The impending removal of import quotas for rice traded under the World Trade Organization will increase the production cost of processed-meat manufacturers, triggering price spikes down to the level of retailers, the Philippine Association of Meat Processors Inc. said.
Pampi executive director Francisco Buencamino said the lifting of the quantitative restriction on rice on July 1 would make mechanically deboned meat—the raw material used in making processed-meat products—more expensive. Buencamino said this could cause the price of some processed- meat products to go up by at least 12 percent in the second half of the year.
“We are bothered by the raw- material concern, because in July, when the rice QR is lifted, the preferential tariff rate of MDM will go up,” he said on the sidelines of a signing ceremony between some Pampi members and Aboitiz Power Corp. held recently in Bonifacio Global City.
“If government reverts MDM tariff back to 40 percent, that will move prices up by 12 percent to 17 percent. We are talking about the price of processed-meat products from the supplier to the outlets. Therefore, the suggested retail price of processed-meat products could even be higher,” Buencamino added.
The Philippines’s rice quota waiver to the World Trade Organization is set to expire on June 30. As part of its concession for the second extension of the rice quota in 2012, the Philippines lowered its tariff on MDM to 5 percent, from 40 percent, for the duration of the extension.
Under Executive Order 190, signed by former President Benigno Aquino III, the Philippines will restore its tariff on MDM to the original rate of 40 percent starting July 1 this year.
“The volume of MDM that we are using, the volume we consume, is huge. So the rate from 5 percent will become 40 percent, which is stated in the EO. So we have a problem with that—on how to handle that,” Buencamino said.
