April 16, 2021
The National Economic and Development Authority (NEDA) supports the temporary increase in the minimum access volume (MAV) for pork from 54,210 to 404,210 metric tons, coupled with lower tariffs, to help fill the supply deficit, reduce food prices, and ensure our food supply is adequate and affordable.
“Every Filipino who eats pork, most especially the poor, cannot afford both an income reduction or loss due to the COVID-19 pandemic, and higher food prices due to the African Swine Fever (ASF). The government’s priority is to foremost boost domestic production and use importation only as the last resort. However, after almost two years since ASF started, the data clearly shows that we cannot meet the total demand for pork only through domestic support,” said Acting Socioeconomic Secretary Karl Kendrick T. Chua during the Senate Committee of the Whole inquiry on the food security crisis brought about by the severe outbreak of the ASF held on April 15, 2021.
The Philippine Statistics Authority’s (PSA) Swine Situation Report on February 8, 2021 shows that the country’s swine inventory decreased sharply by 3 million heads or 24.1 percent from 2020 to 2021. Given this, NEDA projects the carcass pork deficit for 2021 to reach around 477,000 metric tons. This is the difference between domestic production of carcass of around 1.2 million metric tons and the demand of around 1.67 million metric tons, based on a 15-kilograms per person per year consumption.
“The large supply deficit has led to a rapid spike in the retail price of pork. In March 2021, Philippine pork prices averaged 288 pesos per kilo or 36 percent higher and reached as high as 327 pesos per kilo in NCR, or 59 percent higher. Before the supply shock, pork prices were relatively stable at around 224 pesos per kilo,” Chua said.
While the overall inflation in March 2021 decelerated to 4.5 percent on account of slower inflation for other food items, the meat inflation increased to 20.9 percent and was the top contributor to overall inflation of 1.4 percentage points. The contribution of meat to overall inflation has even exceeded that of rice during the height of the 2018 inflation spike, where rice contribution to inflation peaked at a lower, but still high 1-percentage point.
“When we addressed rice inflation with the Rice Tariffication Law, rice ceased to be the main contributor of inflation and fell within the target range of the Bangko Sentral ng Pilipinas (BSP). In March 2021, rice inflation was just 0.9 percent and contributed only 0.1 percentage points to inflation. Similarly, if we augment our hog supply with imports, we could see a decline in full year inflation by around 0.4 percentage points, or from 4.2 percent down to 3.8 percent. This would fall within the central bank’s target of 2 to 4 percent,” Chua explained.
“Lowering inflation by ensuring adequate supply of pork is very crucial to some 95 million Filipinos who rely on pork for their regular diet amid this pandemic,” he added.
The NEDA chief assured that the temporary increase in pork imports will not ‘kill’ the hog industry, as imports would potentially account for only up to 22.8 percent of total consumption, with domestic production expected to fill in the most of the demand. Also, as mentioned by some experts, imports will not flood our markets since ASF has also affected hog production of many countries. In addition, the limited cold chain facility in the country serves as a physical barrier to huge importation since the total capacity is only estimated at around 268,000 metric tons, allocated for pork, given the requirements of other commodities.
Chua also highlighted that the tariff rate for pork also needs to be low enough to help reduce and stabilize retail prices. At 30 to 40 percent tariff, the landed cost of imported pork, based on the prevailing prices by the Food and Agriculture Organization (FAO), is estimated to range between 252 and 267 pesos per kilo, which is still way above the normal price of 224 pesos per kilo.
On the other hand, temporarily lowering the tariff rate to 5 to 10 percent would lead to lower landed cost of around 215 to 222 pesos per kilo, closer to the pork retail price before the price spikes due to ASF.
“To conclude, we need to help domestic producers recover from the ASF. But we also need to help 95 million consumers of pork by reducing tariff and increasing the MAV temporarily to help fill the deficit, reduce food prices, and ensure our food supply is adequate and affordable so that we prevent higher malnutrition and poverty,” Chua said.