The Department of Agriculture’s (DA) move to consider slashing the tariff on corn imports coming from non-ASEAN countries was lambasted by a group of farmers.
In a statement, the Federation of Free Farmers (FFF) said that DA’s initiative was ill-timed, considering that the peak harvest season for corn starts this August.
FFF’s statement came after Agriculture Secretary William Dar’s issuance of Special Order No. 540, which formed a technical working group on decreasing corn import duties so as to provide poultry, livestock, and fisheries sectors with access to cheaper animal feeds.
The FFF noted that, with corn tariff currently at 35 percent, feed millers have been allowed to import unlimited volumes of corn substitutes like feed wheat VAT-free and at a lesser tariff of 7 percent. The government has also reportedly turned a blind eye to corn imports illegally transshipped through ASEAN countries in order to avail of the preferential 5 percent tariff under the ASEAN Trade in Goods Agreement.
“Excessive importation of feed wheat and corn has in fact been the main reason for the sudden and recurrent drops in local corn prices,” FFF National Manager Raul Montemayor said.
“DA has been powerless to help corn farmers weather low farm gate prices, claiming that the price support system previously run by the National Food Authority (NFA) had been terminated by the Rice Tariffication Law (RTL). Now, DA will take the extra step of being directly responsible for depressing corn prices," he added.
The FFF declared that a tariff cut will not trim livestock production costs significantly. It also contested the DA’s insinuation that corn constitutes up to 70 percent of the production cost of chicken.
“You need two kilos of feeds to produce a kilo of chicken. 50 percent of your feeds are made up of corn. If the import cost of corn is P15/kilo and you reduce the tariff from 35 percent to 5 percent, the cost to produce one kilo of chicken will drop by only P4.50. This is less than 4 percent of the current retail price of chicken," Montemayor said.
Montemayor added that the cost reduction arising from lower tariffs will translate to savings of only P0.17 per day for consumers, given the average annual per capita consumption of 14 kilos of chicken a year.
He asserted, however, that even this small saving will not necessarily be passed on to consumers and will just be pocketed by feed millers and middlemen, as what happened in the case of rice and pork.
The FFF further noted that DA’s previous assurances to help corn farmers have not been translated into adequate budgets and credible programs. It added that efforts to raise local corn production may only backfire on farmers, since unlimited imports at reduced customs duties will result in supply gluts and plunging prices for local maize.