Government OKs higher 60,000 MT potato imports at lower tariff

MANILA, Philippines —  The Philippines has allowed the entry of more imported potatoes used for making chips and french fries at a lower tariff to meet the growing demand for the raw material by local snack manufacturers.

The inter-agency Minimum Access Volume (MAV) Management Committee doubled the allowable volume of chipping potatoes to be imported under MAV to 60,000 metric tons.

“There is a need to reflect the current import requirements to ensure competitiveness of locally manufactured potato chips,” the MMC said in an unnumbered administrative circular.

Firms such as Gokongwei-led Universal Robina Corp., Liwayway Marketing Corp. and Leslie Food Corp. stand to benefit from the expansion of the MAV for chipping potatoes. The three companies have the current allocation under the MAV to import chipping potatoes at a lower tariff rate.

The MMC noted that URC imported 24,881.96 MT of chipping potatoes in 2022 while Liwayway Food and Leslie Food imported 4,399.04 MT and 719 MT, respectively, for a total of 30,000 MT.

Imports of chipping potatoes under MAV are levied with only three percent tariff but imports outside the MAV have a 40 percent tariff.

“No locally produced chipping potatoes are currently available for use for manufacturing of potato chips, prompting local potato chips manufacturers to import their additional raw materials requirements outside of the current MAV at a tariff rate of 40 percent,” the MMC said.

The Philippines first opened a unilateral MAV for chipping potatoes in 2018 with a volume of 20,000 MT to cater the needs of the local potato chips manufacturers for raw materials.

Before the establishment of the MAV for chipping potatoes, local food manufacturers have opted to bring in finished goods of potato chips since they are levied with lower tariffs instead of importing raw materials at 40 percent. The tariff on imported potato chips ranges from zero to seven percent depending on the origin.

Under existing rules, local potato chip manufacturers must allocate a minimum of P0.25 per kilogram of chipping potato that they would import under the MAV mechanism. The money collected from the manufacturers would be used to develop the local potato industry through a program jointly undertaken by the local manufacturers and the Department of Agriculture.

The country imported 32,616.332 MT of chipping potatoes last year, 12.5 percent over the 28,991.593 MT recorded in 2022, Philippine Statistics Authority (PSA) data showed. The United States was the country’s top supplier of chipping potatoes, accounting for almost half of the total import volume or about 15,601.019 MT last year, based on PSA data.