Fortunately excessive costs! | The Manila Instances

LAST week, President Ferdinand “Bongbong” Marcos Jr. gave the go-ahead to import an extra 64,050 tonnes (MT) of sugar beneath our Minimal Entry Quantity (MAV) within the World Commerce Group quota. This was along with the 150,000 MT authorised final September.

Recall that former Undersecretary Leocadio Sebastian of the Division of Agriculture (DA) had beforehand advisable the importation of 300,000 tonnes, authorised by the Sugar Regulatory Company (SRA) board, to alleviate sugar provide shortages and tame rising sugar costs. Paradoxically, relatively than supporting this transfer to ease the ache of thousands and thousands of shoppers and meals processors, Malacañang judged that Sebastian had acted exterior of his authority and relieved him of his official duties.

Reliable curiosity teams and senior prosecutors praised the president’s transfer to import 150,000 tons of sugar, claiming it could decrease and stabilize sugar costs. Occasions have proved them unsuitable. Refined sugar costs surpassed P100 per kilo and the arrival of 150,000 tonnes of imported sugar did little to decrease sugar costs.

In a December 20, 2022 memorandum from Senior Undersecretary for Agriculture Domingo Panganiban, he careworn that the President was so involved about excessive sugar inflation of 38 p.c that he ordered the MAV Council convened to overview imports of the utmost speed up quantity of 64,050 MT beneath the MAV quota. The meant goal of the measure is clearly to carry down skyrocketing costs for uncooked and refined sugar.

My rivalry is that this won’t be the case as a result of the advisable motion was not primarily based on a disciplined method to downside fixing. No “full workers work” (a phrase coined by the late President Fidel Ramos) was required to make sure the choice was the best choice.

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provide and demand scenario

First, no sugar provide and demand evaluation has been carried out to find out whether or not the extra MAV quota imports will decrease sugar costs and dampen sugar inflation. It’s now evident that the beforehand authorised 150,000 tonnes of sugar imports weren’t sufficient.

A obtrusive demonstration of its inadequacy is that regardless of the arrival of most imports, there isn’t any reprieve for prime sugar costs. The market is giving us a tough indication of the persistence of a provide tightening as sugar costs stay at sky ranges. No quantity of propaganda can deny the straightforward workings of the legislation of provide and demand.

However will the extra 64,050 tons of sugar imports be the silver bullet? Nobody within the DA may give that assurance as a result of they can’t assess the magnitude of the availability scarcity. Our calculation reveals that the availability deficit has worsened as a result of advisable import ranges had been efficiently blocked by the sugar barons within the first half of this 12 months and our sugar shares had been depleted and never changed by the latest harvest. In accordance with our calculations, the scarcity quantities to round 550,000 tons of uncooked, refined and industrial sugar.

How then can an import quantity of 214,000 MT fill the massive deficit?

Why MAV?

It is usually intriguing why the MAV was used as a instrument to import further sugar. A 50 p.c tariff might be imposed on the MAV quota (that means the 64,050 MT might be taxed at 50 p.c). Outdoors the MAV-In quota, further imports (MAV-Out quota) are topic to 65 p.c customs responsibility.

As a part of the ASEAN Free Commerce Settlement on items, sugar is simply topic to a 5 p.c responsibility. The wholesale worth of sugar in Thailand is round 20 pesos per kilo and the retail worth is mounted at 35 pesos per kilo. In that case, why select to import sugar beneath the upper 50 p.c tariff when the aim is to decrease sugar costs and tame inflation?

As well as, as a result of extraordinarily bureaucratic nature of the MAV Council’s modus operandi, it takes a really very long time for MAV imports to reach. A sequence of consultations have to be held and the signatures of a number of cupboard members who fashioned the council have to be obtained.

When importing pork beneath the MAV final 12 months, the import resolution was made virtually six months earlier than the precise import. It ought to be famous that as a result of nature of the logistics concerned in importing the products, ordered imports will take a minimum of one other 60 days or two months to reach. Assuming MAV recommendation is environment friendly this time, which means MAV sugar imports will not arrive for a minimum of 4 or six months, or someday in April or June.

A greater various is for the SRA Board, headed by the President, to agree and authorize the extra sugar imports. This can velocity up the arrival of imports and guarantee entry to reduced-duty sugar from Thailand. The beforehand authorised 150,000 tonnes of imports arrived simply two months after the choice.

Why go down the MAV route as an alternative of ordering the SRA board to solely authorize further sugar imports?

Rice responsibility discount

A number of so-called agriculture analysts within the media clarify the extension of Government Order (EO) 171 for one more 12 months till the tip of 2023. EO 171 lowered tariffs on imported yellow corn, pork and rice as a part of the federal government’s efforts to carry down our excessive meals inflation fee.

Once we pushed for EO 171 approval in 2001, this was accompanied by an intensive provide and demand evaluation of the nation’s corn, pork and rice scenario. Our native yellow corn manufacturing can solely meet about 57 to 60 p.c of native demand. We misplaced roughly 3 million pigs out of a complete pig inhabitants, or greater than 12 million head, through the peak of the African swine fever (ASF) outbreak. Our forecast is that it’ll take greater than 5 years to repopulate our pigs to pre-ASF ranges.

In rice, we had the best palay harvest (unmilled rice) final 12 months at 19.96 million tonnes (MMT). At this stage, we’re 92 p.c impartial of rice. We imported virtually 3 MMT rice final 12 months, round 90 p.c of which got here from Vietnam. This 12 months we anticipated manufacturing to fall as a consequence of excessive fertilizer and gasoline prices and that’s the reason our rice imports are virtually 4 MMT this 12 months.

A 35 p.c tariff is imposed on rice imports from ASEAN or the Affiliation of Southeast Asian Nations. Outdoors ASEAN it’s 50 p.c and extra. With Thailand and Vietnam (our major rice sources) colluding to extend rice costs, it’s crucial that we diversify our import sources.

India is a significant rice producer and exporter as a result of it gives decrease rice costs. However we cost a 50 p.c tariff as a result of it is exterior of ASEAN. It’s due to this fact good enterprise and smart to decrease tariffs on Indian rice imports to the identical stage as ASEAN with a view to diversify our rice import sources. This serves the nation’s meals safety pursuits.

So I do not fairly perceive why political quibblers within the media are so offensive to decreasing rice tariffs on Indian rice to make it on par with ASEAN.

Until they need “merry” excessive prizes this New Yr!

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