports be pooled in a fund that would be used to develop the local sectors.
“One of the neglected sectors in the agriculture really is the livestock sector. So why not give the tariffs collected from meat products to the sector,” he said.