March 12, 2010

Philippines to buy 200,000 tonnes of corn from local farmers 
 

 
The Philippine government may purchase 200,000 tonnes of clean and dried yellow corn from farmers at a support price of PHP13 (US$0.28) per kilo.

Gregorio Tan Jr., chairman of the Agricultural Commodity Exchange System of the Department of Agriculture (DA), said the government is also looking at the possibility of buying lower-grade yellow corn.

He said the National Food Authority (NFA)--the government's grain and food arm--will still procure [yellow] corn from farmers this year at PHP12.30 (US$0.26) plus the incentive of P0.70 (US$0.01) per kilo.

However, Tan admitted that the food agency may encounter problems in procuring the volume it has targeted due to the relatively stable price of yellow corn in the domestic market. He said private traders are buying yellow corn at PHP14 (US$0.30) per kilogramme.

While the domestic price of yellow corn is stable due to perceptions of lower supply caused by the El Niño weather phenomenon, he said he does not expect prices to go out of control this year as traders can import feed wheat and import corn from the ASEAN at five percent tariff which will provide ceiling for the domestic prices of yellow corn.

Last year the DA set a procurement target of 600,000 tonnes of yellow corn following the clamour of farmers for government support. The DA had to intervene when the domestic price of yellow corn went down due to the entry of duty-free feed wheat.

Corn farmers from the Philippine Maize Federation Inc. (Philmaize) blamed the entry of more than one million tonnes of duty-free wheat for the yellow corn's low prices. Philmaize condemned Executive Order 765, which scrapped the 7-percent duty on feed wheat.

The DA had planned on buying the first tranche of 300,000 tonnes of yellow corn at PHP13 (US$0.28) per kilo. The second tranche of 300,000 tonnes was priced at PHP10 (US$0.21) per kilo.

Corn procured by the NFA was offered to traders through the Agricultural Commodities Exchange System, a scheme which the DA had envisioned as a launch pad for a commodities exchange.