Also on DA’s plate: Stop palm oil smuggling


Image taken from Department of Agriculture website

MANILA, Philippines — The Department of Agriculture (DA) is investigating the alleged illegal entry of palm oil into the country, including its officials and staff who are allegedly in cahoots with smugglers of agricultural products.

“In fact, we investigated the alleged smuggling of palm oil as animal feed, but it is turned into cooking oil for human consumption as early as last year,” the DA said in a statement. read Thursday by Agriculture Undersecretary Fermin Adriano.

This was after Albay Rep. Joey Salceda raised the issue of palm oil smuggling during the House Ways and Means Committee hearing on Tuesday.

Salceda, who chairs the House panel, claimed the government had lost some 45 billion pesos in revenue because palm oil was wrongly declared as animal feed. He said a 15% tariff was supposed to be imposed on imported palm oil for human consumption.

Not covered by VAT

In the Philippines, palm oil used as animal feed can be imported duty free and is not covered by the 12% Value Added Tax (VAT).

However, the DA said it has no law enforcement powers to apprehend and prosecute the suspected smugglers under current laws and regulations, although it has already sought assistance from other government agencies to stop to this illegal activity.

It was only recently that he asked the Anti-Bureaucracy Authority (Arta) to look into the problem and Arta pointed out the “huge discrepancy” between the import data from the Bureau of Customs (BOC) and of the AD.

BOC data showed that palm oil imports reached 55.49 million kilos in 2020, compared to 40.63 million kilos recorded by the Bureau of Animal Industry (BAI) in the same year. The BAI is an agency attached to the DA which promotes the development of the livestock industry.

In 2016, the BOC recorded that the country imported 1.18 million kg of palm oil, less than the BAI’s import volume of 2.42 million kg.

Economic sabotage

Arta also noted that the Food and Drug Administration issues certification that imported palm oil is fit for consumption, one of the conditions for obtaining VAT exemption from the Bureau of Internal Revenue, but the tax agency gave the BAI this responsibility of granting exemptions in September last year.

The anti-red band body then recommended that the DA conduct an internal investigation into the discrepancy between the import data with VAT exemption and the BOC’s record on the actual arrival of the palm oil. imported.

Palm oil smuggling amounts to economic sabotage under Republic Act No. 10845 (a law declaring large-scale agricultural smuggling as economic sabotage), which was signed into law in 2016. The law applies shipments worth at least 1 million pesos for the majority. of agricultural products or a minimum of 10 million pesos for rice.

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said that if the proliferation of smuggling activities could reduce food prices, this would translate into lower government revenues which, in turn, could have been used to finance various projects or even reduce its debt.

“The smuggling of agricultural products would rob the government of tax revenue that is also needed to pay for the various COVID-19 programs over the past two years,” Ricafort said in a Viber message to the Inquirer.

He noted that the entry of smuggled agricultural products also poses a serious health threat to consumers, especially if they fail to undergo inspection or other security processes.

Import ban

The country’s palm oil industry is relatively small with around 100,000 hectares of agricultural land allocated for palm oil plantation, Adriano told the Inquirer in a Viber message.

Palm oil cultivation is mainly concentrated in Cotabato, Agusan, Sultan Kudarat and Maguindanao in Mindanao.

In 2019, as copra prices fell, hurting local coconut farmers, the DA called for a ban on the entry of imported palm oil from Malaysia and Indonesia into the country.

Imported palm oil competes directly with local coconut oil as both are used in the manufacture of cooking oil.

According to then Agriculture Secretary Emmanuel Piñol, the recommendation to ban the import of palm oil was made as early as 2018, following reports that the European Union had imposed a ban. palm oil from Malaysia and Indonesia for “environmental problems”.

In 2017, palm oil entering the Philippines from Malaysia and Indonesia reached 200 million kilograms.

Import data collected by the agency showed that palm oil exports to the Philippines from Malaysia and Indonesia increased by 100% in the three years to 2019.

The governments of the Philippines, Malaysia and Indonesia also agreed in 2019 to establish a tripartite technical working group to combat palm oil dumping in the Philippine market.

Some of the DA’s recommendations were for Malaysia and Indonesia to monitor reports of smuggling of crude and refined palm oil into the Philippines and for both countries to open their markets to Philippine coconut products “to correct the trade imbalance. ” —With a report from INQUIRER RESEARCH

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