VAT on imported hatching eggs turn off Philippines poultry growers

The move to import 150,000 hatching eggs to address a shortage in chick production in the Philippines has been marred by a decision to impose a 12% value-added tax.

The imports were initiated by the United Broilers and Raises Association (UBRA) and the Philippine Association of Broiler Integrators (PABI), while the VAT decision was made by the Bureau of Customs.

The immediate importation of hatching eggs is meant to relieve a temporary tightness in chick production caused by the spate of recent destructive typhoons. But the planned importation now faces a tax hurdle that will make the cost of importation a burden to chicken growers, said UBRA's Gregorio San Diego.

UBRA has enlisted the help of Agriculture Undersecretary Bernie Fondevilla to appeal to the Bureau of Customs and the Department of Finance to scrap the 12% VAT on top of the 5% tariff already imposed on egg imports.

Chicken supply remains adequate for now with retail prices hovering at PHP130 to PHP140 (US$2.8-US$3) per kg, San Diego said.

Local chicken production of 23 million kg will be supplemented by imports of five million kg, with the bulk being chicken leg quarters from the US.

Prior to typhoon Ondoy, the cost of chick production was PHP8-PHP12 (US$0.17-US$0.25) per head. A change in nutrition from corn to feed wheat caused a disruption in production, which was worsened by the typhoons, resulting in nearly no delivery of day-old chicks.

Thus, price of day-old chicks had jumped from PHP28 (US$0.6) per head to PHP35 (US$0.75), said San Diego.

To address this problem, chicken farmers have asked the Department of Agriculture to allow the imports of additional hatching eggs from Malaysia, which remains a bird flu-free country.