Lower pork tariffs to provide P67 billion savings

Published April 27, 2021, 3:39 PM

by Chino S. Leyco

The temporary reduction in pork import tariffs will slash the government’s revenue haul this year, but the Department of Finance (DOF) said these losses are necessary to ease the burden on consumers already reeling from the economic impact of the pandemic.

Finance Secretary Carlos G. Dominguez III (Photo credit: https://www.dof.gov.ph/about/secretarys-page/)

During the Senate inquiry into the current pork supply shortfall on Tuesday, April 27, Finance Secretary Carlos G. Dominguez defended the President’s directive allowing more pork imports at lower tariffs for a temporary period.

Dominguez, a former agriculture secretary, said that lowering the tariffs is “a painful solution” to tame skyrocketing pork prices as the government stands to lose P13.68 billion from this intervention.

However, the finance chief pointed out that the benefits still outweigh government tax losses as this measure will would slash pork prices to a level estimated to save Filipino consumers a whopping P67.38 billion. 

“The gains of consumers reeling from the economic shock of the pandemic dwarf the foregone revenues by P53.7 billion, which is clearly a tradeoff beneficial to the entire country,” Dominguez said.

But reduced pork tariffs is only temporary, Dominguez said, adding that long-term solutions are necessary to deal in the long run with the current situation triggered mainly by the African swine fever (ASF) outbreak.

President Duterte earlier issued 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 five 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 to 404,210 metric tons. 

The current import quota was set way back in 1998 as part of the implementation 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. 

Dominguez said the increase in the MAV quota for pork factors in the estimated supply deficit for 2021 at up to 477,000 metric tons 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, Dominguez said.

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 tradeoffs considered in the cost-benefit analysis. 

The spike in pork prices could be immediately be resolved by bringing in more supply, Dominguez noted. 

 “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 said.