NEDA: Extension of lower agri tariffs to manage inflation amid El Niño, ASF

The recently approved extension of reduced tariff rates on imported key agricultural commodities is seen to ensure that inflation would be kept in check next year amid the threats of El Niño and African Swine Fever (ASF), according to National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan on Thursday.

Under Executive Order No. 50 issued by President Ferdinand "Bongbong" Marcos Jr. last Friday, the reduced tariff rates on rice, corn, and meat products will remain in effect until Dec. 31, 2024.

The new EO extends the validity of the modified tariff rates under EO 10, which is set to expire on Dec. 31, 2023. With the latest order, the tariff rates for pork will remain at 15% in-quota and 25% out-quota, corn at 5% in-quota and 15% out-quota, and rice at 35% both in-quota and out-quota until the end of 2024.

In a statement, Balisacan said the extension "will help reduce the risks and alleviate the inflationary pressures caused by the onset of El Niño, the worsening effects of African Swine Fever (ASF), and external pressures such as geopolitical tensions and export bans imposed by some countries."

The NEDA chief also emphasized the importance of diversifying market sources to ensure a sufficient and affordable food supply in the Philippines.

"While the swine flu, production shortfall in corn, and estimated supply deficit in rice drove price increases in these commodities for this year, additional meat importation played a crucial role in reducing meat inflation to -1.2% in September 2023, down from 21% in 2021," Balisacan said.

"In addition, the reduction on tariff rates had pulled down corn inflation and broadened market sources for rice, mitigating the impact of elevated inflation in September of this year," he said.

The country's chief economist earlier said that extending the reduced tariff rates for the key agricultural commodities was among the trade policy tools of the government to keep upside risks to inflation in check amid the El Niño threat.

Inflation, which measures the rate of increase in the prices of goods and services, decelerated to its slowest in 20 months in November amid the slower increase in food and transport costs.

High inflation, which resulted in higher interest rates, was blamed for the slower economic growth in the second quarter of the year before it recovered to 5.9% in the third quarter, thanks to government's ramped up spending which offset the decline in household spending during the period.

Balisacan also cited the importance of complementing this trade policy with crucial strategies and programs to enhance local food production and boost the productivity of farmers.

"These crucial strategies include sustained investments in irrigation, flood control, supply chain logistics, and climate change adaptation," he said.

"Short-term and long-term interventions need to work together to protect the purchasing power of Filipino households and boost the productivity and income of local producers. Doing so will ensure equitable and sustainable development for the country," he added. — VDV, GMA Integrated News