September 6, 2010

 

Philippines to benefit from stable, high corn price

To ensure food security and give incentives for farmers to massively plant corn, the Philippines should take advantage of the predicted stabilisation of corn prices at higher levels in the world market.

 

The Philippine Maize Federation Inc. (PMFI) pressed the Department of Agriculture (DA) to issue policies beneficial to farmers even as the external environment is proving to be auspicious for local farmers.

 

From an import level of only 1.7 million tonnes this year and 5.8 million tonnes next year, the possibility of China importing corn by as much as 15 million tonnes yearly by 2015 will be a major driver for the upsurge of corn price in the market.

 

While the country may not directly benefit through an export of corn, local price settling at perhaps more or less PHP20 (US$0.45) per kilo, will be beneficial for farmers.

 

"China being there in the market will push price to a high level and set a new floor price. Farmers will be out planting. We should be able to manage this and keep a level of sufficiency. Price will not be too high if we have local stocks," said Roderico R. Bioco, Philmaize chairman emeritus.

 

First, the government should no longer issue 'irresponsible' policies such as a zero tariff on feed wheat, a corn substitute, which sent prices tumbling down to the P6 to PHP7 (US$0.16) per kilo level, from PHP13 (US$0.29) to PHP14 (US$0.32) per kilo, last year, leaving corn farmers desperate.

 

In order to help farmers improve their gains, government should consider PMFI's proposed policies of reviewing rules in truck loading, scrapping the National Food Authority (NFA)'s charges for corn shellers and other post harvest equipment, and reviewing rules in taxation.

 

The present truck loading policy has been punishing the corn industry through exorbitant fees on the road slapped by law enforcers on trucks while transporting a bigger load.

 

NFA's fee of PHP500 (US$11.27) yearly for every piece of corn shelling equipment, along with warehouse fees per square meter and other charges on post harvest equipment, has stalled growth of the corn sector.

 

"Government should pay us to invest (in corn planting). But we pay them (instead). There should be a moral basis for our policies," he said.

 

China's having become a net importer of corn adds up to the tightening of corn supply in the market, which is now worsened by failed harvests in Baltic countries affected by drought. The tightening supply is worsened by an export ban for wheat issued by Russia and the failed wheat production in Pakistan due to flooding and in Kazakhstan, brought about by drought. Ukraine, also affected by drought and which has earlier announced its intention to abide by its supply contracts for wheat, has also indicated limiting grain exports as it was also affected by drought. Russia, Ukraine, and Kazakhstan together supply 90% of wheat world supply.