A congressional leader on Thursday asked President Rodrigo Duterte to reconsider his decision to lower import duties on pork meat from 40 percent to 15 percent for out-quota pork, and from 30 percent to five percent for in-quota pork imports.
Albay Rep. Joey Sarte Salceda, chairman of the House ways and means committee, said while he agrees that action is needed to lower meat inflation, he believes lowering pork tariffs will harm the domestic industry while benefiting primarily importers and traders.
“The price differential between imported pork at around P190 after duties, and the domestic price of around P300-400 a kilo is enough incentive to import. What we need to do is ensure that imports that come in are safe, and that the application process for the in-quota tariff rate is not tedious or expensive,” said Salceda, whose committee also oversees tariff matters.
Meanwhile, Senate President Vicente Sotto III on Thursday said both senators and local hog raisers “will be utterly, utterly disappointed” by the pork tariff cut recently ordered by the President.
“That is bad news!” Sotto said in a message to reporters when sought for comment on the lowered pork tariff rates.
He said the minimum access volume (MAV) for pork could have been raised without lowering the tariff.
“The reason they are giving for the lowering of taxes is not acceptable. There must be something else. That’s what we want to find out on Monday,” pointed out Sotto.
The Senate Committee of the Whole will open on Monday its investigation into the “tongpats” (kickback) scheme on pork imports.
“It’s naïve to think that traders will sell at lower prices just because imports are priced more cheaply. They are already pocketing up to 110% in gross margins. What would stop them from just taking more?” Salceda added.
“We already know what happens when we do these adjustments. Domestic industry suffers at a higher rate than the price level goes down. We saw that with rice tariffication, where farmers took a bigger price cut for their produce than the average consumer saved in rice prices,” he said.
“While I support the overall policy of easing trade to lower consumer prices, we should have precautions to help domestic industry,” Salceda remarked.
In an accompanying note citing his objection to the lowering of pork tariffs, Salceda said that the government stands to lose P1.9 billion in revenues from the lowering of tariffs, revenues that he says could be used to develop the local industry instead.
“The better answer, I believe, is to use tariff revenues to improve our swine repopulation program and invest in biosafety and better feeding. That way, we can overcome the scourge of ASF, which comes from swill feeding and unsafe imports,” Salceda said.
“My problem here is that the domestic industry is not dominated by big businesses. When we hurt the domestic industry, we are hurting small backyard raisers, whose output comprises 71% of all swine production in the country,” he added.
“I understand that this is a power of the President, to lower tariffs during Congressional break. That said, my committee was empowered by the House leadership to hold hearings even during the break. We could have heard all the stakeholders and come up with a mutually-beneficial solution,” Salceda said.
“Ordinarily, lowering tariffs is a power of Congress, that should specifically originate in my Committee. NEDA could have at the very least asked my Committee to clear the final decision, because they’re borrowing my Committee’s power. And it’s very hard to reverse decisions like these,” he said.
“I don’t appreciate that we were not given the opportunity to formally weigh in, especially when the economic team always gets priority of hearing in my Committee. At least, President Duterte could have had more alternatives presented to him. I will of course continue to work with them openly and productively, but I’m disappointed,” Salceda added.
That said, Salceda stressed the lowering is time-bound and gradually phased out, before completely reverting to original tariff levels after 12 months.
“It’s good that President Duterte placed a backstop by gradually phasing it out. That is very sensible. If the policy does not work to lower prices, though, I would urge him to reverse the policy. We in Congress can also work with his economic managers for a viable alternative,” Salceda added.
One alternative, according to Salceda’s note on the matter, is to expand the Minimum Access Volume, whose tariff rate is ten percent lower than the regular rate, and automatically approve imports as MAV on a first-come, first-served basis.
“We can simplify the procedure, so that whoever comes first gets to use the MAV. That also saves importers money, because there are at least 3 trade barriers directly related to the MAV,” he added.
“In the meantime, our policy with the domestic industry should be to do no further harm. We are not so generous with stimulus measures or aid. The least we can do is not to hurt our own sectors,” Salceda said.
Senator Panfilo Lacson earlier said kickback from the racket could amount to P6 billion per year if the President approved the Department of Agriculture’s proposal to lower tariffs and increase import allocation on pork imports.
Sen. Risa Hontiveros expressed disappointment over Malacanang’s decision to lower tariffs. Clearly, she said revival of the local hog industry is not part of its plan.
“Sa lagay na ito, parang tinalikuran at sinukuan na ang mga lokal nating magbababoy,” she said.
First, Hontiveros said the Palace only allowed the Department of Agriculture (DA) a measly P200 million for its restocking program that will replace pigs that have been decimated by the African Swine Fever (ASF).
Second, she said the country welcomed the increased insurance coverage for ASF-hit pigs as well as the impending price caps on imported pork, but in the context of a deluge of imports, zero border inspection and absent biosafety investments in the rural areas, “these measures remain futile.”
“These will not neutralize the drowning effect of the flood of pork imports on the local hog industry,” the senator said.
Third, she said the government allowed P14 billion worth of imported meat but still failed to boost border control to prevent the entry of ASF in the country.
Hontiveros emphasized there are dangers in the imports and entry of uninspected frozen meats, even as hog-raisers in Visayas and Mindanao are hit by African Swine Fever.
Fourth, she said the Bureau of Animal industry is still relying on local government units, which are unprepared when it comes to the scale of the biosafety capabilities needed to battle the virus in rural areas.
Furthermore, Hontiveros said there is still no budget proposal for 2022 for mass-testing of pigs to allow early detection and culling.
“We refuse to accept this capitulationist stance. We continue to demand adequate budgets for 2022 to support biosafety, restocking and sufficient insurance coverage that will help revive the local hog-industry. We, at the Senate, fervently hope that things can still be turned around,” the senator said.
She also cited “the need to be sending signals of hope for our hog-raisers.”
“We don’t want the government slaughtering off the industry now, in tandem with, the ASF virus.”