The Philippines has decided to restore a 7 percent tariff on feed wheat imports and extend a zero duty on imports of food wheat for another six months, Trade Secretary Peter Favila said on Tuesday. Import tariffs on both food and feed wheat were lowered to zero for six months from January to keep bread prices low and aid the local feed sector, which was hit by high corn prices earlier this year.
Feed wheat and corn are used alternatively as animal feed. Imports of food wheat were charged a 3 percent duty previously. Favila did not give details, but other officials said that maintaining of the zero duty on flour wheat imports should reduce bread prices. "That would be the most immediate impact of this extension," Rolando Tungpalan, deputy director general at the National Economic and Development Authority, told reporters.
A government panel had recommended bringing back the 7 percent duty on feed wheat imports to encourage local corn farmers to boost output in the second half of 2009. Philippine corn production is forecast to drop 2.5 percent to 3.21 million tonnes in the first half of 2009, according to government estimates, on unfavourable weather and decreased hectarage devoted to the crop.
But the government expects corn output to rise 2.3 percent to 2.31 million tonnes in the third quarter. The local feed industry has imported more than 1.1 million tonnes of feed wheat this year, scheduled for delivery until August, thanks partly to the zero tariff. That compares to just 112,000 tonnes in all of 2008 when surging prices turned off buyers.
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