THE MARCOS administration is planning to extend lower tariff rates on key commodities such as pork, corn, rice, and coal to next year, Finance Secretary Benjamin E. Diokno said, as the government seeks to curb rising food inflation.
“[The] economic managers have repeatedly raised the needed measures to address food inflation. In the last Cabinet meeting, a comprehensive set of measures including the extension of EO (executive order) 171 has been put forward by the Department of Finance (DoF), with inputs from across the Cabinet,” Mr. Diokno told reporters in a Viber message on Wednesday.
“Hopefully, the guidance from President [Ferdinand R. Marcos, Jr.] during that meeting will translate to EOs, circulars, and administrative orders soon,” he added.
Mr. Diokno said there is a plan to issue a joint memorandum on EO 171 “for the economic managers to highlight the latest food supply demand assessment and options to anticipate price shocks moving forward.”
In May, President Rodrigo R. Duterte issued EO 171 which extended lower tariffs on pork and rice until end-2022, as well as slashed duties on corn and coal.
Under the EO, tariff rates on pork for in-quota and out-quota shipments were kept at a reduced rate of 15% (from 30%) and 25% (from 40%). Rice tariffs were also kept at a lower rate of 35% for in-quota and 50% for out-quota.
The EO also cut corn tariff rates to 5% for in-quota imports (from 35%) and 15% (from 50%) for out-quota, and temporarily removed the 7% duty on coal imports.
The Foundation for Economic Freedom (FEF) earlier said the Marcos administration should extend EO 171 in order to ensure prices remain stable and to tame inflation. FEF noted that the country continues to face headwinds such as supply chain disruptions, the Russia-Ukraine conflict, and the African Swine Fever outbreak, and recent typhoons.
“It is arguable that conditions have aggravated since the passage of EO 171, with inflation now hovering just short of 7% versus the 4% level back in May 2022,” the FEF said.
“In the backdrop of all of these is a weakening economy and higher interest rate environment, which will cause sluggish economic recovery into at least 2023.”
Headline inflation hit a four-year high of 6.9% in September from 6.3% the previous month and 4.2% last year, driven mostly by the increase in food prices.
Inflation for food rose to 7.7% in the same month from 6.5% in August and 5.2% year on year.
“Although agriculture’s contribution to the gross domestic product (GDP) is only around 10%, the food manufacturing industry depends highly on agriculture for its raw materials,” the FEF added. “Taken together, both agricultural and the food manufacturing industries contribute around a third of our total GDP. In addition, around 50% of our manufacturing sector is agriculture- and food-based.”
PORK IMPORTS
Meanwhile, Philippine pork imports will likely drop in 2023 if the lower tariffs are not extended, according to the United States Department of Agriculture (USDA).
“Despite persistent issues with African Swine Fever, Philippine pork imports are also forecast to decline due to the end of policies favoring imports in 2022,” the report stated.
“The temporary increase in pork quota volumes ended in May 2022 and reduced tariffs were extended through the end of 2022,” it added.
The USDA projected that the Philippines will import 450,000 MT of pork in 2023, lower than its 2022 forecast of 550,000 MT.
From January to September this year, pork imports reached 545,213 MT, according to the latest data from the Bureau of Animal Industry.
In 2021, the country’s total meat imports rose by 30.3% to 1.17 million MT. Of the total, pork imports accounted for 554,698 MT in 2021.
The USDA forecasts local pork production to hit 1 million MT in 2023, slightly higher than its 950,000 MT projection for this year.
The Philippine Statistics Authority reported that hog production in the first quarter was approximately at 418,400 MT. In the second quarter, output was at around 416,720 MT.
The USDA also said that next year’s domestic consumption of pork will remain at 1.45 million MT, the same amount it slated for 2022. — Luisa Maria Jacinta C. Jocson and Diego Gabriel C. Robles