MANILA – Finance Secretary Carlos Dominguez III said Tuesday President Rodrigo Duterte’s directive allowing more pork imports at lower tariffs for a temporary period is an immediate and practicable response to protect Filipino consumers from price spirals that could further drive up inflation amid the pandemic.
During the resumption of the Senate's Committee of the Whole (COW) inquiry into the current pork supply shortfall in the country resulting from the prolonged outbreak of the African swine fever (ASF), Dominguez said the spike in meat prices this year has unduly jacked up food inflation.
This compounds 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”, he said.
A former agriculture secretary, Dominguez 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 PHP13.68 billion for the government, this would actually slash pork prices to a level estimated to save Filipino consumers a whopping PHP67.38 billion.
"The gains of consumers reeling from the economic shock of the pandemic dwarf the foregone revenues by PHP53.7 billion, which is clearly a trade-off beneficial to the entire country,” he said.
Dominguez said the worse the country can do in a situation similar to it is 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,” he added.
Long-term solutions are necessary to deal in the long run with the current situation triggered mainly by the ASF outbreak and these are initiated by the Department of Agriculture (DA), Dominguez said hence the issuance of Executive Order (EO) 128 providing 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 5 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 Agricultural Tariffication Act, which was more than 20 years ago when the Philippines’ consuming population was only 71 million.
“Again, more than the economics of it, EO 128 is a response to protect our people from shortages and price spikes during this difficult time. We need to do it now for the sake of our countrymen,” Dominguez said.
He said 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 (NEDA).
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, he added.
Dominguez also made it clear that 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 trade-offs considered in the cost-benefit analysis.
The spike in pork prices could be immediately resolved by bringing in more supply, he said.
“It is not a question of smuggling or anything. It is because of shortage, and bringing in more supply would stabilize and bring down the price of pork, and therefore, the inflation rate,” he added. (PR)
