The Market Monitor Minding the Nation's Business
By Rose de la Cruz
The continuing deficiencies in local supplies of vital food commodities, which are expected to be filled by imports, have prompted the government to maintain lower tariff rates on food imports to ensure that food inflation will not worsen.
This, after the board of the National Economic and Development Authority– chaired by President Ferdinand Marcos Jr. former head of the Department of Agriculture– approved the extension of reduced tariffs under Executive Order No. 10 until the end of 2024 to keep local food prices stable amid volatile supply situation in the world market.
NEDA Secretary Arsenio Balisacan told a press briefing that the board okayed the extension of low tariff rates on pork (because of the continued presence of African Swine Flu which affected local production), rice and corn.
He said the primary considerations of the NEDA Board were the insufficient domestic production amid continuing elevated global food prices.
The review done by the CTRM (Committee on Tariff and Related Matters) revealed continuing challenges in the global markets and supply issues such as ASF for pork and low world production for rice and corn prompting suppliers to hold on to their stocks.
As approved, the tariff rates on the following commodities remain until December 31, 2024: for pork 15 percent for in-quota and 25 percent for out-quota; for corn 5 percent for in-quota dn 15 percent for out-quota and for rice a uniform rate of 30 percent for all imports.
EO No. 10, which lowered and fixed the tax on agricultural commodities to what are known as Most Favored Nation tariff rates, is set to expire on December 31, 2023.
“The proposed extension of reduced tariffs will help ensure an adequate supply of agricultural commodities and maintain stable and affordable prices, thereby managing potential inflationary pressures,” Balisacan said.
Malacanang has yet to release the EO extending the reduced tariff rates.
Meanwhile, Balisacan blamed the looming impact of El Niño as among the reasons behind the high prices of rice.
“The inflation for rice is quite high,” he said. “And that is because in the world market, prices continue to rise. Partly arising from the fact that the world is expecting an El Niño that affects most rice-producing countries. And the bans imposed by India continue and the world market takes those into account.”
“Just to ensure that those higher prices will not be transmitted to our local markets, at least temper the effects of those prices on the global market in our local markets, we need to keep those reduced tariffs,” the NEDA chief stressed.
Balisacan also said that “if you don’t keep them, meaning the tariffs will now move, in the case of rice from 35% to 50%. So, world prices are rising, pagkatapos dagdagan po ng another increase in price, ‘di mas lalong mag-spike iyong prices paid by our consumers. So, we don’t want that to happen. And of course, it will also impact inflation,” he continued.
In addition, Balisacan said the NEDA Board also approved the recommendation of the Committee on Tariff Related Matters to modify the review period for the tariff rate on coal from semestral to an annual basis, while the tariff rates on pork, corn and rice will be reviewed in a semestral basis
The extended tariff rates will be formalized through the issuance of an EO by the President.
In his capacity as chief executive, Marcos can exercise his power to modify tariff rates when the Congress is not in session.
Marcos can issue the EO as early as December 16 to extend the reduced tariff rates. He has until January 21 to do so.
However, the lower tariff rates under EO 10 would only be effective until the end of this year.
The extension of the lower tariff rates on the three commodities was seen in some quarters as a step in the right direction to stabilize domestic food prices and arrest any possible price spikes.