October 21, 2003
Corn Shortage Looms in Philippines
The bidding for the corn importation meant to help in the impact of the crop damage in Cagayan Valley wrought by typhoon Harurot last July failed, allowing prices to remain firm.
The failure was traced to high corn prices in the world market due to the drought in North America, which affected corn, soybean and wheat production. Rising international sea freight, which made the landed cost of imported corn even much higher, leads to worsening of problem.
Local feedmillers and livestock raisers refused to participate in the bidding, claiming government not only imposed a 20% tariff on the corn to be shipped into the country, but also added a levy of 22 centavos per kilo.
As a result, the tight supply has encouraged speculation by corn traders, with prices now nearing P10 per kilo in Luzon.
In Mindanao however, farm gate prices of yellow corn had been hovering at the P7 to P7.25 per kilogram range, compared to from P6 three months ago.
"The high price is in Luzon, but prices are still low in Mindanao," said Roderico R. Bioco, chairman of the Philippine Maize Federation Inc. (PMFI).
Ric Pinca, vice-president of the Philippine Association of Feed Millers (PAFMIL) said feedmillers are subsisting on wheat as substitute for their corn requirements in 2003.
He said wheat importation is seen to hit 1.2 million MT this; this figure is approximately the same as last year's imports of the commodity.
Pinca said government should have allowed the sector to import corn subjected to bidding last Sept. 10 and Oct. 3 at a tariff rate of 20% flat without additional cost.
"If only the government had reasonably priced the 150,000 tons, then this could have averted the crisis situation. But they still asked us to pay 22 centavos as facilitation charge on top of the 20-percent tariff," explained Pinca, adding this is an unusual practice in government-led or assisted importations.
Bioco said even as Mindanao-based corn farmers start harvesting corn next month, farmers cannot meet the quality or standards required by Luzon-based feedmillers because of the high aflatoxin content of their corn.
PMFI wants the government to push through with the importation because the local corn industry will benefit from the import tariffs to be collected.
The corn industry in Philippines agreed to the plan to import corn because government promised to turn over the tariff collections to the corn sector which in turn, will use the fund to improve its infrastructure such as postharvest facilities and farm-to-market roads and marketing network.
Bioco said supply would further tighten if the importations are unsuccessful.
"There is still time to import and it is better to do it now because next year will be a different story."
