Freeze on MAV seen pressuring prices of pork, corn upwards

By Adrian H. Halili, Reporter

THE suspension of the minimum access volume (MAV) for pork and corn will push prices higher, economists said.

“If the MAV is not followed, then the domestic prices of the imported goods will rise. Consumers will then suffer, “Monetary Board member Bruce J. Tolentino said in a Viber message.

The MAV allows trading partners guaranteed market access subject to volume quotas, The MAV system is a feature of the World Trade Organization (WTO) trading system.

The Philippines has committed to admit 54,210 metric tons (MT) of pork and 216,940 MT of corn.

“The MAV system is a key aspect of the Philippines’ commitments as a member of WTO. The MAV is the minimum volume of a commodity that shall be imported at a lower tariff,” Mr. Tolentino said.

In December, the government extended the lowered tariff regime on pork, rice, and corn until December 2024 through Executive Order (EO) No. 50.

EO 50 had kept tariff rates for corn at 5% for shipments within the quota and 15% for those exceeding, while pork was kept at 15% for in-quota and 25% for out-of-quota shipments. The tariff rate on rice currently stands at 35%, regardless of its country of origin.

Calixto V. Chikiamco, Foundation for Economic Freedom president, said the suspension of the MAV will have a knock-on impact on the price of chicken through rising feed prices.

“Suspending the MAV for pork and corn will increase the prices of pork but also chicken since corn prices constitute the biggest cost of livestock production,” Mr. Chikiamco said in a Viber message.

“Not only will this have a negative impact on individual consumers but also the downstream industries of tourism, restaurants, meat processing, and hotels, which use chicken and pork,” he added.

Mr. Chikiamco noted the suspension will add to growing food inflation.

The Philippine Statistics Authority (PSA) reported that food inflation for January was 3.3%, against 5.5% in December and 11.2% a year earlier. The PSA said lower prices of vegetables, tubers, cooking bananas, fish, and meat had contributed to the decrease.

He added that the proposal will need approval from the Tariff Commission and the WTO.

“The best solution is to reform the tariff structure entirely to a uniform and relatively low rate. And get rid of the MAV system entirely,” Mr. Tolentino said.

On the other hand, Ateneo de Manila economics professor Leonardo A. Lanzona said that the price of pork and corn may drop as the proposal may attract greater imports.

“The suspension of the MAV for pork and corn is beneficial to the consumers since this will induce greater imports. As such, prices of pork and corn will decline” he added.

“The issue is how the government expects to sustain these imports as the country’s trade deficits are expected to increase as well,” he said.

Last week, the British Chamber of Commerce of the Philippines (BCCP) raised concerns regarding a Department of Agriculture proposal to suspend the MAV for the two commodities.

The BCCP has said that the move affects supply and disrupts trade agreements.