P4-B duties, 1-M jobs lost due to pork smuggling – agri group

MANILA, Philippines - The Samahang Industriya ng Agrikultura (SINAG) said yesterday the government lost close to P4-billion in revenues last year while almost a million Filipinos dependent on hog raising lost their livelihood in the last four years due to outright and technical smuggling of pork meat.

SINAG said data from the Bureau of Animal Industry (BAI) indicate that 199 million kilos of pork were imported last year. However, a United Nations Commodity Trade Division (UN ComTrade) report of countries that exported pork meat to the Philippines showed pork importation at 237 million kilos – a difference of 38 million kilos that are presumed smuggled to the country.

“Multiplying the 38 million kilos unaccounted for with the correct duties for prime cuts misdeclared as pork fats or offal, the result is a staggering P3.85-billion in lost revenues for government,” SINAG chairman Rosendo So said.

He added that of the 237 million kilos cited by UN Comtrade, 15 million kilos came from China which was mysteriously excluded in the BAI report.

The Philippines currently bans pork importations from China due to the outbreak of foot and mouth disease (FMD) in that country. The Philippines is one of few countries that the World Organization for Animal Health (OIE) has certified as FMD-free.

But more than the billions in lost revenues due to smuggling, the SINAG chairman said the “unkindest cut” is the loss of livelihood of close to a million Filipinos engaged in backyard hog raising. “From 9.5 million heads in January 2010, the number of hogs raised by backyard raisers dropped to a precarious 7.6 million in 2014. This shows a drastic drop of 1.9 million heads of hogs with an estimated cumulative value of close to P40-billion since 2011,” he stressed.

“We’re fighting smuggling on two fronts: one is outright smuggling and the other is technical smuggling where illicit importer-traders misdeclare imported prime pork cuts as pork offal to evade paying the right taxes (tariff),” So explained.

Pork offal is levied only five percent as against the 40-percent tariff on prime cuts. Offal refers to a butchered animal’s internal organs, entrails, skin and other leftover materials commonly used as extenders in processed meat products like hotdogs and sausages.

 So said the mathematics for technical smuggling is simple: for every 20-foot container containing 25,000 kilos of prime pork cuts but misdeclared as offal, illicit importers pay only a five-percent tariff rate for offal at ($1/kilo reference price) or around Php 50,000. If importers declare the real content and pay correct duties for prime cuts, they should pay Php1.32 million for each container using the 40 percent tariff rate for choice pork.

“The difference per container is more than P1.2 million. Last year alone, technical smuggling reached P1.9 billion,” added So.