Higher MDM tariff seen to yield additional P5 billion revenues

MANILA, Philippines — The government can collect up to P5 billion in additional revenues if it proceeds with its plan to impose a 40 percent tariff rate on imported mechanically deboned meat (MDM), according to the Samahang Industriya ng Agrikultura (Sinag).

A new executive order, which would retain the most favored nation tariff rates on MDM or separated meat of chicken and meat and edible offal of turkeys  both at five percent, is ready for signing by President Duterte.

“Reverting to the five percent tariff will deprive the government of much needed revenues. At that rate, it will only be able to collect P635 million,” Sinag said.

“A 40 percent tariff, however, will increase government revenues to P5.08 billion, or an additional revenue of P4.44 billion,” it said.

This is based on last year’s total MDM imports of 254 million kilograms  pegged at an average of P50 per kilo.

The retention of the five percent tariff is upon the recommendation of the country’s economic managers in a bid to keep prices of canned meat products at bay at a time when the country has yet to recover from the pandemic.

Sinag, however, maintained that collecting 40 percent would have no significant increase in retail price of processed meat.

“There is no empirical data to show that the retail price of processed and canned meat was ever reduced as a result of lowering the tariff for the past 20 years,” Sinag said.

“On the contrary and as if on cue, smugglers and their cohorts in the bureaucracy found a novel way to smuggle pork and chicken meat by simply misdeclaring their imports as MDM,” it said.

Misdeclaration of various agricultural commodities remains a major source of technical smuggling in the Philippines.

Sinag also slammed the Department of Agriculture for agreeing on the retention of lower tariffs instead of prioritizing the local industry.

“It is appalling and disheartening to learn that no less than the Secretary of DA is in chorus to those who want to totally annihilate the local agriculture industry,” Sinag said.

It was June 2019 when the five percent rate was extended to mitigate the impacts of high prices of goods.

While processors can actually replace MDM with local poultry, Pampi earlier said it would contribute to a huge spike in the cost of products as MDMs remain to be much cheaper than the local poultry products.

Due to lack of local facilities in separating the meat from the bone, added costs would likely reach 40 percent and this would translate to higher price of finished products.

It was in 2012 when the 40 percent tariff on MDM was reduced to five percent as a concession to the quantitative restriction on rice imports.

Under EO 23 issued in 2017, the tariff rates on agricultural products including chicken MDM must be brought back to previous levels once the QR is removed.