Extension of lower agriculture tariffs pushed

MANILA, Philippines — The Foundation for Economic Freedom (FEF) is pushing for the extension of the lower tariffs on pork, rice and corn, in line with ensuring availability and affordability of these products.

The group made the call for the extension of the relief measures under Executive Order (EO) 171 in three position papers.

The order extends the 15 percent in-quota and 25 percent out quota tariff rates for pork imports under EO 134 until Dec. 31, 2022.

It also extends the reduced tariff of 35 percent on imported rice until the end of the year.

The EO also lowered the in-quota tariffs on corn imports to five percent from 35 percent until the end of the year.

“Given the continuing conflict between Russia and Ukraine that has pushed prices of key agricultural commodities to multi-year highs, the rising headline inflation (at 7.7 percent as of October 2022) where the food commodity group already contributes 45 percent of headline inflation as of October 2022, and the projected substantial local supply deficit of pork in 2023, there is a need to extend EO 171 until December 2023,” the FEF said.

The group noted that pork deficit is projected to reach 451,000 metric tons (MT) in 2023.

It also stressed that the high headline inflation, particularly food inflation, has already resulted in greater self-rated food poverty among Filipinos as of October 2022 at 34 percent, citing the result of a recent Social Weather Station (SWS) survey.

According to FEF, meat remains a major contributor to food inflation wherein its share to food inflation is 24 percent from January to October 2022.

“Thus, extending EO 171 until the end of 2023, particularly lower pork tariffs, is imperative if the government wants to slow down the rate of increase in meat prices,” it said.

The group estimated that continuing the lower pork tariff rates until December 2023 would result in approximately P156 billion in total consumer savings or benefits next year.

Similarly, the FEF urged for the extension of the lower tariffs on corn, emphasizing that it is imperative if the government wants to slow down the rate of increase of prices of corn-dependent products to ensure food availability and affordability of these key agricultural commodities.

It pointed out that reduced corn tariffs resulted in significant consumer savings.

EO 171 is estimated to lower pork, chicken, and egg prices by P1.12 per kilo, P2 per kilo, and P0.023 per egg, respectively.

“Subsequently, given estimated monthly demands for pork, chicken, and egg of 144.7 million kilos, 151.5 million kilos, and 46.7 million kilos, respectively, and the lower corn tariff rates effective for nine months in 2022, total consumer benefits are estimated to be P1.5 billion for pork, P2.7 billion for chicken, and P9.7 million for egg from April to December 2022,” the FEF said.

Furthermore, the FEF urged for the extension of the lower rice tariffs under EO 171.

“The tariff reduction on non-ASEAN rice clearly amplifies the favorable impact of the Rice Liberalization Act. On the other hand, allowing EO 171 to lapse will lead to a five to 15 percentage point increase of tariff rates on non-ASEAN rice, narrowing affordable options for consumers. This is a risky move when the food inflation rate in 2022 has thus far hit very high levels of nearly 10 percent,” it added.

The FEF said equalizing tariffs for most favored nations (MFN) expands choices for Filipino consumers.

“For China and Pakistan, the two biggest suppliers among non-ASEAN countries, the unit value of imports of Philippines in 2021 was respectively $478 per ton, and $346 per ton, corresponding to premium rice for middle- and upper-class consumers for the former, and ordinary rice for lower class consumers for the latter,” the group said.