DoF chief says consumer gains outweigh P14-B revenue loss from EO 128

FINANCE Secretary Carlos G. Dominguez III on Tuesday defended the move to cut tariffs on pork imports, saying that while the government might lose about P14 billion in revenues, this measure would allow consumers to save P67 billion.

“Our revenues will drop by P13.68 billion. However, lowering the price of pork will save our consumers P67.38 billion. These gains of consumers dwarf the foregone revenues by P53.7 billion. Clearly, this is a trade-off beneficial to the entire country,” he said during a Senate committee of the whole’s hearing on Tuesday.

At the hearing, senators grilled the Finance chief over Executive Order (EO) 128, which reduced the tariff rates of pork imports within the minimum access volume (MAV) quota to 5% in the first three months and 10% in the following nine months; and out-quota pork imports to 15% in the first three months and 20% in the succeeding nine months.

Senate Minority Leader Franklin M. Drilon earlier filed a resolution urging President Rodrigo R. Duterte to withdraw EO 128 and recall the recommendation to increase the MAV for pork. He said the two policies would hurt the local hog industry.

However, Mr. Dominguez said EO 128 is aimed at protecting consumers from supply shortages and price increases.

“If you want to solve the problem quickly, you have to encourage importation of the materials that are short, which in this case is pork. We have designed the program to be time-bound. By the end of 12 months when we expect prices to drop and stabilize and production to pick up, then that is the time we ease off,” he added.

On March 26, Mr. Duterte recommended that Congress increase the MAV allocation for pork imports by 350,000 metric tons (MT), together with the current allocation of 54,210 MT, to address the supply shortage due to an African Swine Fever (ASF) outbreak.

“If the domestic production is higher, nobody will bring in pork with that tariff rate. Trust the market. The market will determine the price,” Mr. Dominguez said.

HIKE IN TARIFFS?
Meanwhile, the Tariff Commission is studying an increase in import duties on frozen pork meat products proposed by the Samahang Industriya ng Agrikultura (SINAG).

The group wrote a letter to the commission last month asking that tariffs on pork imports within a minimum access volume quota be increased to 44% from 30%, and that out-of-quota imports be set at 44% from 40%.

The commission in a notice signed on April 22 said that it was conducting an investigation and had asked interested parties to submit comments by May 7.

“The schedule of the public hearing will be announced at a later date,” the commission said.

SINAG Chairman Rosendo O. So in March said importers were profiting from a tariff rate that has no impact on prime pork cuts retail prices, noting that pork had been sold for P350 to P450 per kilogram in the first two months of this year, when pork market prices surged while an ASF outbreak cut supply.

The average landed cost of pork imports, he said, was P81 per kilogram in 2020.

“(Importers) are easily profiting between P200 and P250 per kilogram at the current retail of P350 to P400 per kilogram of pork belly (liempo) and pork shoulder (kasim),” Mr. So had said.  R.M.D.Ochave and J.P. Ibañez