MANILA – A lawmaker on Wednesday said the government should be allowed to import pork at the new reduced tariff rates and sell directly to the consumers to bring in more competition among importers and effectively pull down retail prices.
Marikina City Rep. Stella Quimbo said this is one way to ensure that the reduced tariffs will translate to lower prices in the markets.
"Otherwise, importers can simply purchase low and continue to sell high in the market, especially if they engage in anti-competitive practices such as price fixing," Quimbo said.
She said reducing tariffs as a way to reduce market prices of pork makes perfect economic sense, but it requires markets to be "perfectly competitive".
"In a less than perfect situation, reducing tariffs alone may not work. Government must be part of the solution. Government must be temporarily allowed to import pork to help stabilize prices," she said. "Competition is key in making reduced tariffs pro-people."
The government, she said, must also provide cash assistance to domestic hog raisers to repopulate their hogs and to support investments needed so they can better compete with imported pork.
She questioned the basis of the parallel proposal to increase the minimum access volume (MAV) by 645 percent, considering that only 70 percent of the current MAV is utilized.
Quimbo noted that there does not seem to be the need to expand MAV by a substantial amount, way more than the estimated shortage of about 150,000 metric tons.
Earlier, President Rodrigo Duterte asked Congress to approve his recommendation to raise the MAV allocation to 350,000 metric tons from the current 54,210 to boost the pork supply in the country.
"It would seem that importers don’t have the appetite for bringing in more imported pork when there are profit opportunities even at the original tariff rates of 30 to 40 percent. If the landed cost of a kilo of imported pork is about 145 pesos, with a tariff rate of 30 percent and distribution costs of about 50 pesos, plus margins, pork imported within the MAV can sell at about 280 pesos per kilo. This means that importers can very well undercut domestically supplied pork," she said.
She said importers are not fully utilizing the MAV, which could mean that there could be anti-competitive practices prevalent in the market, such as deliberately limiting imports to keep prices high, and smuggling imported pork which can then be sold at the higher price levels established at the legitimate price of imported pork.
Under Executive Order (EO) 128 inked by Duterte on April 7, the tariff rate on pork imports within the MAV was reduced from the current rate of 30 percent to 5 percent for the first three months and to 10 percent for the next nine months.
Pork imports outside MAV, according to EO 128, will be slapped with a lower tariff of 15 percent for the first three months and 20 percent for the succeeding nine months from the current 40 percent.
Senators, however, believed that lowering the tariff in the importation of swine products would only kill the local hog industry. (PNA)
