Importation the answer to inflation?

MANILA, Philippines — President Duterte’s economic advisers have agreed to recommend the lowering of tariff and removal of non-tariff barriers to allow greater importation of fish, meat and wheat products as part of measures to temper rising inflation in the country.

The economic managers are also set to meet this week with Agriculture Secretary Emmanuel Piñol, the immediate head of government agencies that manage the country’s fish, livestock and wheat products, just as the Philippine Statistics Authority (PSA) is set to release the latest average inflation rate for July.

Last month’s average inflation rate hit a high of 4.6 percent, largely due to rising prices in the food basket component of the consumer price index (CPI). The food basket comprises a substantial component of the month-to-month monitoring of inflation by the PSA.

The implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law was earlier blamed for the surge of inflation in June as reflected by the increase of prices in goods and services that are now taxed at higher rates.

Duterte’s economic managers earlier assured consumers that the rising prices of goods and services were a “temporary” reaction of the markets to the law that took effect last Jan. 1.

They also said the inflation rate will eventually “taper off” in the next months.

Led by Budget Secretary Benjamin Diokno, the economic team disclosed to The STAR yesterday that they have also called the attention of the PSA to the unusual uptick in the “tuition” and education component of the inflation indicator.

“We have asked the PSA to check and review their numbers because there was almost 0.6 percent increase in ‘tuition’ during this period when we have already implemented the free tuition law. So, why should the rise be this high from a low of near zero?” Diokno rhetorically asked.

An economics professor, Diokno admitted that the government needs to address the inflationary impact of more money and income in the hands of consumers but not enough food and services.

Initially, he said, they noted the prices of fish, poultry, vegetables and meat (pork and beef) products, in particular, have steadily increased mainly because of low domestic supply.

“This is why the economic managers recommended greater importation of fish and wheat which are chiefly used as feedstock ingredients for poultry and other livestock,” he explained.

Diokno noted with concern the fisheries production in the country has substantially dropped through the years. Latest data from the PSA showed the fishery sector posted a 3.03 percent contraction in output in the January to March 2018 period from the 1.5 percent growth last year.

As reported by the Bureau of Fisheries and Aquatic Resources (BFAR), commercial fishery saw a three percent decline in production to 216,200 metric tons following less fishing trips due to rough seas brought about by weather disturbances that prevailed in Western Visayas during the period.

Diokno surmised climate change and over-fishing have also affected the country’s fish production despite being an archipelago surrounded by bodies of water.

The PSA noted lower production level of tilapia at 5.43 percent, attributed to high mortality rate and lesser appearance in inland waters.

Milkfish production also registered a 7.38-percent decline during the period, with producers harvesting smaller sizes, which were blamed on low water temperature, rehabilitation of brackish water fishponds and late stocking in some areas.

The common round scad (galunggong) continued to post negative growth, falling 14 percent as a result of weather disturbances and less fishing trips and unloading in some areas.

Decline was likewise noted in the production of squid, anchovies, frigate tuna, indian mackerel, yellowfin tuna, blue crab, lapu-lapu, catfish and oysters.

Stakeholders’ meeting

Piñol is set to meet with industry stakeholders on Friday to discuss the planned importation of the three commodities to help stabilize prices and prepare for the holiday season.

“We are going to review whether it is the right time now to allow the entry of additional imports under the MAV (minimum access volume) for meat and if it would be advisable for us to allow the entry of fish for food security into the market,” Piñol told reporters yesterday.

For pork imports, the agriculture department is considering up to 10,000 metric tons or one million kilos of pork to enter the country before the peak of the Christmas season.

“According to BAI (Bureau of Animal Industry), our current supply of pork is almost equal to the demand. It is a very critical situation and we need to consider this (importation),” Piñol said.

Pork (kasim and liempo) is now priced at a high of P260 per kilo when it should have ranged only between P200 to P220.

Piñol plans to ask the President to request Congress to allow the additional volume under MAV, pegged only at 54,000 MT. He added that he could not just unilaterally allow the increase in MAV.

“We looked at the protocol and the President just needs to write to Congress. It would not take a month once Congress approves it. Our worry is that once the -ber months come, there might be tight supply that would cause further spike in prices. So, if we allow the importation of about 10,000 MT of pork, then that will stabilize the price in the market,” he pointed out.

For fish, the DA is considering issuing a certificate of necessity to allow the entry of additional fish supply, specifically round scad (galunggong) amid the upswing in prices.

“There are reports that there are some that exceeded our P140 per SRP (suggested retail price) and the best way to stabilize it is to make more supply available in the market,” Piñol said.

Market monitoring data showed that galunggong is retailed at P160 to P200 per kilo while tilapia and milkfish are sold at P150 and P180 per kilo, way above its SRP of only P100 and P150, respectively.

For chicken, Piñol is considering the removal of the temporary special safeguard duties to allow a special importation of the commodity as he noted that prices have reached a high of P170 per kilo.

No volume of imports has yet been set for fish and chicken.

Piñol said plans to scrap tariffs for meat and fish imports need to go through intense consultation with the stakeholders, noting that this might not sit well with the livestock sector.

“Any suggestion eliminating tariff for both meat and fish will certainly be met with strong oppositions by agriculture stakeholders. As DA secretary, we will just have to relay to Congress and the economic team the sentiments of the stakeholders. It is so easy to say but it is so hard to do. Look at our rice, it took us awhile before we finally decided to do away with the restrictions,” Piñol added. – With Louise Maureen Simeon