September 23, 2009
Philippine corn buying price falls below profit levels
Commercial buying price of corn has dropped below profitable levels in Central Mindanao, Philippines, a regional Department of Agriculture (DA) official said on Tuesday (Sep 22).
DA corn coordinator Zaldy M. Boloron said the decision of corporate feed millers to stop buying corn is making the matter worse for corn farmers.
Boloran noted that commercial buying price of corn in the region now averages at P8.60 per kilogramme, from the previous P10-P11 per kilogramme.
The present commercial buying price of corn is below the corn industry's estimated production cost of P9-P10/kg.
Faced with this dampened price from private traders, corn farmers had decried the government's decision late last month to cut its own buying price to P10/kg from P13/kg last May.
This led the government this month to raise the price back to P13/kg for the first 300,000 tonnes it would buy from farmers this year, and to peg the price for the remaining 300,000 tonnes at P10.70/kg.
Both prices include a total of P0.70/kg in incentive for delivery to government warehouses, for drying corn to government standards and for participating farm cooperatives.
The restored government price led the Philippine Maize Federation Inc. (PhilMaize) to say it was enough to encourage farmers to plant corn for the September-October cropping season.
Boloron said this cropping period is expected to yield 160,000 tonnes.
He added that while the restored state buying price was designed to prod corn farmers to sell more to the government, the growing corn inventory in state warehouses in the region was also brought about by the decision of San Miguel Corp., maker of B-Meg feeds, and Purina Philippines, Inc. to stop buying the crop.
He said feed millers have not been buying corn due to the available feed wheat stocks in the country, which was also a factor why corn prices have dropped.
The imported feed wheat, which is a substitute for yellow corn in making animal feeds, entered the country at a cheap price of around P7/kg.
The government allowed in the first half of the year the importation of 1.1 million tonnes of feed wheat at zero tariff. In May, it also allowed the private sector to import 210,000 tonne of yellow and white corn at lower duties.
US$1 = P47.46 (Sep 23)
