Easing barriers to improve use of import quota

MANILA, Philippines — The Department of Finance (DOF) wants the Department of Agriculture (DA) to further relax import barriers in order to improve the utilization of the quota system and prevent another spike in inflation this year.

In an economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the DA should streamline its import procedures on labeling and requirements to encourage traders to access the minimum access volume (MAV).

He said the government can sustain the decline in inflation if the DA pursues programs that address constraints on food supply.

Beltran said the utilization of the expanded MAV stood at only 65 percent at the end of 2021 due to policies that discouraged importers to access the quota system. He also stressed that the transport and distribution of food products should proceed as usual.

President Duterte last year issued Executive Order (EO) 133 raising the MAV for pork imports from 54,210 metric tons to 254,210 MT to increase market supply and stabilize retail prices.

By using the MAV, importers can ship pork items at reduced rates thanks to another presidential directive, EO 134, that cuts tariffs across the board.

Under EO 134 imposed in May 2021, pork products imported through MAV were slapped with a 10 percent duty for the first three months upon effectivity, then 15 percent in the fourth to 12th month, and back to 30 percent afterward.

EO 133, the measure expanding the MAV, expired at the close of 2021, but the economic team proposes that its validity be extended until December this year.

Inflation or the general increase in commodity prices shot up to a 32-month high of 4.9 percent in August 2021. Since then, the headline print has trended down, falling to a 12-month low of 3.6 percent in December.

Despite the decline, inflation last year still went beyond the government’s target band of two to four percent, at an average of 4.5 percent. Meat inflation accounted for 1.1 percentage points, as meat prices ballooned by 16.8 percent on the impact of the African swine fever on hog production.

As such, the DOF pushes the DA and its attached agencies to strengthen its efforts to beef up food supply to avert any potential spikes in retail prices.

“The slowdown in inflationary trend should continue with the unhampered implementation of DA programs in mitigating food supply concerns,” Beltran said.