April 14, 2008

Philippine hog farmers slam meat price hike; meat processors protest new import restrictions

A hog farmers' group has slammed meat processors' plan to raise prices of meat products by 20 percent over a new policy of the Philippine Department of Agriculture (DA) restricting importation of pork products.

The National Federation of Hog Farmers Inc. (NFHFI) said the price hike has no basis, judging from the importation history of meat processors belonging to the Philippine Association of Meat Processors Inc. (Pampi).

NFHFI president Albert Lim Jr. said meat processors are "dramatising the issue" as there is no definite details regarding the new DA rules and regulation changes under the Minimum Access Volume (MAV) is still in discussions.

Pampi executive director Francisco Buencamino has earlier warned that DA's refusal to issue MAV import clearances (Mavic) could result in higher prices of canned goods and processed meat products.

On the other hand, Pampi has strongly opposed the new import restrictions issued by the DA, stressing that the "injury that this provision will cause is clear, imminent and absolute."

Importers and processors, he said, are left with only 40 percent with the remaining 10 percent to be kept and used by the government for price stabilization purposes.

The industry has been using only about 12 percent of this volume yearly to support the local livestock sector.

Buencamino stressed that allowing livestock producers to import under MAV might result in a "shortage [of MAV-covered products], compromising Filipino consumers," and livestock producers might stop producing and will just resort to importing and trading.

MAV refers to the minimum volume for specific agricultural products that member-countries of the World Trade Organization (WTO) can import with lower tariff. Importations in excess of MAV are still allowed albeit at a higher tariff rate.

Without the Mavic, meat processors will have to pay the out-quota rate of 40 percent slapped on pork products. The in-quota tariff rate for pork products is set at 30 percent.

Buencamino said the government will allow 53,000 tonnes of pork products at a reduced tariff rate this year.

He added that the jump in canned meat goods is due to the cost increase of tin can which rose by 30 percent. But Lim counters that meat processors have not been using pork products judging from official government data on MAV.

Data from the DA's MAV Management Committee shows that in 2007, utilisation rates of tariff rate-quotas or MAV for pork increased from 5 percent in 2006 to 19 percent in 2007, indicating more imports of higher-value pork cuts, such as bellies and other unspecified prime cuts.

In a report, the United States Department of Agriculture (USDA) noted that MAV usage for pork has been relatively low, due in part to the entry of large quantities of buffalo meat, with a low tariff rate of 10 percent and illegally imported pork in the market.

Buffalo meat from India has been traditionally used by local meat processors as a substitute for pork.

MAV utilization is expected to remain low due to the high in-quota duties for pork as well as high pork prices in the world market relative to the price of local pork. Majority of the pork imported in the Philippines is pork rind and pork fat, said the USDA report.

Earlier, Pampi said granting livestock producers a MAV license would result for the group to manage the situation to produce a shortage of a MAV product for the purpose of pushing final cost of products in the market higher or to purposely block any product to create a domestic market shortage.