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Business

When importation is necessary

BIZLINKS - Rey Gamboa - The Philippine Star

With the threat of inflation still very much in play during these pandemic-troubled times, preparing for a potential fish shortage is a prudent move (even an audacious one in light of the coming May elections) by the Department of Agriculture (DA).

The DA recently allowed the importation of 60,000 metric tons (MT) of small pelagic fish, mainly round scad, sardines, and mackerel for the first quarter of the year in response to an estimated shortage of 119,000 metric tons by the Bureau of Fisheries and Aquatic Resources (BFAR) because of Super Typhoon Odette.

As expected, a storm of protestations descended on the DA, as well as its chief, William Dar, who continues to be maligned for his decisions to open up or increase importations on food commodities. Not just the affected stakeholders are protesting, so too are election candidates batting for some free publicity.

In truth, not all calls of food importations are bad for the country. Last July, the DA allowed the importation of 60,000 MT of small fish to help cover for an expected shortfall in local catch, coinciding with the November closure of the fishing season in major fishing grounds.

The importation included round scad or galunggong, regarded as the poor Filipinos’ fish staple because of its lower price, and which the DA stipulated should be sold at wet markets at a price not higher than P88 per kilo. At a time when such fish would have been in short supply, the imports certainly helped keep prices of small fish relatively low.

With regards the recent decision of the DA to import fish, not heeding the advice of BFAR would have irresponsibly put at risk the welfare of many poor Filipinos who rely on such low-priced fish for their daily protein intake. Any public official worth his salt would not have gambled on a shortage, much more so, high prices.

Pork supply and prices

The call of government to import food commodities to augment local supply is usually met with protests, often because of a poor understanding of the risks that come when local supply capability drops below demand levels. Take the case of pork imports.

When the President issued two executive orders in the first half of 2021 allowing for lower tariffs on imported pork and increasing the minimum access volume (MAV) to 254,210 metric tons from 54, 210 MT, protests rose about how this would adversely affect the local swine raisers.

Truth be told, swine raisers were already reeling from a crisis caused by the spreading African swine fever (ASF). From just a few farms in central Luzon in late 2019, the ASF infection reached almost all hog-raising provinces by end 2020.

Widespread culling of pigs led to an acute shortage in local pork production, and caused hog prices to more than double. Unfortunately, the EOs were issued during the height of the crisis, which did not give time for the DA to iron out distribution kinks associated with imported frozen pork. Given the weight of pork in the consumer price index, it was difficult to bring down inflation rates below four percent for most part of 2021.

Pork prices are now lower, and this had definitely helped bring down inflation levels to below four percent, even if this materialized only towards the end of the year. However, had the government not issued the EOs, the effect of high inflation would have been catastrophic to our economy.

The Department of Finance estimates that the lower tariffs on imported pork has cost the government some P3.7 billion in foregone revenues last year, but nonetheless would continue to support the extension of the EOs until the end of 2022. This alone tells us that losing the associated tariff revenues is still better than going through elevated inflation levels this year.

Overfishing

Going back to our fishing industry, the Philippines remains as one of the world’s top catchers in the world, with tuna, seaweed, prawns, shrimps, and crabs sought after for export by other countries like the US, Japan, UK, Germany, Spain, and even China.

Overall catch, however, has been steadily decreasing over the years, which is attributed to overfishing by local commercial companies, and aggravated by the reported incursion in contested Philippine waters of foreign fishing vessels, notably Chinese, that have been emboldened by a lukewarm response of our government.

Definitely, the problem of overfishing must be given more attention in light of higher demand for fish by our growing population. The DA, through BFAR, has already defined protected fishing grounds, but policing the waters and upholding regulations remain a challenge.

Other problems

A major concern raised about the country’s fishing industry is its inability to deliver fish at lower prices. High inter-island shipping and land transportation costs are a few of the problems that contribute to the problem of high prices.

Food-fish deficient areas also continue to suffer from the limited marketing network for the distribution of fish products from highly productive areas. Poor packaging and storage of most catch also inhibits a more efficient distribution system.

With regards our export capability, many local fishing companies continue to suffer from an inability to fully comply with regulatory requirements on food quality and safety of major fish importing countries like the US and the EU. This has not helped increase the value of our fish exports in foreign markets.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

DEPARTMENT OF AGRICULTURE

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