THE Philippine Association of Meat Processors Inc. (Pampi) has cautioned the government against reverting the tariff on mechanically deboned meat (MDM) to 40 percent, saying this would cause prices of processed meat products to spike.
In a letter to Socioeconomic Planning Secretary Ernesto M. Pernia, Pampi argued that 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.
MDM is a widely utilized raw material in production of processed meat products, such as hot dogs and meat loaf.
“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 PHP [Philippine peso], fuel cost increase, labor cost increase and tin can cost increase will put pressure on our costs, as well,” Pampi added.
Pampi said it computed the 12- percent to 17-percent price increase on processed meat products based on the hike in customs duty brought about by the reversion of tariff and increasing global prices of MDM due to limited import sources coupled by the depreciation of the Philippine peso against the US dollar.
Furthermore, Pampi argued that they are pushing for the decoupling of the treatment on the tariffs on MDM from the country’s quantitative restriction on rice.
The reduction of tariff on MDM from 40 percent to 5 percent was a concession made by the Philippines in securing its waiver on the special treatment on rice in 2012.
Under the 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.
“It is time to decouple the treatment of rice from the treatment of MDM,” the letter read. “Needless to say, the aforementioned thesis further justifies our proposal that the 5-percent duty on MDM/MSM be made permanent, all for the national interest.”
Pampi said the meat processing industry’s import of MDM last year reached 189.1 million kilograms, 12.09 percent higher than the 168.7 million kg recorded volume in 2016.
“MDM has been used since the late-1960s in certain meat and meat products, such as hot dogs, luncheon meats, other sausages,” it said.
“The use of MDM in processed products has allowed us to maintain affordable protein-filled wholesome processed meats, which benefits the consumers and its use is regulated by the National Meat Inspection Service since March of 2015,” it added.
Earlier this year, Trade Secretary Ramon M. Lopez said he will push for the permanent enforcement of the reduced rates under EO 23, which will make permanent the 5-percent tariff on MDM.
“Yes,” Lopez said when asked if he favored keeping the rates. “In fact, we were the ones who extended that. Even before the tariffication of rice, we see it as an important support to the local industry so that there will be a good entry of raw materials here.”
“That means we are expecting prices of meat to not go up if we keep the tariff at 5 percent, especially on MDMs. If you ask the DTI [Department of Trade and Industry], we will continue to support that policy,” Lopez said in English and Filipino. “That is why we are saying that if we are to be asked, we would like to keep it at that. It doesn’t have to be reverted back to higher tariff,” the trade chief said.