Meat processors defend push to retain low MDM tariff

MANILA, Philippines — Meat processors defended their push to retain the low tariff rate on imported mechanically deboned meat (MDM) of chicken and turkey as local producers fight to reject the proposal to support local production.

Last month, Philippine Association of Meat Processors Inc. (PAMPI) filed a petition with the Tariff Commission to continue the five percent tariff on MDM of chicken and turkey beyond this year.

In a public consultation spearheaded by the Tariff Commission, PAMPI said it is proposing to retain the five percent tariff on MDM of chicken and turkey until 2025.

“We were thinking there might be stronger opposition if we make it longer. If we make it three years, hopefully local supply would be available by then, and we do not have to depend on imported MDM. As much as possible, we’d like to buy all our materials locally and support local sectors,” PAMPI vice president Jerome Ong said.

Ong said the five percent tariff on MDM has helped maintain prices of processed meat products stable and reasonable.

“PAMPI’s petition is intended primarily to support the administration’s determined efforts to keep the national economy stable and help control inflation especially food inflation,” Ong said.

The rise in food prices has been a major driver of quickening inflation globally.

In the Philippines, September inflation accelerated to 6.9 percent year-on-year — a four-year high — mainly due to faster increases in food prices.

If its petition to extend the tariff until 2025 is not granted, PAMPI will have to further raise prices of its products.

“If tariff increases by 35 percent… obviously it will result to higher prices of our products. All things equal, our price will increase,” Ong said.

In the same hearing, San Miguel Foods Inc. president Rita Palabyab said import prices of MDM have increased significantly in the past couple of years, attributed mainly to tight supply and high feed costs around the world.

“Where the average price of MDM in 2020 was at P40.99 per kilo, this increased to P56.84 in 2021 — a 38.7 percent increase), and to P60.79 in first half of 2022,” she said.

“Considering the current forex rate at P58-59, and my computation is based on P57. The P60.79 in first half of 2022 would reach P66.28 per kilo. If we were to impose 40 percent tariff, it will increase further to P87 per kilo,” she said.

Meat processors are asking the Department of Trade and Industry (DTI) to allow them to raise the prices of processed meat products by P1.50 to P2 per 150-gram can.

Ong said the product costs have already risen by 20 percent, which is equivalent to P3 to P4 per can, but processed meat manufacturers are only asking for P1.50 to P2 price hike so as not to pass on the entire costs to consumers.

Apart from meat, other factors that pushed up costs include other ingredients such as binder, fat and water), packaging, fuel costs — which affects both production and distribution costs, and tin cans.

While it is not entirely against importation, Samahang Industriya ng Agrikultura (SINAG) is opposed to  the lowering of tariffs.

SINAG executive director Jayson Cainglet said this should be done at the right tariff — or at the original 40 percent — to allow local poultry industry to compete.

“The local industry imports at the right tariff and we’re not demanding to lower the tariff,” he said, noting that they are not contesting the local supply availability of MDM.

Cainglet said the government conceded the lowering of the tariff on MDM to maintain the quantitative restrictions (QRs) on imported rice, but this move was “a historical injustice to the livestock industry, poultry raisers and local agriculture sector.”

“The government recognized that conceding to lower the tariff of MDM was to the detriment of the poultry industry but nevertheless was pursued to protect the rice industry, at that time,” he said.

The current administration is now pushing for the development of the local agriculture industry.

“We appeal that this time, they side with the local producers, and we are at this point, confident since the marching order of the President is clearly to support local production,” Cainglet said.

SINAG also said the lower tariff on MDM has led the government foregone revenues of P6 billion — additional amount which could have been used in supporting the economy in the post-COVID-19 period.

Based on the group’s computation, the governments realized P887.6 million in revenue last year from MDM slapped with five percent tariff, versus the P7.101 billion revenue if MDM had 40 percent tariff.

Cainglet said that meant lost revenues of P6.214 billion to the government.

From January to August this year, the government realized P556 million from imported MDM at five percent tariff, as against P4.46 billion at 40 percent tariff, translating to foregone revenues of P4.39 billion, he said.