Allowing more pork imports at lower tariffs temporarily will reduce the government’s revenues, but will be an “immediate and practicable” solution for cheaper pork for consumers, according to
Carlos Dominguez, secretary of the Department of Finance (DOF), said although the presidential directive to ease the pork supply shortage appears to be a painful solution as it would lead to a revenue loss of P13.68 billion for the government, this would actually slash pork prices to a level estimated to save Filipino consumers a whopping P67.38 billion.
“The gains of consumers reeling from the economic shock of the pandemic dwarf the foregone revenues by P53.7 billion, which is clearly a tradeoff beneficial to the entire country,” Dominguez said at the resumption of the Senate’s Committee of the Whole inquiry yesterday into the current pork supply shortfall in the country resulting from the prolonged outbreak of the African swine fever (ASF).
“The worse we could do in a situation like the one we are facing today is to let supply issues force food prices up even more. If food prices rise, the inflation rate also increases.
If the inflation rate rises, interest rate increases will follow. This unhealthy chain of events will make economic recovery even more difficult for all,” Dominguez told senators.
Dominguez said the spike in meat prices this year has unduly jacked up food inflation, thus exacerbating the problems of unemployment, hunger and reduced or lost incomes for many Filipinos that have led “people to line up at community pantries at dawn.”
Long-term solutions are necessary to deal in the long run with the current situation triggered mainly by the ASF outbreak, and these are already being initiated by the Department of Agriculture (DA), said Dominguez, hence the issuance of Executive Order (EO) 128 provides an instant, albeit temporary, answer to the current supply and price problems.
EO 128 temporarily cuts the tariff rate on pork imports within the minimum access volume (MAV) quota to five percent, from the current rate of 30 percent, for the first three months upon the effectivity of the presidential directive. The reduced rate will go up to 10 percent for the next nine months thereafter.
It also increases the MAV quota for pork from 54,210 metric tons (MT) to 404,210 MT.
The current import quota was set way back in 1998 as part of the implementation of the Agricultural Tariffication Act, which was more than 20 years ago when the Philippines’ consuming population was only 71 million.
“More than the economics of it, EO 128 is a response to protect our people from shortages and price spikes during this difficult time,” Dominguez said.
Dominguez told senators the increase in the MAV quota for pork factors in the estimated supply deficit for 2021 at up to 477,000 MT based on estimates by the National Economic and Development Authority.
Thus, the temporary increase in pork imports will not “kill” the local hog industry as feared by some quarters, given that imports would potentially account for only up to 22.8 percent of total consumption, Dominguez said.
Dominguez also said the decision to adjust pork import tariffs was not done haphazardly, but underwent extensive deliberations and consultations among the public and concerned agencies, with all the tradeoffs considered in the cost-benefit analysis.
The spike in pork prices could be immediately be resolved by bringing in more supply, Dominguez noted.
“We are not giving up on the domestic pork industry. The interventions of the DA to help the industry are aggressive. They expect them to yield even greater benefits once a permanent solution to the ASF outbreak becomes available,” Dominguez said.
Dominguez added more than 60 percent of pork imports last year were offals, fats and pork skin used for meat processing, and not the kind of meat such as kasim and liempo that Filipino families prepare as food and put on their tables.
The imports covered by EO 128 refer to the kind of pork that people eat as viand or ulam, Dominguez said
Meanwhile, the National Federation of Hog Farmers Inc. (NFHFI) yesterday said the projected shortfall on pork supply to justify the lowering of tariff on pork imports and expanding the MAV should factor poor demand due to the pandemic.
Chester Warren Tan, NFHFI president, told the Senate hearing at present, the per capita consumption of pork could be 10 to 11 kg and not 15 kg as projected.
“DA’s pork demand projection is too high given the pandemic situation and the much lesser purchasing power of consumers. We hope (DA) will also give us local producers a chance to recover our losses operationally and financially at a short period of time. As it is, in our current situation when ASF is still a challenge and there is still no vaccine yet in the near future, many farmers are scared of expanding and repopulating,” Tan said.
The DA projects a shortfall of over 380,000 metric tons (MT) of pork this year due to ASF but senators, citing a 10-year historical data from the DA, said the gap is only 125,000 MT.
Based on data from DA’s Bantay Presyo, as of yesterday (April 27), pork kasim has a prevailing per kg price of P370 and at a low of P330 and a high of P390 while liempo is prevailing at P380 per kg and at a low of P350 but at a high of P420.
DA also said ASF cases in the country have gone down to 935 cases in the first quarter of 2021 compared with the peak of 3,060 cases in the third quarter of 2020. -A. Celis and J. Macapagal