Dominguez: EO on pork imports not done haphazardly, only a temporary measure

The Department of Finance on Tuesday defended the implementation of Executive Order 128, which lowers the tariff of pork importations, saying the adjustment of tariffs was not done “haphazardly” as all the “tradeoffs” are considered in the cost-benefit analysis.

In his opening presentation during the continuation of the Senate Committee of the Whole's hearing on the African swine fever outbreak, Finance Secretary Carlos Dominguez III admitted that EO 128 was a “painful solution” but it was a “short-term and only practicable strategy” to the current problem in pork supply.

“I know that EO 128 appears to be a painful solution. 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 53.7 billion pesos. Clearly, this is tradeoff beneficial for the entire country,” Dominguez said.

The DOF chief explained that the current tariff rates will keep pork prices high due to the shortage in the local market and the inability of importers to bring the meat in the country due to high tariffs.

Citing data from the Philippine Statistics Authority (PSA), Dominguez said the volume of hog production plunged by 26% in the first quarter of 2021, resulting in meat inflation of 19.6% in the same period.

“Our temporary solution to rise in pork prices is to bring in more supply. Pork prices are rising because of supply shortfalls. Bringing in more supply would stabilize the prices and bring down the inflation rate,” Dominguez said.

He further explained that high food prices will have a domino effect on the inflation rate and interest rates.

“If inflation rate rises, interest rates increases, [it] will follow. This unhealthy chain of events will make economic recovery even more difficult for all. Everyone will suffer from high interest rates,” Dominguez said.

“I reiterate that EO 128 is a temporary measure. It addresses a single factor that threatens food shortages and a spike in inflation. While short-time, it will prevent a chain of events that could bring long-term damage,” he added.

On the other hand, Dominguez said the government is not giving up on the domestic hog industry, citing Department of Agriculture’s long-term projects to address the scarcity in pork supply.

“We are not giving up on the domestic industry. The interventions of the Department of Agriculture to help the industry address it, they expect them to yield even greater benefits once the permanent solution to the ASF outbreak becomes available,” he said.

According to his presentation, the DA is currently working on the repopulation of swine herd, compensation of producers for losses of pigs due to ASF, and implementation of barangay surveillance and quarantine.

LandBank of the Philippines is likewise doubling its loan support for domestic hog raisers from P15 billion to P30 billion.

Under President Rodrigo Duterte's EO 128, the tariff rate for imported pork meat within quota or MAV, whether fresh, chilled or frozen, will be pegged at 5% for the first three months upon the EO’s effectivity and 10% for the fourth to 12 months.

The tariff rate for imported meat outside of the MAV, however, has been set to 15% for the first three months upon the EO’s effectivity and 20% for the fourth to the 12th months.

The existing 30% to 40% tariff rate for imported pork will be restored after the 12th month.

Earlier, the DA had proposed to hike the MAV to at least 400,000 metric tons from the current 54,000 MT, citing supply constraints brought about by the African swine fever outbreak.

The Senate earlier passed a resolution calling for the withdrawal of EO 128.

Senators argue that such measure will put local hog raisers at a disadvantage, and that such move is not needed given the surplus in pork supply in the Visayas and Mindanao.  —KBK, GMA News