By Jasper Emmanuel Y. Arcalas & Bernadette D. Nicolas, June 18 2019; Business Mirror

https://businessmirror.com.ph/2019/06/18/duterte-retains-tariff-on-chicken-mdm-at-5/

Image Credit to Business Mirror

THE tariff on mechanically deboned meat (MDM) of chicken and turkey will remain at 5 percent until 2020 after President Duterte followed the recommendation of the National Economic and Development Authority (Neda) and signed Executive Order (EO) 82.

As reported in the BusinessMirror (See, “‘EO on MDM tariff up for Duterte’s  signature,’” June 10, 2019), the issuance of the EO is expected to avert increases in the prices of processed meat products, which are popular among most low-income households. This is because chicken MDM is a key component for the manufacture of hot dogs and canned luncheon meat.

EO 82, which was signed on June 13 and released to the media on Monday, also retained the lower tariff rate on frozen turkey meat and turkey offal at 20 percent.

The new EO shall take effect immediately after its publication in the Official Gazette or in a newspaper of general circulation, and shall be applicable until December 31, 2020.

“Whereas, the present economic condition warrants the continued application of reduced rate of duties on certain agricultural products to mitigate the impact of high prices of goods,” read EO 82’s introductory clause stating the rationale for the issuance.

The President is allowed to increase, reduce or remove existing rates of import duty upon the recommendation of the Neda if Congress is not in session.

EO 82 repeals the memorandum circular, which temporarily reverted the tariff on chicken MDM to 40 percent, issued by the Bureau of Customs (BOC) on May 23.

The BOC also told the BusinessMirror that it will continue to collect retroactively more money from importers who were assessed a lower tariff even after Republic Act (RA) 11203 took effect on March 5. However, a consumer group on Monday said the BOC should in fact return the balance of the rates shelled out by importers when it immediately imposed the 40-percent tariff on them right after the rice trade liberalization law was enacted. (See related, “DTI shuts door on hike of canned meat prices with 5% MDM tariff EO”).

Duterte issued EO 23 in 2017 to retain the lower tariff rates on select farm goods, including chicken MDM, while Congress worked on amending RA 8178 to remove the caps on rice imports.

After RA 11203, or the rice trade liberalization law was signed by the President, the DA and the BOC had argued that the reversion of the tariff rate on chicken MDM to the 2012 level of 40 percent is automatic.

The Philippine Association of Meat Processors Inc. (Pampi), however, said the reversion should not be automatic. Pampi President Felix O. Tiukinhoy Jr. also told the BusinesMirror that the government should refund any tariff difference collected by the BOC on imported chicken MDM.

Commitment

With the issuance of EO 82, local meat processors have committed not to hike the retail price of their products, particularly those that are popular with the poor.

“We will not increase our prices. We assure the consumers and the Department of Trade and Industry that we will not increase our prices now that [tariff on imported chicken MDM] is at 5 percent,” Tiukinhoy said.

Neda Undersecretary for Planning and Policy Rosemarie G. Edillon told the BusinessMirror that the decision to retain the tariff rate at 5 percent was to reduce inflationary pressures.

Edillon said MDMs account for 22.5 percent to 27.4 percent and 26.3 percent to 35.3 percent of the cost to produce hot dogs and canned luncheon meat, respectively.

“MDM is the one that is primarily used in our processed products. [The government is]trying to contain the increase in prices of canned goods because these are usually consumed by the poor,” Neda Assistant Secretary for Regional Development Mercedita A. Sombilla told the BusinessMirror.

Meat Importers and Traders Association (Mita) President Jesus C. Cham said traders would have preferred the permanent retention of the tariff to ensure that food prices will remain stable.

“It is a welcome, albeit, much-delayed order which will keep food inflation in check. But [the issuance of the EO] is a short-lived victory. That’s not good for consumers,” Cham said.

Edillon said the decision to extend the lower tariff rate on chicken MDM only until 2020 was also in consideration of rice prices.

“The government hopes that the price of other commodities will have stabilized by [2020], notably, rice. This means the tariff increase in MDM will not likely result in high inflation,” she said.

After December 31, 2020, depending on the economic conditions at the time, the government may choose to gradually increase the tariff on MDM. This, Edillon said was the original recommendation of the Neda.

Food safety

United Broiler Raisers Association (Ubra) President Elias Jose Inciong expressed disappointment over the government’s decision to retain the 5-percent tariff on MDM.

Inciong also raised concerns over the food and health standards observed by meat processors in using MDM.

“The Food and Drug Administration [FDA] should look into the inclusion rate of MDM in accordance with health standards of the country of origin. How would consumers know that indeed it is affordable and it is of value to them?” he said.

Inciong noted that meat processors have admitted in previous Senate and Tariff Commission proceedings that the inclusion rate of MDM in their products is “high” at 35 percent. High MDM content could pose health risks to consumers, he said.

“The Economic Development cluster assured the profits of meat processors. But as far as consumers are concerned, [the government] does not have any grounds to assure that consumers will benefit [from high MDM use],” Inciong said.

However, Tiukinhoy dismissed Inciong’s claim, saying he has no technical basis for declaring that high MDM use poses health risks. Also, the Pampi chief said processors keep utilization rate at safe levels.

“We will not do anything that is not good for our consumers. We do not exceed the healthy utilization rate of MDM. Besides, this [MDM] is where our consumers get their protein and calcium,” Tiukinhoy said.

As unscrupulous traders misdeclare chicken leg quarters as MDM, the Ubra chief also urged the government to institutionalize measures that would curb technical smuggling of imported poultry.

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