Agriculture Secretary Emmanuel F. Piñol said he is partial to retaining the 5-percent tariff on mechanically deboned meat (MDM) after the quantitative restriction (QR) on rice is converted into tariffs.
Piñol said the Philippines does not produce MDM, a raw material used by meat processors to manufacture food items such as hot dogs.
“I really would not mind if the 5-percent tariff on MDM, which is used for [meat] processing, would be retained,” Piñol told the BusinessMirror. “It’s okay to retain the current tariff.”
He said, however, that he opposes the retention of the current 5-percent tariff on pork offal, citing the possibility that it could be used for technical smuggling, which would harm the local hog sector.
The chief of the Department of Agriculture (DA) said he informed Trade Secretary Ramon M. Lopez about his position on the pork offal tariff on the sidelines of the Cabinet meeting on August 6.
“I have expressed my opposition to the idea of allowing the same tariff level for offal even if the rice QR is already lifted. It should go back to its previous level because the livestock sector feels that they are being used as sacrificial lambs just to protect rice farmers,” he said.
The DA chief said retaining the 5-percent tariff on offal could encourage the technical smuggling of prime pork cuts.
The reduction of tariff on MDM and pork offal to 5 percent from 40 percent was a concession made by the Philippines in securing its waiver on the special treatment on rice in 2012. The waiver allowed the Philippines to extend its right to impose the rice QR until June 30, 2017.
Under Executive Order (EO) 23 issued by President Duterte, the tariff levels of the concessions made by the Philippines, including MDM, would revert to their 2012 levels once the rice QR is lifted—or by January 1, 2021, whichever comes first.
United Broiler Raisers Association (Ubra) President Elias Jose Inciong warned the government that retaining the 5-percent tariff on MDM would be used by traders who resort to technical smuggling of chicken products.
Inciong also said his group would only agree to retain it if the government would be able to establish an “efficient” data system that would properly monitor agriculture imports.
“[The government] should put in place a mechanism to make sure that the importation of MDM will not be misdeclared or used for technical smuggling. And that requires a transparent, often efficient, data system which the DA for decades have failed to attained to do,” he told the BusinessMirror.
“If there is no assurance that it will not be used for technical smuggling then we will oppose it,” Inciong added.
The Ubra official said his group needs assurance that the poultry sector would not be harmed by technical smuggling if the current tariff on MDM is retained.
“There has to be an act of good faith on the part of government, whether or not it involves MDM,” Inciong said.
“The government should have a transparent and accessible data system. It is embarrassing that a nation of 105 million does not have a data system for its agri-fishery sectors that would help stakeholders make rational decisions,” he added.
Pork Producers Federation of the Philippines Inc. (ProPork) President Edwin G. Chen said he welcomes Piñol’s position to revert the tariff on pork offal to 40 percent.
“We support that. That is a very good [move],” Chen told the BusinessMirror. “Even with the 40-percent tariff, pork offal is still very cheap. Some countries are practically giving it away.”
Earlier, the Philippine Association of Meat Processors Inc. (Pampi) has cautioned the government against returning the tariff on MDM to 40 percent, saying this would cause the price of processed meat products to rise.
In a letter to Socioeconomic Planning Secretary Ernesto M. Pernia, Pampi argued that the prices of canned meat products and hot dogs would increase by as much as 17 percent once the current tariff on MDM of 5 percent reverts to its 2012 level.
“By our estimates, the prices of hot dogs and canned meat products will be going up by 12 [percent] to 17 percent. But if the tariff on MDM stays at 5 percent, this price increase can be avoided,” Pampi said in the letter on May 24, a copy of which was obtained by the BusinessMirror.
“There are, however, other factors, such as the strong dollar versus all currencies, including Philippine peso, fuel cost increase, labor cost increase and tin can cost increase will put pressure on our costs, as well,” the group added.