Local coconut oil refiners have asked President Ferdinand R. Marcos Jr. to review the Department of Agriculture’s (DA) policy on granting tax and duty-free privilege to importers of palm oil purportedly for animal feeds compounding and implement import licensing rules to curb rampant cases of technical smuggling.
Dr. Jesus L. Arranza, president of the Coconut Oil Refiners Association (CORA) and chairman of the Federation of Philippine Industries (FPI), made the appeal in a follow-up letter to the President, who is also the concurrent DA secretary to reiterate their intention to work with Agriculture Undersecretary Domingo F. Panganiban in putting a stop to the illegal use of imported palm olein by some unscrupulous traders.
“The DA should also revisit this policy of allowing zero VAT and duty free importations of palm olein as this is clearly hurting the local coconut and palm oil farmers and producers. There should be strict validation relative to such reason given by importers and effective monitoring on where these importations are actually utilized,” Arranza said in his follow up letter to the President on Feb. 8, 2023.
In a previous letter, Arranza informed President Marcos that he got hold of documents that may aid the government in going after traders who managed to get duty and tax-free privilege from the Bureau of Animal Industry (BAI) but used their importations for purposes other than compounding of animal feeds. The imported palm olein reportedly ended up in the market as cooking oil or were channeled to bio-diesel producers as substitute to the more expensive coconut oil. Arranza added that he and other industry leaders are ready to help the DA in launching an investigation.
In reaction to the letter, the Office of the President promptly directed Panganiban to act on the matter.
In a press conference, Arranza said that to ensure against smuggling of palm olein the BAI or the DA must implement some measures to control the use of imported palm oil for purposes other than for use in animal feeds compounding.
For instance, Arranza said that BAI must monitor how many feedmill plants are there to handle the imported palm Olein volume for animal feeds compounding.
The BAI must have a qualification as to who are allowed to import tax and duty-free palm olein. The authorized importer must show how much of the imported volume is needed as compounds for animal.
The BAI must also monitor the volume of animal feeds produced using the palm oil as well as the volume of imported compounded animal feeds.
Arranza pointed out that some unscrupulous traders are using palm olein for biodiesel instead of the mandated coconut oil, depriving the local coconut industry of market and revenues.
In addition, Arranza questioned as to why palm olein, the highest form of refined palm oil, is being preferred as compounds for use in animal feeds when the bleached and deodorized palm oil would already suffice for such purpose.
Arranza, also the chairman of Fight Illicit Trade (FightIT), said the investigation on palm oil importation should zero in on BAI, which gave permit to import tax and tax-free and all the recipient of BAI exemption.
“There is no closure yet on this issue, we opened it and we have to close it fairly, expeditiously, and ferret out all illicit acts attendant to this issue, otherwise there’ll be room for other interpretations, and I thank the President for giving importance to my plea,” he said.