Consumers should brace for a possible hike in the prices of meat products as producers and traders would incur additional costs due to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN).
Bureau of Animal Industry Assistant Director Simeon S. Amurao Jr. said the expected increase in fuel prices due to higher excise taxes on petroleum products would affect meat traders.
“Definitely, [higher fuel prices] will add to the cost of our meat products,” Amurao told reporters in an interview on Thursday. “Imported meat products will also be affected, as trucking rates may also go up.”
He added that logistical concerns and not the meat-supply situation would influence price movements this year. “This is more of a logistical concern because there is no expected hike in the raw ingredients used by the livestock sector.”
The Department of Trade and Industry recently released a price matrix showing the possible impact of the excise tax on petroleum on the prices of some basic commodities. It showed that the prices of meat loaf (155 grams) and corned beef (150 grams) could rise by P0.04 and P0.07, respectively.
Meat Importers and Traders Association (Mita) President Jesus C. Cham said the hike in the excise tax of petroleum and the possible increase in electricity rates would translate to higher operating costs for meat importers and traders.
“It is too early to determine the effect of TRAIN, but we are hearing the clamor to increase the transportation rates. That is a big factor for us. Plus, there is also an increase in power cost,” Cham told reporters in an interview.
“Our business relies on cold storage facilities, and we do not know yet how much they would increase their rates,” he added.
Cham added that meat importers would just pass on the additional costs to customers. “Well, for the majority of the meat importers, they will have to pass it on because they make very, very little margins.”
The Mita official said the increase in fuel prices would have a bigger impact on the local meat industry as producers use more fuel to transport their goods.
“Freight cost is not affected by TRAIN, but domestic transport will be affected by it. The whole line of local meat production use gasoline to transport their feeds, food stuff to the farm and their produce to the city and markets,” Cham added.
However, local poultry and hog producers told the BusinessMirror that they do not see TRAIN affecting their products, as their pricing is influenced by the supply situation in the
domestic market.
“No price increases because broilers are a commodity. Hence, its prices are determined by market conditions and not by cost-plus pricing,” United Broilers Raisers Association President Elias Jose Inciong told the BusinessMirror.
“Broiler raisers are constrained to absorb the additional costs. It cannot be easily passed on to consumers,” Inciong added.
Edwin G. Chen, President of Pork Producers Federation of the Philippines Inc., said the same scenario holds true for the local hog sector.
“We will have to check if the impact [of the hike in the excise tax on diesel] will be big or not,” Chen told the BusinessMirror. “[Price increase] depends on the supply and demand of hogs.”
Image credits: Luke Sharrett/Bloomberg