Killing the local hog industry
In a rare show of unity, senators from both the majority and the opposition unanimously approved last week a resolution urging President Duterte to immediately withdraw Executive Order No. 128, which has lowered the tariff on imported pork products.
The senators’ fear is that the lower tariffs, combined with the increase in the minimum access volume or the ceiling for pork imports that can be charged the lowest tariff from the current 54,000 metric tons to a staggering 404,210 MT, will flood the local market with cheap imported pork products, drowning out local hog raisers. The industry is already floundering from the adverse effects of the African swine fever that has decimated about a quarter of the local hog population, and the COVID-19 crisis that has hampered hog raisers’ ability to bring their products to the market.
“The two policies can potentially spell the demise of our local hog industry,” warned Senate Minority Leader Franklin Drilon, who authored the bipartisan resolution adopted on April 15 by the Senate committee of the whole urging the President to immediately recall the “ill-advised” policies.
President Duterte issued EO 128 last April 7 in a bid to rein in runaway prices of pork, which had already hit a high of almost P400 a kilo, stoking inflation. According to the Department of Agriculture (DA), the price surge was a consequence of the severe decline in local pork production caused by African swine fever, which reduced the country’s hog population to just 9.7 million heads in January 2021, down more than 3 million heads from 12.7 million in January 2020.
For 2021, the DA projected that the country would have a supply deficit of 388,563 MT of pork, based on a supply estimate of 1.23 million MT against a total demand of 1.62 million MT. This, argued the DA, justified the hefty increase in the import volume.
The minimum access volume (MAV) of 404,210 MT of pork for the next 12 months from the current 54,210 MT will be charged just a 5 percent tariff for the first three months, then up to 10 percent from the fourth to the 12th month, from the current rate of 30 percent.
Imported pork products beyond this MAV, on the other hand, will be levied a tax of 15 percent, from the current 40 percent, in the first three months, increasing to 20 percent from the fourth to the 12th month, all told potentially costing the government some P13.4 billion in foregone revenue
Sen. Cynthia Villar, chair of the Senate committee on agriculture, food, and agrarian reform, disputed the figures provided by the DA, saying that according to the Bureau of Customs, pork imports over the past 10 years peaked at just 120,000 MT in 2018. Assuming the culling of 25 percent of the current hog population due to ASF, the highest increase in MAV should only be up to 150,000 MT. “Sobrang out of range,” Villar scolded Agriculture Secretary William Dar during the committee hearing on April 12. “Di kayo naawa sa ating mga backyard farmers, and they are 65 percent of hog raisers in the Philippines.”
Dar insisted that increasing pork imports under the in-quota MAV was “but a temporary measure to be implemented for only one year, under strict monitoring and supervision by the inter-agency MAV Management Committee.” The Senate was not buying that explanation, however, and hit the DA for failing “to satisfactorily establish through accurate and reliable data” that this year would have a major shortage of pork, requiring the resort to increased imports.
Livestock industry leaders have similarly blasted the DA and the National Economic and Development Authority for allegedly using flawed data to justify the massive importation. More to the point, Rosendo So of the Samahang Industriya ng Agrikultura said any pork shortfall can be imported at the current tariff level, as even at current rates of 30 percent, importers already earn a profit of P200 to P250 a kilo. Thus, “There is no need to incentivize them further; increasing the MAV and lowering tariffs serve to only increase the profits of importers at the expense of Filipino consumers who will not benefit from lower pork prices.”
The lack of satisfactory data to justify the higher imports at lower tariffs is only heightening speculations that the move was pushed to line the pockets of corrupt officials at the DA. This point was raised by Sen. Panfilo Lacson, who revealed last March that a syndicate at the department was getting kickbacks or “tong-pats” of P5 to P7 for every kilo of imported pork, a claim vigorously denied by Dar.
Indeed, even with the lower tariffs and higher volumes that may benefit only a few unscrupulous quarters, there is no guarantee that pork prices will be reduced significantly. What seems guaranteed under the new set of policies, however, is the further devastation of the local hog industry—when global pandemic disruptions have shown the imperative for the country to shore up the lifeline of agriculture and protect national food security and sufficiency.
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