Poultry integrators buck move to hike corn import tariff

The country’s big poultry producers and integrators are against a move by the corn industry to call for an increase in the tariff on imported corn and other feed grain substitutes to 50 percent.

The Philippine Association of Broiler Integrators (PABI), led by poultry and hog producers such as San Miguel Foods Inc., Swift Foods Inc., Tyson Agro-ventures Inc., and Universal Robina Corp., wants government to deny the corn farmers’ petition and instead push for the strict implementation of Section 109 of Agriculture Fisheries and Modernization Act (AFMA) which exempts the tariff duty for all agricultural inputs including corn.

In a letter to Agriculture Secretary Leonardo Montemayor, PABI president Tennyson G. Chen of Tyson Agro-ventures Inc. pointed out that raising corn tariff will impact heavily on the cross section of the Filipino population.

"Increasing corn and other feed grain tariffs will slow down production and consumption of poultry and livestock products, leading to lower levels of consumption, and possibly, no growth in employment, income, gross value added and gross domestic product," warned Chen.

Corn farmers are asking government to raise the tariff on imported corn substitutes from the present range of seven to 10 percent to 50 percent by 2003.

For corn, the import tariff is 35 percent within the minimum access volume (MAV), and 65 percent outside the MAV. By next year, corn tariffs outside of the MAV will go down to 50 percent.

MAV refers to the minimum volume of agricultural products that a country is obliged to allow to enter its market under the World Trade Organization trade agreement.

PABI said the current tariff policies which are focused on supporting the corn sector, are hurting the poultry and livestock industries, and are also affecting other sectors of the economy.

PABI said consumers will bear the brunt of the high cost of corn since corn comprises 48 to 60 percent of swine feed rations and about 51 to 63 percent of poultry feed rations.

PABI added corn farmer will likewise be affected if feedmillers shift to alternative ingredients should corn prices become prohibitive. Livestock and poultry integrators usually import cheaper corn substitutes such as sorghum, soybean meal, rye, food wheat, barley and feed wheat when local prices are too high. The tariff for these substitutes are also lower at three to five percent.

PABI added raising corn tariff will directly affect 7.3 million Filipinos whose families are employed by the corn, poultry, livestock and allied industries.

In contrast to the low productivity of the corn sector, the poultry and livestock industries have grown steadily over the last 10 years.

Government is inclined to take the side of the corn industry. The DA has endorsed to the Tariff Commission the petition to raise tariff on corn feed substitutes.

The local corn industry, still reeling from poor productivity and low prices, wants more tariff protection since it cannot survive competition from cheap imported corn and corn substitutes.

PABI said instead of continuing extending tariff protection to corn farmers, government should instead stimulate investments and adopt technologies that will boost corn yields and efficiencies.

"Where it is possible, import tariffs should be integrated and congruent for both inputs such as feedgrains and outputs such as dressed chicken and pork to curb market distortion and maintain the balance throughout the feed grains poultry industry," PABI said.

PABI recommended long-term solutions that require government to increase investments in rural infrastructure that will reduce the high costs and inefficiencies in transportation, processing and marketing in support of the corn industry; farm-to-market roads, bulk handling and grain handling facilities and inter-island transport.