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Philippines: Local producers urge return of 40% tariff on MDM

MANILA, Philippines — As meat processors push to retain the low tariff rate on imported mechanically deboned meat (MDM) of chicken and turkey, local producers said this should only be temporary and should revert back to 40 percent.

Last year, Executive Order (EO) 123 was issued by then president Rodrigo Duterte, which extended the reduced tariff rates on MDM of chicken and turkey until Dec. 31, 2022 as provided under the Customs Modernization and Tariff Act.

If not for the said EO, the tariff rates on MDM should have reverted back to 40 percent on Jan. 1, 2021 following the lapse of EO 82 on Dec. 31, 2020.

But in a notice issued last week, the Tariff Commission said it is conducting an investigation on the petition of Philippine Association of Meat Processors Inc. (PAMPI) to continue the five percent tariff on MDM of chicken and turkey beyond this year.

The Meat Importers and Traders Association (MITA) said it supports PAMPI’s petition to extend the five percent tariff on MDM.

“MDM is an important raw material for the meat processing industry that provides affordable meat products to our people,” MITA president Jess Cham said in a text message to The STAR.

MITA earlier said it would have been better if EO 123 would be effective for five years since the country would not be able to produce MDM competitively in that horizon.

However, United Broilers and Raisers Association (UBRA) president Elias Jose Inciong said the extension of low tariff rates should be limited to six months to one year, depending on the current shipping arrivals.

“Ultimately, when things have normalized the tariff for MDM should be back to 40 percent. The only reason it was brought down to five percent was that it was used as compensation in the World Trade Organization (WTO) in order for the Philippines to maintain the quantitative restriction (QR) for rice,” he said.

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

However, the low tariff has been extended to mitigate the impacts of high prices of goods.

Samahang Industriya ng Agrikultura (SINAG) said the MFN rates on MDM should revert back to 40 percent as the country no longer has need to keep low tariff rates sans bilateral agreements with other countries.

“The MFN rates on MDM was extended beyond agreement with the WTO. The QR for rice was our bargain with other countries. But once the QR for rice was implemented, the tariff rate should have returned to 40 percent,” SINAG president Rosendo So said in a text message to The STAR.

He also said collecting the higher rate would have no significant increase in retail price of processed meat.

“MDM only has a 20-percent inclusion rate in processed meat such as hotdogs. So there’s not much price impact. Besides, they can’t include large amount of MDM in processed meat,” So said.

Processors argued that the use of MDM has contributed to the affordability of the protein source, especially in challenging times of high inflationary effects caused by a number of uncontrollable factors.

MDM has been used since the late 1960s in certain meat and meat products, such as hotdogs, luncheon meats and sausages, and does not compete against table grade meat.

MDM is a paste-like meat product produced by forcing pureed or ground beef, pork, turkey or chicken, under high pressure through a sieve or similar device to separate the bone from the edible meat tissue.

If the low MFN rates will be extended anew, UBRA’s Inciong said government should ensure that it is temporary and limited to accredited processors whose production capacities are validated and registered.

“Aside from technical smuggling issues, which should be tackled separately, there are food safety and labeling concerns that should also be addressed,” he said.

“Regarding food safety and labeling, the late former Bureau of Animal Industry (BAI) director Jose Molina raised the concern of the inclusion rate of MDM in processed meat products. There is an industry standard in the US of 20-percent inclusion except for certain products. Consumers should be informed of the inclusion rate in the labels,” the UBRA official said.

He also pushed for an inspection area for the quarantine of imported MDM.

“The perennial problem is misdeclaration of chicken leg quarters (CLQs) and chicken cuts (CCs) as MDM. The others have a tariff of 40 percent while MDM is five percent,” Inciong said.

The UBRA official also said the tariff collections for MDM should also be earmarked for the development of the broiler industry.

“Earmarking has long been a proposal,” Inciong said, noting there are bills regarding the Livestock Development Act in Congress.

Source: https://www.philstar.com/business/2022/09/12/2208947/local-producers-urge-return-40-tariff-mdm