July 15, 2009

Philippine corn production might record no growth in the 2009-10 market year which starts this month, given high cost of inputs and more competition from Southeast Asian corn exporters, according to USDA's Foreign Agricultural Service (FAS).

According to the report, production of corn, one of the main crops of the country, dipped by 6 percent to 6,846 million tonnes in market year 2008-09 due to heavy rains and low buying prices.

To encourage planting, the government restored 7-percent duties on feed wheat, an alternative to yellow corn in making animal feeds, and raised the buying price for yellow corn to PHP13 per kilogramme from PHP11.50 per kilogramme last May.

The report said that this is not expected to raise production, however, due to increasing production costs as well as persistent and heavy rainfall during the early part of market year 2009-10.

But Dennis B. Araullo, Agriculture assistant secretary and director of the National Corn Program, contested the US projection saying corn production might reach 7.2 million tonnes.

Araullo said higher buying price should result in more areas to be planted and more financers will get involved in the production.

At the same time, however, corn imports for market year 2009-10 are expected to rise to 400,000 tonnes from 310,000 tonnes during the same period last year as the tariff rate is scheduled to be cut in January 2010.

Under the country's commitment to the ASEAN Free Trade Area-Common Effective Preferential Tariff, import duties of corn will be cut to 5 percent next year from 30 percent this year.

Araullo said that more imports is possible as there is high demand in the livestock and poultry sector.

The report said consumption of corn for feeds will rise to 5.4 million tonnes from 5.2 million tonnes.

Official data showed that corn output, which accounted for 8.41 percent of total farm production, dropped by 3.39 percent in the first quarter to 1.925 million tonnes year-on-year due to early onset of rains.