Poor industry data gathering results in higher food importation

Published May 17, 2021, 2:00 PM

by Madelaine B. Miraflor

Amid recent government decisions that aim to increase the importation of rice and pork, food security advocacy group Tugon Kabuhayan has called for much-improved industry data gathering in the agriculture sector.

In a virtual briefing, Asis Perez, convenor of Tugon Kabuhayan, said the government needs to set aside higher fund allocation on industry data gathering in the agriculture sector because this is one of the most important basis for policy decisions related to importation. The group has pressed for tempered importation policy for the survival and development of local food production.

Asis Perez, convenor of Tugon Kabuhayan

“The reason why we can’t decide right on how much to import is that because the data is wrong,” Perez said.

Norberto Chingcuanco, co-convenor of Tugon Kabuhayan, said poor industry data gathering – which normally shows lower production on certain farm products – results in food insecurity among policymakers and the public.

“Reliable data will guide us what and when to produce and help us evaluate if importation is indeed necessary for a certain commodity and season,” he pointed out.

According to Tugon Kabuhayan, a comprehensive industry database should contain updated information on the volume and value of production and stock inventory in the ponds and cages and areas where these products are located.

In measuring agricultural output, the government currently relies mainly on the quarterly production update being released by Philippine Statistics Authority (PSA)

However, in fisheries alone, Chingcuanco said PSA’s data is usually far from the actual data figures estimated by fishermen and aquaculture players.

The policy implications of this is more importation, he reiterated.

“The situation is also like in rice. We used to be 98 percent self-sufficient, now we’re just at 70 percent. This could happen to us [in the fisheries sector] too,” Perez, who is also a former director of Bureau of Fisheries and Aquatic Resources, said.

Tugon Kabuhayan issued the statement after President Rodrigo Duterte issued over the weekend Executive Order (EO) No. 135, reducing the import tariff rates for rice coming from non-ASEAN countries, and EO 134, amending EO 128 and slightly raising the proposed import tariff cut on pork.

Under EO 135, Duterte authorized the temporary reduction of the Most Favored Nation (MFN) tariff rates on rice imports to 35 percent from 50 percent out-quota and the 40 percent minimum access volume (MAV) tariffs on rice for a period of one year.

The adjustment, which was recommended by the National Economic Development Authority (NEDA) Board, was intended to “diversify the country’s market sources, augment rice supply, maintain prices affordable, and reduce pressures on inflation”.

EO 134, on the other hand, raised the proposed tariff cut on pork imports implemented under EO 128.

Under such an amendment, the pork import tariff under minimum access volume (MAV) will now be adjusted from the current 30 percent to 10 percent, instead of the original proposal of 5 percent, for the first three months of EO 128’s implementation.

This will be adjusted to 15 percent, instead of 10 percent, in the remaining nine months of EO’s validity.

MAV refers to the volume of a specific agricultural product that is allowed to be imported with a lower tariff as committed by the Philippines to the World Trade Organization (WTO).

For out-quota, the tariff will be reduced from the current 40 percent to only 20 percent, instead of the original proposal of 15 percent, for the first three months of the tariff cut implementation. Then it will be increased to 25 percent, instead of 20 percent, in the next remaining nine months.

“The MFN tariff rates for pork products were further modified in recognition of the plight of all concerned sectors and stakeholders, including the local hog industry,” the Palace said.

The tariff adjustment on pork imports came after the President approved higher import volume for pork to 254,210 metric tons (MT) this year, from the current 54,210 MT.

Like EO 135, EO 134 is also one of the government’s efforts to augment the supply of pork and stabilize meat prices amid the spread of African Swine Fever (ASF) in the country.

For the Federation of Free Farmers (FFF), the issuance of EO 135 is a “cruel joke” on rice farmers right in the middle of Farmers Month and the very feast day of Saint Isidore, the patron saint of Filipino farmers.

The FFF argued that all the claimed grounds for the tariff adjustment were baseless and deceptive.

“There is no need to diversify the foreign sources of our rice because, under the Rice Tariffication Law, importers are already free to bring in rice from any country for as long as they pass our quarantine regulations. Aside from Vietnam and other ASEAN countries, we have been consistently importing from nine other countries, including India and Pakistan, and more recently China,” said FFF National Manager Raul Montemayor.

Similarly, he said that there is no urgent need to augment our rice supply, citing official government data.

Based on PSA data, the country’s rice inventory as of March 1 stood at 2.08 million tons, or only 4.5 percent lower than last year.

“This stock level would have already been augmented by the recent dry season harvest. The Department of Agriculture (DA) in turn has repeatedly claimed that we have ample rice supply and has even announced plans to increase our output by one million tons in 2021,” Montemayor said.

The FFF noted that there has been no significant decline in rice imports, with 610,428 thousand MT coming in between January and March 2021, or only 3 percent lower than the volume brought in during the same period in 2020.

Meanwhile, international prices have started to soften with the Bureau of Customs (BoC) pegging the Free on Board or FOB price of Vietnamese rice with 5 percent brokens at USD480 per ton as of April 26, 2021, down from its peak of USD 515 per ton.

The FFF added that domestic rice prices have remained stable and that inflationary pressures have been due to increases in the prices of pork and fish and not rice.

“The average price of regular-milled rice (RMR) actually went down from P37.89 in 2019 to P36.93 per kilo in 2020. Similarly, retail prices for well-milled rice went down from P42.73 to P41.67 per kilo,” explained Montemayor.

Data from the BoC further indicated that there were no significant differences in import costs between rice from Vietnam and non-ASEAN countries despite the current differential in tariff rates.

In 2020, Vietnam rice with 5 percent brokens came in at an average of P29.75 per kilo, compared to P30.29 for a similar grade from India.

The FFF estimated that importers of rice from India would save an additional P3 per kilo if tariffs are reduced to 35 percent. However, this extra margin could just be pocketed by importers and traders and not passed on to consumers, as what happened during the first two years of RTL.

In turn, palay prices for farmers could go down by as much as P1.50 per kilo. Government could also lose around P100 million in customs duties, or more if import volumes from non-ASEAN countries increase due to the tariff reduction.

Funding for the Rice Competitiveness Enhancement Fund (RCEF) and similar support programs for farmers would correspondingly go down.