Agriculture Secretary Francisco Tiu Laurel, Jr. has temporarily suspended the importation of onions until May 2024 amid oversupply that weighed down the price of the spice in the domestic market.
Meanwhile, the Department of Agriculture (DA) was asked to scrap the Minimum Access Volume (MAV) in poultry and pork imports while also ensuring that fees collected from the Safeguard Measures Act implementation be channelled for the competitiveness of the agriculture sector.
Laurel said the suspension may be extended until July depending on the harvest volume and the market situations.
“In principle, I agree with no onion importation until July. But that is on condition that if there is a sudden supply shortfall, we will have to import earlier. We don’t know what would happen because of El Nino,” Laurel explained.
The secretary also met on Thursday with representatives of the Philippine Chamber of Agriculture and Food Inc. (PCAFI) to discuss , among others, the surge in domestic supply of onions due to bumper harvest and arrival of the additional importations last December.
About 99 tons of imported onions came in several tranches last month up to and 15, 2024 when the harvest of locally produced onions started to peak.
The increased supply pushed down the farm gate prices of the onion between P50 and P70 a kilo, and could fall further as harvesting continued in February.
In some areas in Nueva Ecija, which accounts for 97 percent of onion production in Luzon, prices have dropped to as low as P20 a kilo.
Luzon accounts for 65 percent of local onion production.
To recall, prices of onion surged to a record high P720 a kilo due to tight supply in 2022.
Members of the PCAFI said they expected a glut since an additional 40 percent of land area were planted to onions. They added that despite the reported infestation of armyworms in some areas in Tarlac and Nueva Ecija, oversupply was imminent as the pest was expected to damage only about around five percent of production.
Warmer temperatures and a prolonged dry spell caused by El Nino could spawn more pests that could undermine onion production. The full impact of El Nino is expected to be felt around March and April.
The DA and the PCAFI agreed to meet every 45 days to review the supply situation and recalibrate import schedule and volume. The next meeting will be in early March.
In a meeting last January 18 with Secretary Laurel, the Philippine Chamber of Agriculture and Food Inc. (PCAFI) asserted the that MAV has become useless as actual import volume for chicken, pork, and corn have ballooned many times more than the MAV.
“The volume of importation for chicken is more than 15 times the MAV.
Thus, our treaty commitment with the GATT-WTO shows that with this condition, there is no longer need for a MAV,” said PCAFI president Danilo Fausto.
Philippines’ committed in 1995 to the General Agreement on Tariff and Trade-World Trade Organization (GATT-WTO) for an import volume of 23,500 metric tons (MT) for chicken with lower tariff of 40 percent under the MAV.
Outside the MAV, tariff commitment was at 50 percent. However, in 2005 tariff rate became equal for in and out of MAV volume.
Removing MAV will result in a “level playing field among importers and importers vis a vis local producers,” Fausto said.
The PCAFI was concerned that farm gate price of chicken reported by the United Broilers and Raisers Association as of January 4 was P89.15 per kilo liveweight. This was way below production cost per kilo. For imported chicken, estimated cost was at P84.83 per kilo within MAV and P90.83 per kilo outside MAV.
On the other hand, retail price as per DA Bantay Presyo data on January 4 was at P170 to P180 per kilo.
In 2023, total chicken importation stood at 426,620 kilos. The same situation applied for corn and pork where actual import volume far exceeds MAV.
In his Aide Memoire No. 2, Fausto also asked the government to strictly enforce Section 34, Chapter 4 of the Safeguard Measures Act (Republic Act 8800) which was aimed at protecting local farmers from any surge in imports.
This mandates that fees and safeguard duties from the implementation of RA 8800 totalling to 50 percent be allocated for the competitiveness of the agriculture sector adversely affected by the surge in imports.
“RA 8800 was approved last July 19, 2000. Two decades have passed and we have yet to see where the money collected under the law was allocated.
More particularly coffee, pork and chicken,” said Fausto.
As the coffee sector is negatively affected by excessive imports, PCAFI asked DA to use the RA 8800 fees to develop the coffee industry.
“The DA budget should provide for enough planting materials either through cuttings or
tissue culture to a wider coverage of farmer groups to generate at least five million coffee trees with a better yield from 700 kilos per hectare comparable to Vietnam production of 3-5 tons per hectare.”
DA coffee program should also provide training and better technology to farmers; encourage the youth to participate in the project; encourage a wider participant granting National Seed Certification from the Bureau of Plant Industry; and prioritize coffee for intercropping with the coconut trees.
PCAFI also asked DA to simply farmers’ access to the credit guarantee of the Philippine Guaranty Corp. The guarantee will ensure easier access of farmers to credit with banks.
Likewise, the Philippine Crop Insurance Corp. (PCIC) should insure crops, livestock, poultry and dairy against climate change, pests, and diseases. PCIC should expedite payment of insurance calls to provide confidence to investors and banks.
DA in collaboration with the Department of Finance should encourage front-end or forward purchase on planted crops to provide a turn-around capital of farmer-producers. Such production contracts and warehouse receipts should enable farmers to use these as collaterals to avail of loans from Land Bank and Development Bank of the Philippines.
Special safeguard funds must be put up to encourage banks, Land Bank and DBP to provide farmers easy access to credit.