November 18, 2024

Philippines's corn imports to fall to 1.5 million metric tons in current market year

The Philippines' corn imports are expected to drop slightly to 1.5 million metric tons in the current market year due to lower world corn shipments and weak recovery in production.

According to the US Department of Agriculture (USDA), the Philippines' corn imports in market year 2024-2025 (July-June) are expected to dip slightly from previous market year's 1.52 MMT.

"Lower world corn exports and a small recovery in production are moderating growth," the USDA said in a recent global grain situation report.

The USDA said the Philippines' corn demand continues to grow due to higher use of corn feed by the livestock and poultry industries, as well as higher industrial use for snacks and starch.

Despite the growing demand for the grain, local corn production has been unable to catch up as farms have been hampered by pest infestations, typhoons, and a lack of land in recent years, according to the USDA.

"In 2023/24, production was 8.1 million metric tons, the lowest volume since 2019/20. As a result, larger imports were necessary to meet domestic demand – reaching 16% of total supplies in 2023/24, versus 4% in 2019/20," the organisation said.

Since mid-2022, the Philippine government reduced and has maintained lower tariff rates on imported corn to plug the shortfall in domestic demand and keep the retail prices of various commodities like meat stable.

At present, the Philippines slaps a 5% tariff on corn imports within the minimum access volume or in-quota, while imports outside it or out-quota are levied with a 15% tariff. The lower tariff rates will be in effect until the end of 2028.

The corn tariffs will revert to their original rates of 35% (in-quota) and 50% (out-quota) beginning 2029 pursuant to President Ferdinand Marcos Jr's Executive Order 62.

The USDA said that non-ASEAN corn exporters benefitted from the tariff cuts, effectively diversifying the Philippines' supply base for the commodity.

Non-ASEAN corn exporters are at a disadvantage against ASEAN producers since the latter enjoy a significantly lower tariff rate of 5% under the Asean Trade in Goods Agreement.

Prior to the tariff reduction, the Philippines sources virtually all its imported corn from the ASEAN region, the USDA said.

 
In market year 2022-23, the ASEAN fell to two thirds of the Philippines' market share after Brazil shipped more than 200,000 MT. By market year 2023-24, ASEAN accounted for only half of all the country's corn imports, with Argentina alone growing to 35%,according to the USDA.

"With corn tariffs reduced, overall imports surged by 56% in 2022/23 and 68% in 2023/24, with non-ASEAN exporters augmenting volumes," the USDA said.

The Philippines' top corn import sources are Argentina, Myanmar, Vietnam, Brazil and Pakistan, according to the USDA.

- PhilStar