DA amends allocation rules for imported agricultural products

The Department of Agriculture (DA) has amended the rules for the allocation of imported agricultural products under its minimum access volume (MAV) scheme.

The MAV Management Committee (MMC) issued Administrative Order 52 which, among others, revised the requirements for companies applying for MAV allocation.

Under the new rules specified in AO 52, companies directly or indirectly owned by the same person or entity will be limited to one application for each MAV product. Thus, applicants with common ownership which incudes similarity in incorporators, interlocking directors and similar office address, will be automatically disqualified.

Applicants who violate this rule will also be disqualified from being awarded any MAV allocation under any product category for at least a year.

Another significant amendment is that the MAV allocation will give priority to end-users of grain and sugar provided that they can justify their requested allocation.

The volumes allocated to MAV entrants will either be the total volumes indicated in the lots which are drawn in their respective volume requests, whichever is lower.

There is a clause, however, which provides that in cases where the volume requested is beyond the capacity of applicant, based on historical data or previous importation volumes, consumption and market share, the Secretary of Agriculture can determine a specific volume to be awarded. Moreover, the volumes awarded to such entities will be carried over to their regular allocations for the following MAV allotment year.

Another amendment made is to recall MAV allocations of licensees utilizing less than 80 percent of their respective net allocations, this will then be used to determine allocations in the succeeding MAV year.

The utilization rate will be reckoned as of Dec. 15. The MMC will recall from the regular allocations of a licensee in the following MAV year 50 percent of the unused volumes and or 75 percent in the second instance of failure to meet the so-called utilization threshold.

The new rules also penalize licensees which surrender all or part of their respective allocations. The MMC will recall form the regular allocation of a licensee in the following year 10 percent of the surrendered volumes of the licensee if this is made or before the last working day of May.

The amendments were made in the recent meeting between the private sector and the inter-agency MAV secretariat.

The MAV scheme allows food and agribusiness firms to import farm products at low tariffs, varying per agricultural commodity and is the least volume of imports that the government allows at low import duty. MAV products include sensitive farm commodities such as corn, sugar, pork, chicken, onion and coffee. Volume imported outside of MAV is called MAV plus which has higher tariffs.

The MAV secretariat, in justifying the change, said that under the existing rules, the applicant with the higher volume request has the better chance of obtaining a higher allocation. This is based entirely on the volume asked for, and not on the actual need of the applicant.

"If volumes requested by MAV licensees would be based on the applicant’s use and in case of new entrants, their consumption level, there is a better chance for the Department to grant MAV to applicants who can maximize the utilization of the volumes allocated to them," the MAV secretariat said, adding that this will also enable the granting of MAV to more companies and groups through a first-come-first-served basis.