February 10, 2009

A Philippine lawmaker warned of further increases in chicken and pork prices if the government fails to address the corn shortage.

 

AGAP Representative Nicanor Briones said the country is facing a corn shortage, which was pegged at 600,000 tonnes in the coming months.

 

He said corn shortfalls would surely impact prices of chicken, pork and eggs since corn accounts 50 percent of the feeds animal raisers use.

 

From P12 (US$0.25) to P13 (US$0.27) a kilo, Briones said corn prices have jumped from P25 (US$0.53) to P28 (US$0.59) a kilo as of January this year.

 

Briones said corn prices temporarily slid to P18 per kilo this February due to the arrival of 100,000 tonnes of young corn from Brazil and 120,000 tonnes of feed wheat from Ukraine last month.

 

There will be additional imports of 62,500 tonnes of corn this February and another 187,500 tonnes from March to May to meet the demand until the second quarter of the year, he said.

 

Briones said the original plan was to course the private financed importation through the National Food Authority (NFA) to speed the process and to minimize, if not lift, the 35 percent tariff duty.

 

However, the NFA imposed a P4 per kilo fixed tariff has not been beneficial to farmers especially when the price of corn in the world market gets really low.

 

The Department of Agriculture (DA) further suggested that the NFA should have a buffer stock of 75,000 to 100,000 tonnes of corn to shield the farmers from such shortages and possible subsequent unscrupulous hoarding practices.

 

But the Department of Finance (DoF) wants the funds for the buffer stock to come from the P4 a kilo tariff imposed by the NFA.

 

Briones urged the DA to bring down the fixed tariff to P2 per kilo to help the poor farmers, stating private investors will be encouraged to join the importation.

           

He added that NFA's buffer stock should also be implemented using DA's budget allocation to minimize the impact on the farmers, especially in the critical months of May to July.

 

The rising cost of LPG (liquefied petroleum gas) and meat price hikes will certainly cause a domino effect in the prices of basic necessities of the already impoverished Filipino masses, he said.

 

For his part, Agriculture Secretary Arthur Yap said the DA is now studying ways on how to establish a buffer stock for corn, which will primarily benefit small players that do not have the means to import the commodity during temporary supply tightness and address seasonal volatilities in the production and demand for corn.

 

He explained that corn imports have already been liberalized, which means that the government's involvement in importing the grain should only be limited to meeting the Philippines' World Trade Organization (WTO) commitment on the minimum access volume (MAV) on corn.

 

With a liberalized product like corn, the private sector takes the lead in addressing any domestic supply gap, he noted.

 

Yap said the government comes in only if "the private sector asks for our help, as what has happened now with the temporary tightening of supply, which is expected to last for two or three weeks."  He noted that "the courses of action we are now undertaking are being done in close consultation with leaders of the corn industry and will do in a manner that does not unnecessarily disadvantage corn farmers."

 

Unlike rice where the DA can project demand based on human population, the DA chief said that in corn, estimation of demand can be better done by the private sector as they are in a better position to know what their chicken and populations are.

 

Yap said the government could not allow appeals by some groups to allow corn imports at zero tariff as this will hurt over a million corn farmers who were also subjected to high fertiliser prices and should get good prices for their corn if they are to make money and continue to be motivated to plant.

 

At zero tariff, imported corn will have a landed cost of about P11 a kilo as against the prevailing government support price of P11.50.

 

Meanwhile, DA Assistant Secretary Dennis Araullo, national coordinator of the Ginintuang Masaganang Ani (GMA) Corn Program, said that although on a normal year some corn harvest commence in January, plantings this year's harvests will come only in February to April as farmers plantings were delayed by about one to two months as a result of changing weather patterns.

 

He however said the DA expects harvests in March and April, which is estimated to reach two million tonnes, would stabilize corn prices in the country.

                          

US$1 = PHP47.0900 (Feb 10)