January 12, 2009

 

Philippines rejects feed industry call to import duty-free corn

 

 

A Philippine inter-agency committee on rice and corn has rejected a request by local feed millers to import up to 300,000 metric tonnes of tariff-free corn amid record-high domestic corn prices, a senior agriculture official said Monday (January 12).

 

"The (committee) has decided that it won't allow tariff-free importation," said Agriculture Assistant Secretary Dennis Araullo. Feed millers "can import any volume provided they pay the necessary tariff."

 

The request to remove the tariff on corn imports, if granted, could "jeopardize the interests of local corn farmers," Araullo said. "If we allow it, farmers may no longer plant and we would have to depend even more on corn imports."

 

In its request last month, the Philippine Association of Feed Millers Inc. sought duty-free treatment of imports for arrival not later than March.

 

Meanwhile, offers for local corn have soared to PHP25 (US$0.52) a kilogramme amid tight supply, said a feed milling industry executive. Offers of PHP18/kg  (US$0.37) were made as recently as Friday.

 

With the normal tariff of 35 percent, the landed cost of imported corn would translate to around PHP14/kg.

 

Amid high corn prices, feed production this year could continue its downward trend from previous years, the executive said. Last year, feed output totalled 6.5 million tonnes, from 7.3 million tonnes in 2007 and 8.6 million tonnes in 2006.

 

Araullo had said that feed millers wanted to import corn not due to local market supply issues, but because they wanted to take advantage of lower international prices.

 

Last month, local feed millers bought 90,000 tonnes of corn from Brazil.

 

An initial volume of 55,000 tonnes was contracted in early December, followed by a 35,000 tonnes-deal. The imports are for arrival by the end of January. The bulk was imported by food and beverage conglomerate San Miguel Corporation, which has a feed and poultry division.

 

Corn is a major component of livestock and poultry feeds.

 

US$1 = P47.575 (as of January 12)