"The poultry industry suggests setting up an independent regulating body or council that would put a cap on chicken importation."
It was not just rice that apparently became a target of government intervention at the height of the inflation crisis last year. The government lifted the special safeguard duty (SSG) on poultry products in August to supposedly help lower retail prices and ease inflation, which hit near-decade highs in 2018.
Months into its implementation, however, the zero-tariff measure has effectively deregulated the poultry industry, and local players are now crying foul over the flooding of imports into the market without the hoped-for effect on retail prices.
The impact includes a 106-percent surge in the importation of grandparent stocks, which more than doubled between 2014 and 2018 while inbound shipment of parent stocks jumped 68 percent and frozen chicken imports rose by 74 percent.
Year-on-year data from the Department of Trade and Industry showed chicken leg quarter imports reaching some 61.43 million kilos as of November 2018, 37 percent higher than the 44.834 million kilos for the entirety of 2017. Separate data from the Bureau of Animal Industry indicates an 18.1 percent jump in chicken meat imports from 244,104 MT in 2017 to 288,202 MT last year.
But while supply did improve, wet market retail prices still ranged between P125 and P160 per kilogram, which only means that the measure failed to bring relief to retail consumers, its original intent.
What the lifting of the SSG did effect was farm gate prices, which had gone down to P38 per kilo. This is way below the cost-to-produce at P80 to P85 per kilo live weight, which had obviously put a serious strain on local farmers, many of whom had begun to quit raising chicken because it simply became financially untenable.
Industry group United Broilers Raisers Association (UBRA) said the lifting also affected government revenues, which instead translated into windfall profits for importers.
“Clearly, imports have no impact on consumer retail prices, notwithstanding the academic notions by economists about the law of supply and demand. Inelasticities at the segments beyond the farm gate have undermine basic economic theories,” said UBRA President Elias Jose Inciong.
To be fair, better production conditions also contributed to the surge in local supply, but this seems to have been completely diminished, if not nullified, by the lifting of the SSG, which caused imported chicken to flood the local market.
Perhaps sensing the damage, the government through the DTI had reportedly started to reconsider re-imposing the special safeguard duty so local poultry raisers may breathe easier again. For his part, Department of Agriculture Secretary Manny Piñol hascalled on for the reinstatement of the SSG, citing precisely that its lifting did nothing to the retail prices of chicken meat.
“We are double checking now if there is a need to bring back the safeguard measure on chicken imports,” said DTI Secretary Ramon M. Lopez, who had been in talks with Piñol.
It is not immediately clear why the measure was green-lit in the first place without, it would seem, consultations with the broiler industry. After all, some 8.3 million Filipinos are employed in the sector all over the country, and something that can have such a massive impact on one of the country’s most productive and strategic industries should have been more thoroughly studied.
In the context of its original implementation last year, there appears to be a knee-jerk, almost populist quality to the lifting of the special safeguard duty on poultry products, which must be replaced by astute analysis of the issue.
To help correct the mess, the poultry industry suggests setting up an independent regulating body or council that would put a cap on chicken importation precisely to prevent oversupply and avert overwhelming domestic broiler production, which this year is forecast to outpace consumption, 1.4 billion vs 1 billion.
To further protect the local poultry industry, a 40-percent tariff should be imposed on all livestock and poultry meat and by-products. Government subsidy and incentive on inputs, especially corn and soya, which comprise 70 percent of the feeds for local feed millers and farmers, will also be helpful.
Finally, industry players say there is a need to revisit and review the principle of minimum access volume as well as its recipients. This commitment of a certain quantity to be imported with a lower tariff is something that traders take advantage of, they feel, to the loss of local producers and integrators.
Sadly, even an issue as big as this can be buried in the feverish election noise. But for the sake of 8.3 million workers who depend on the industry, the government needs to rethink its aggressive pro-meat importer policy and the kind of long-term damage it will do to an otherwise vibrant sector.
Our lawmakers, especially those up for reelection, should do well to remember that inflation and employment are consistently among the top concerns for Filipinos, who will troop to the polls in a few months. In this case, the more than 8 million that are affected by the chicken import mess represents 8 million disgruntled votes, which can easily make or break political dreams.