China’s hog industry was hard-hit by African swine fever (ASF), with the staggering loss placed at around $400 billion in 2019 alone. With more than a billion people, it is also one of the world’s biggest pork consumers. Do you know what China’s agriculture authorities did in the face of these two dueling realities?
First, it did not impose a free-for-all import policy and declare an open season regime on pork importation – with rock-bottom tariffs as a complement to fill in the supply gaps. What it also did was to nurture back its hog industry to growth, without the knee-jerk, artificial lowering of pork prices through open imports and low tariffs.
Simply put, China protected its hog farmers. Because of that, the farmers enjoyed an almost two-year run of high farm gate prices that enabled them to recoup everything they lost during the 2019 ASF pandemic. Prices are cooling off right now, but those two years of good farm gate prices – consumers were sacrificed to save the hog farmers – proved to be the right decision.
In major economies, that is what they do all the time – protect the farmers, the small farmers in particular. The degree of farmers protection varies – many throw big subsidies at their farms to keep them afloat. France has elevated its small farms to a high pedestal. All presidential campaigns in France – Gaullist, centrist, left-wing, or even the right-wing crazies – start in the rural areas, and all the candidates vow to protect and defend the small farmers.
In contrast, what did the Duterte administration do to fill in the pork supply gaps? As supply fell short and farm gate prices increased, it unilaterally imposed a pork tariff cut supposedly to protect the interest of consumers. The grim results were expected. Pork importers and the middlemen vacuumed up gains from the pork tariff cuts. Consumers benefited very little. The hog raisers, voiceless and faceless – battered, suffered from the tariff cuts.
The cuts on pork tariff, just in case you have short memories, was the second major bludgeoning of farmers and raisers in about two years. In 2019, Congress did pass the Rice Tariffication Law (RTL), which removed the historic protection of our staple food via quantitative restrictions and put in place tariff levels that in a brief span of less than a year, resulted in the dumping of 3.1 million metric tons of rice into the country. In 2019, small rice farmers turned into dead men walking.
The RTL did not only open the floodgates to rice dumps. It was made flexible enough to guarantee more rice dumps via executive action, which Mr. Duterte did. In an executive directive on the pork tariff cuts, he also ordered the lowering of tariffs from out-quota sources, India and Pakistan primarily, to further intensify more rice imports from those sources at lower tariffs.
In the calculation of the Federation of Free Farmers (FFF), benefits that accrued to rice consumers under the expansion of tariff cuts merely benefited the usual suspects – rice importers.
The tariff-cutting virus, lethal to small farmers, is fast spreading like the Delta variant.
According to the FFF, William Dar, the DA secretary who plastered the main offices of the agency along Elliptical Road in Quezon City with ” Buy Local, Go Local” tarpaulins, only to preside over world-setting records on rice importation (top importer in 2019, top importer along with China last year), is planning to cut tariffs–this time on yellow corn.
The federation said Dar has issued Special Order 540 that mandated the creation of a so-called TWG, or technical working group, to study ways to decrease corn tariffs. The rationale–the DA wants cheaper animal feeds to bring down the cost of chicken. But we all know where this would lead–screwing of the yellow corn farmers.
Yellow corn production enclaves have developed from Isabela province up north to Magalang town in Pampanga and the small farmers will be sideswiped by the plan of the mendacious William Dar.
Was the special order written by the giant feed manufacturers and fed to the DA? The yellow corn importers and middlemen? This we do not know. But the FFF knows one thing, the feed manufacturers and importers have been a pampered lot.
For example, feed wheat, a corn substitute, is being imported–without limits as to the volume and, take note of this, VAT-free – at a mere 7 percent tariff, according to the FFF. The dramatic contrast is that the support for yellow corn farmers is almost non-existent. The DA has been big on support to farmers in its propaganda work, but 99 percent of these are phantom programs.
One more thing, yellow corn importers have been importing yellow corn from outside of the Asean, then transhipped through Asean ports so the levy would be 5 percent. This is technical smuggling but no one is keenly monitoring this hocus-pocus. The cyclical depression of farm gate prices of yellow corn is rooted in the unlimited entry of feed wheat and technical smuggling of yellow corn, the FFF said.
Will the tariff cuts on yellow corn imports benefit chicken consumers, which the mendacious Mr. Dar cited as the main reason behind the effort to cut the corn tariffs? Hardly, according to the FFF. By way of background, the farmers federation has a better economic policy shop than the DA and can be relied on to do the real number-crunching. According to the FFF, the benefit per chicken consumer would be 17 centavos.
Meanwhile, over a million small yellow corn farmers would suffer. Even the broiler producers, represented by Elias Jose Inciong of the United Broilers Raisers Association or UBRA, refused to be swayed by Dar’s tariff plan. “This is just another public relations stunt of the DA designed to divide and rule the agriculture sector,” Inciong said, probably fed up with Dar’s propaganda-oriented stewardship of the DA.
But, as we all know, that is government. Always ready to bludgeon and screw the small farmers. And pamper the traders, millers, and importers. Always ready to spread the lethal anti-farm virus that savages and ravages the most vulnerable in the farming sector – the small farmers and the small animal raisers.
Source: Manila Times