HOG raisers and poultry growers have warned against removing tariffs on fish and meat imports to ease inflation, as this could “unduly harm” local producers, and the Department of Agriculture counseled caution in pursuing this strategy.
Agriculture Secretary Emmanuel F. Piñol told the BusinessMirror that he supports the proposal of Speaker Gloria Macapagal-Arroyo to scrap tariffs on meat and fish imports. Piñol said, however, that the government must not “sacrifice” the farm sector just to halt the increase in food prices.
“Yes, but we should not unduly sacrifice our farmers and fishermen,” the DA chief said via SMS when asked if he supports Arroyo’s proposal.
Piñol said he would convene the concerned sectors for a special meeting this week to discuss the Speaker’s proposal.
Arroyo pitched to economic managers the removal of tariffs on meat and fish imports as the two items accounted for a total of 0.9 percentage point of the 5.2-percent inflation rate recorded in June.
The tariffs currently imposed by the Philippines on meat products range from 10 to 40 percent, while fish imports are levied a duty of 3 to 10 percent.
Last year the Philippines imported 716,944.619 metric tons (MT) of meat and meat products, according to data from the Philippine Statistics Authority (PSA). The fish and fish products imported by the country last year expanded by 39.25 percent to 411,969.235 MT, from 295,844.345 MT recorded in 2016.
Economists told the BusinessMirror that Arroyo’s proposal is just a “short-term” measure to address inflation. However, the reduction in tariffs could put local producers at risk.
“They are short-sighted, short-term measures that don’t address the structural problems behind undue inflation—low agricultural productivity from government neglect and the peso’s secular decline from chronic trade deficits,” Jose Enrique A. Africa, executive director of IBON Foundation Inc., told the BusinessMirror.
“Greater agricultural imports could even worsen the long-term situation by displacing uncompetitive producers and increasing our import bill,” Africa added. He tagged them “supply-side measures that will likely have more effect than interest rate hike and can momentarily reduce inflationary pressures.”
Economist Pablito M. Villegas warned that only traders and middlemen will benefit from the removal of tariffs and this would not result in lower prices of goods. “There is a big price difference between the farm-gate price of local produce and retail prices. What is the assurance that with cheaper meat imports, retail prices would go down?” Villegas said.
‘Let PITC do importation’
“The government must find a solution to tame inflation and make goods affordable to consumers without harming producers. The problem really is more on the price at the retail level,” he added.
Villegas said the government could consider allowing the Philippine International Trading Corp. (PITC) to import meat and fish at zero tariff to cushion the impact on local producers. He said the PITC, an attached government-owned and -controlled corporation of the Department of Trade and Industry, does not need an executive order to import products at lower tariffs.
United Broiler Raisers Association (Ubra) President Elias Jose Inciong said he understands the objective of Arroyo’s proposal but urged the government to conduct consultations before tinkering with the tariffs.
“The problem is in the retail market, not in the production. We have sufficient supply. I hope that [Arroyo’s proposal] would go through a process of consultation so that we can determine the necessary steps that should be taken,” Inciong told the BusinessMirror.
Broiler prices, however, are quite high during the July-to-September period due to the so-called third-quarter syndrome—a combination of factors that leads to lower production due to extreme weather conditions, according to Inciong.
“It is not that we are against importation, but if there is a need for it due to lack of supply, institutional buyers and broiler raisers would usually complain first and propose importation,” he said.
Farm-gate prices of broiler currently range from P94 per kilogram to as high as P100 per kg, depending on the size and area. “This is in accordance with the season. Our expectation, based on our records, is that prices would start to collapse in late-August until October,” Inciong said.
If Arroyo’s proposal is approved without consulting stakeholders, broiler raisers may be forced to slash production, according to Inciong.
“We will be constrained to recommend to our members cuts in production and for breeders not to restock, which would affect supply for a longer period. If that happens, you will have a more serious problem,” he said.
Hike in production cost
Pork Producers Federation of the Philippines Inc. (ProPork) President Edwin G. Chen said the government must recognize that the production costs incurred by hog raisers and poultry growers have gone up due to the increase in the price of raw materials.
“I don’t think it is right to just single out the meat and fish sectors to solve inflation. The government should come up with a comprehensive solution to address the issue,” Chen told the BusinessMirror. “[Arroyo] always wants to sacrifice agricultural products like before. The real culprit is our rising fuel costs, power and weak peso,” he added.
Chen urged the government to support the livestock and poultry sectors to bring down production costs and retail prices. He said government can consider allowing the duty-free importation of corn and soybean meal.
“The small backyard raisers and fishermen will need government support if the government would push through with zero tariffs for fish and meat imports. In the last three years, we saw an increase in our sow population and inventory. This shows that the livestock sector will grow for as long as there is a level playing field,” he added.
Meat Importers and Traders Association President Jesus C. Cham backed Arroyo’s proposal and urged the government to make the measure permanent. “I think allowing more access to protein, to good meat, aside from addressing inflation, will also have a lot of health benefits,” Cham told the BusinessMirror.
The Philippines could capitalize on the low price of meat products in the international market, he added. However, he said importers would need “sufficient elbow room” for the imports to arrive in the country. It usually takes two to three months for shipments to arrive in Philippines after traders place the order.
Pork prices are “at an all-time high, and it is not yet Christmas. Definitely, [reducing the tariffs] would entice more imports. Any reduction in duty will help us,” he said.
Cham said the private sector, not the government, should undertake the impor-tation. “It did not work out before, when they proposed that the government import products and sell these to us.”