Trade Secretary Ramon Lopez wants to keep the import tariff on mechanically deboned meat at 5 percent “for the best of the people and the country.”
“If not, we will all see higher major costing for the basic canned meat products that will push up prices of a basic commodity consumed by the mass-based market if we allow a major input to have higher tariff when MDM is not even locally produced. [There is] no sense in increasing tariff on MDM,” Lopez said over the weekend.
The Philippines mainly imports MDM, made from beef, pork, mutton, turkey or chicken, as raw material for the local production of corned beef, hotdog, sausage and other canned meat products.
A rough estimate by DTI showed that if the tariff of MDM was increased to 40 percent from 5 percent, the price of canned products would go up by around 25 percent.
“Assuming a P25 canned meat product, the price can go up to P31. We should not trigger this thing to happen,” Lopez said.
He said there would also be a high probability that local manufacturers would leave or reduce operations, leading to job losses.
These companies may pull out investments to start operating in other countries, where MDMs are levied 5-percent, and export products to the Philippines at a lower tariff, according to the agency.
The department said such a scenario would be quite unfortunate because, amid the current inflation, it is the manufactured food products that enjoyed stable prices and was not a major cause of the 5.2-percent inflation in June.
The agency emphasized the importance of stability in prices especially at a time when other prices in other sectors were going up.
Canned products are basic commodities in the food basket of the mass-based market and are the usual part of the grocery items of common Filipinos.
Lopez signed an amendment to Executive Order 190 on April 30, 2017 that extended the importation of MBMs and other edible offals at lower tariff over the next three years.
The EO stated that the reduction of tariff for MBM imports to 5 percent was in compliance with the country’s commitment to the World Trade Organization as a concession to the extension of protective measures on rice imports.
The tariff on edible meat and animal offals would have reverted back to the original tariff of 40 percent on July 1, 2017 if not for the extension.
Meat processors welcomed the development as this would continue to stabilize canned meat prices for the next three years.