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Salceda files bills to boost livestock and poultry sectors, and to set up competitiveness funds for domestic crops; House tax chair says tariff revenues should support domestic sector, contribute to food sufficiency

August 1st, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) has filed two bills that will support the livestock and crops sector, directing tariff revenues towards domestic sector support programs. The House tax panel chair filed the proposals in response to concerns about rising food and feed prices, and growing protectionism among the country’s import sources.

“Food protectionism among our import sources is on the rise. So, we’re not going to be always sure that we can import food. President Marcos is right about having to make sure we have a vibrant domestic agriculture sector even when we import,” Salceda said.

“I don’t think it’s wise to halt imports for needed goods by brute force. In fact, in some sectors, the bitter pill to swallow is we may have to lower some barriers, such as corn, where high domestic prices are already taking a bite out of the quality of poultry and livestock. But we can direct revenues from imports towards domestic sector support,” Salceda added.

In response, Salceda has filed the Livestock, Poultry, and Dairy Development Act, and the Universal Agricultural Tariff Allocation Towards Domestic Competitiveness Act, which will allocate tariff revenues from agricultural products towards development programs for domestic agriculture.

“For all the negative sentiment that the Rice Tariffication Law gets, one accomplishment it can boast of is raising yields. According to the Philippine Rice Research Institute, beneficiaries of RCEF programs need 33% less seedlings, and have 15% higher yields. In 2021, we produced a record-high palay harvest. So, the domestic support component is working, regardless of what one might think about the effects of the liberalization component,” Salceda said.

Livestock development act filed

Following the RCEF model, Salceda has filed the Livestock, Poultry, and Dairy (LPD) Development Act which Salceda says “will address the high production cost, particularly in corn, the unorganized, backward, and small scale production in the livestock and poultry sectors, and fix the fragmentation in government structure for livestock and poultry.”

The features of the LPD Development Act are:

  1. Rationalization of LPD support agencies into two agencies: a) Philippine Livestock and Poultry Authority and b) Bureau of Animal Safety and Regulations
  2. Replacement of minimum access volume (MAV) system on livestock, poultry, and corn with a uniform 5 percent tariff rate, similar to rice tariffication;
  3. Allocation of tariff revenues for livestock and poultry earmarked for LP productivity improvement (Livestock and Poultry Competitiveness and Enhancement Fund, amounting to PHP 3 billion);
  4. Allocation of tariff revenues for corn earmarked for corn productivity improvement (Corn Competitiveness Enhancement Fund of PHP 2 billion); and
  5. Exemption from taxes and duties of LPD farm inputs, veterinary and other supplies, equipment, machineries, breeders, etc

“The livestock and poultry sectors are particularly crucial. Protein deficiency almost certainly leads to learning deficiencies. In fact, students from countries with higher pork and chicken prices tend to have lower test scores such as in the Program for International Student Assessment,” Salceda said.

“Among children under five years of age, 28.8% or 3.2 million children are stunted, and protein and calcium are critical in that outcome.”

“Corn is sixty percent of LPD production costs, so we need to address corn as well,” Salceda added.

ACEF amendments filed

Salceda also filed amendments to the Agricultural Competitiveness Enhancement Fund Law (Republic Act No. 8178, as amended).

“The ACEF is expiring this year. When it expires, whatever support programs are being funded by that law will no longer be available to the specific agri sectors. So, that’s the main point of urgency in that proposal.”

“But, in a more long-term and structural view, we have always seen agricultural development as a matter of protecting the domestic sector from world trade rather than nurturing it enough to be competitive with the rest of the world.”

“I think it’s a defeatist way to do agriculture. We can compete. But we need to identify the gaps that we can bridge with government support. That is the point of my proposal.”

Salceda’s proposal will change the ACEF from a lump-sum primarily used towards credit programs from farmers, to separate funds per crop sector, with programs primarily focused on machinery, seeds and breeding materials, and training, similar to the RCEF.

“The problem with credit is that it presents barriers of access to farmers. It’s not easy to borrow from banks. And it’s no guarantee of yield or quality improvements,” Salceda said.

“Likewise, ensuring that the theoretical damage due to world trade per crop is compensated correspondingly with domestic support from tariff revenues is consistent with the recommendation of agricultural experts that not enough support programs have been made towards “nurturing” the domestic sectors, and far too many resources have instead been spent on “protectionist” programs and policies. The expiry of the ACEF this year is an opportunity to reorganize its use and allocation towards such “nurturing” programs,” Salceda wrote in his explanatory note.

“The harm of world trade to the domestic sector should be spent on programs that make it more competitive. That is the only sustainable way to stop the harm, without hurting consumers or industries.”

“Agriculture is much more than just rice. And these two bills, I believe, will help us put that fact in proper perspective. I believe that the success of President Marcos’s tenure in the DA depends almost entirely on that holistic perspective,” Salceda added.

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