January 13, 2010

Philippines falls short of corn purchase target in 2009

New official data showed that the Philippine government fell 85.7% short of its 85,961 tonnes corn purchase target last year.

The huge shortfall was due to late purchases that started only in the second half of the year in a bid to shore up farmers' income amid massive imports of feed wheat, higher prices offered by private traders, and the start of operations of an online trading system that requires quality produce.

The government started buying corn in June to support farmers as prices dropped to as low as PHP4.50-PHP8 (US$0.1-US$0.17) per kg that month from about PHP20 (US$0.44) per kg in January due to large imports of feed wheat, according to Rex Estoperez, director for Public Affairs of the National Food Authority (NFA). The June prices were lower than the production cost of PHP9-PHP10 (US$0.2-US$0.22) per kg.

The 7% duty on feed wheat, a substitute for corn in feed milling, was removed from January to June 21 last year.

Estoperez said the state grain agency had also given way to corn users such as hog and poultry farmers in order to support their production amid lower demand due to weaker consumer buying power caused by the economic slump.

Early last year, NFA targeted to buy a total of 600,000 tonnes of corn from local farmers but farmers turned to private traders, who offered higher prices.

However, Roger Navarro, president of the Philippine Maize Federation, said they could not meet NFA's quality requirement so they were forced to sell to end users like livestock farmers and feed millers.

Philmaize data showed that private traders paid an average of PHP10.50-PHP11.50 (US$0.23-US$0.25) per kg for corn last year - much higher than the government.

Navarro said the government needs to set up infrastructures for postharvest facilities. The lack of postharvest facilities account for up to 15% of crop loses, government data show.

The Bureau of Agricultural Statistics said in November last year that corn production, which accounts for 6% of farm output, was expected to rise 1.63% to 7.04 million tonnes in 2009 from 6.92 million tonnes in 2008, given expansion in harvest area and higher yield.