March 12, 2007

 

Philippine shortfall for corn at 1.8 million tonnes

 

 

The local shortfall in Philippine corn production is estimated to reach up to 1.8 million tonnes despite a projected record harvest this year, which could lead to a sharp increase in yellow grain imports by the livestock, poultry and feed milling sectors, a senior feed milling industry said.

 

"The projected shortfall is based on an assumption that livestock and poultry requirements for corn will grow this year by 3.2 percent, which is a very conservative forecast," Ric Pinca, executive vice president of the Philippine Association of Feed Millers Inc (PAFMI), said in an interview Friday (Mar 9).

 

According to Pinca, local production of yellow corn this year is projected to reach 3.88 million tonnes, or around 60 percent of total corn output.

 

However, domestic requirements for feed coming from the livestock, poultry and aquaculture sectors are projected at around 5.11 million tonnes. Given post-harvest losses of around 15 percent, the available yellow corn for feeds would only reach around 3.3 million tonnes, or a shortfall of 1.8 million tonnes, he said.

 

The remaining 40 percent of the country's corn output, representing white corn, is used mainly for food purposes.

 

High grain prices prohibit imports with tariff

 

Despite the huge shortfall, local end users are prohibited from importing corn without government intervention, Pinca said.

 

He said sharp increases in the price of grain in the international market have prevented local end users from buying the grain and paying due taxes.

 

"There is no other option. We can't be competitive unless we bring in the corn at zero tariff," he said.

 

At the current duty of 35 percent, the cost of importing corn would translate to a landed price of around 15.87 peso a kilogramme, significantly higher than the prevailing price of local corn ranging from 11-12 peso/kg.

 

At zero-tariff, the landed price would be around 11.76 peso/kg, which is on par with local prices, he added.

 

While local corn users are appreciative of a government decision to allow corn imports of up to 400,000 tonnes to come in at zero duty, the volume isn't enough to meet domestic requirements, he said.

 

On Thursday, Agriculture Secretary Arthur Yap said he has given the go-ahead for local end users to bring in 200,000 tonnes of the grain at zero duty. The corn should arrive by July this year, which is an off-season for local harvests.

 

Yap said the department may allow another 200,000 tonnes of corn to come in also at zero tariff, depending on actual demand by local livestock and poultry industries.