February 14, 2008

Philippine feed millers seek zero tariff on soy imports

The Philippine Association of Feed Millers, Inc. (PAFMI) is urging the Department of Agriculture (DA) for a one-year zero tariff on imported soy, soy meal, dried distillers grains soluble (DDGS) and tapioca residue pellet to ease soaring cost of  imported raw materials.

In a letter to Agriculture Secretary Arthur C. Yap, PAFMI president Norman C. Ramos wrote that "with the current global trend of increasing raw material prices and its negative impact to our production cost, we believe that the reduction in tariff rate will provide relief to feed millers, livestock and poultry producers, other industry stakeholders, and ultimately the consumers."

Soy, soymeal, DDGS and tapioca residue pellets are subject to a three-percent tariff but is exempted from the value added tax.

PAFMI has already informed Yap of the industry's troubles as production costs have already jacked up by 30 percent.

Ramos said the industry might be able to post some growth if the livestock sector, as  projected by the Department of Agriculture, would grow more than the 2.38 percent  registered in 2007.

Ramos noted that the price of soymeal, which is one of the primary source of protein for livestock feed, is at a 37-year high. Soymeal, which previously costs P13 per kilo now costs P23 to P24 per kilo, according to Ramos.

He adds that copra meal, which is also a source of protein and fiber now costs P11 per kilo compared to just P5 to P6 kilo as of end-2006.

Prices of local corn, which along with soymeal is the primary input of livestock feeds, have increased from P10.50 per kilo to P13.30 to P13.50 per kilo.

Corn comprises 35 percent of total cost of feeds.

The prices of other raw materials such as rice bran (a lower source of fiber and a lower percentage protein but high in starch), coconut oil (source of fat), pollard (a better source of fiber than rice bran but inferior to copra meal) and even wheat (as a substitute to corn),  have all similarly gone up, Ramos continued.

The price of vitamins sourced from China, Ramos said, has also increased by 100 percent.

The higher cost of raw material inputs, Ramos warned, would result in a "hard squeeze for the industry."

Ramos also mentioned that some small feed millers are struggling to survive and the sector is looking for some assistance in the form of ensuring that its projected 10 percent increase in corn production this year materializes.