Philippine 2H corn output may fall 23 percent

Philippine corn output in the second half of the year could fall by up to 23 percent on-year unless the government hikes its price support program for the yellow grain, an industry official said on Thursday (August 21, 2008).

 

The projected decline could boost local corn prices to as much as PHP18 a kilogramme against the prevailing prices of PHP11/kg, Roger Navarro, president of the Philippine Maize Federation Inc., or Philmaize, told a public consultation. Philmaize is an organization of local farmers.

 

"Without the necessary government support, prices would go up to PHP18/kg because there would be less supply in the market, and this isn't good for the poultry and hog sectors," he said.

 

The decline may reach only 10 percent if the government decides to increase its price support to PHP13/kg from the current level of PHP10/kg, Navarro said.

 

The demand for an increase in the government's price support stems from the sharp rise in the prices of petroleum-based fertilisers.

 

Late last month, the National Food Authority, a state-owned grains trading firm, increased its price support for yellow corn to PHP10/kg from PHP7.50/kg, taking into account the rising cost of inputs including fertiliser.

 

Corn farmers, however, said the increase wasn't sufficient and sought a PHP13/kg price support.

 

But bringing the level to PHP13/kg might be too late for some corn farmers; thus, the projected output contraction of 10 percent in the second half of the year, Navarro said.

 

The increase, however, would significantly increase output next year as farmers would be encouraged to plant more, Navarro said.

 

According to him, the current actual cost of production is much higher at PHP9.50-PHP9.80/kg compared to the government's estimate of only PHP7.11/kg.

 

The agriculture department said corn output in the first six months of the year rose by as much as 20 percent to 3.3 million tonnes on a significant rise in acreage. However, it said, output in the second half is projected to fall 7 percent to 3.7 million tons due to a fall in the planting area and yield.

 

Corn is a major component in animal feeds.