Amid lack of government support, the Philippines has been slacking in corn production. The situation has gone so bad that importation has already become a necessity.
Roger Navarro, president of the country’s largest group of corn producers Philippine Maize Federation (PhilMaize), said in an interview that the Philippines’ corn production has been insufficient for a while now, and could not meet the demand for feeds manufacturing.
He said the industry understands the need for importation, but this should be done with the right tax and regulation.
“The solution has been there ever since we signed up with the WTO [World Trade Organization] and we have no problem with that. They [feed millers] can import corn and corn substitute by way of feed wheat any time they want but they must pay their taxes. That is all we wanted,” Navarro said.
Corn accounts for 60 to 70 percent of the ingredients for the production of animal feeds, while the cost of feeds can take up 80 percent of production cost for chicken and other livestock.
“Corn and corn substitute imports are allowed ever since we signed up with the WTO. They can import anytime,” he added.
Navarro said that on the supply side, local production for yellow corn stood at 5.7 million metric tons (MT), while white corn stood at 2.5 million MT at 50 percent as food/feed equivalent.
“Total supply would be 6.95 million MT versus total demand for meat requirement at 7.8 million MT. This will translate to an 850,000 MT deficit,” Navarro said.
Data from the Philippine Statistics Authority (PSA) also showed that as of August 1, 2021, the country’s total corn stocks inventory level was estimated at 707,650 MT, falling by 3.4 percent from the 732,180 MT level in the same period in the previous year.
Similarly, corn stocks dropped by 23.4 percent from the previous month’s level of 924,250 MT.
Year-on-year, corn household stocks went up by 12 percent, but stocks in commercial warehouses/wholesalers/retailers dropped by 5.7 percent.
In comparison with the previous month’s level, corn household stocks increased by 9.8 percent, but dipped by 27 percent for commercial warehouse/wholesalers/retailers.
Right now, corn farmers only harvest twice a year, with the first, or the wet season, producing 65 percent of the annual output. The second harvest is February down to the dry season.
Aside from this, harvests are plagued with quality and volume issues. As a result, there is not enough corn to supply the growth in the poultry sector and the recovery of the hogs from African Swine Flu as the economy slowly rebounds from the Covid 19 pandemic.
“Without the proper post-harvest and storage facility, we can never achieve quality and stability in both supply and prices,” Navarro said.
For his part, Erwin Vibal, grower marketing lead of Bayer Crop Science Philippines, said that these days, corn farmers have been facing a lot of uncertainties, including whether or not to continue producing.
“Managing the variable weather conditions, increasing cost of inputs and volatile market prices are some of the risks that corn farmers consider before going for production. Corn farmers under these risk situations just bite the bullet as the majority of them have no option to switch crops,” Vibal said. Bayer Crop Science is into production of high-yielding seed brands.
He also said that the corn industry is challenged logistically by COVID-19 pandemic restrictions.
Despite this, he said, seed companies continue to provide seeds whenever farmers need them.
“Since the demand for animal feeds continues to grow in the Philippines, the demand for corn grains follows suit, and local production and limited importations continue to fill this increasing demand,” he further said.
Overall, the Philippines’ corn seeds market is estimated to be around 850 to 900 thousand hectares annually.
In August, to address the shortfall in corn production, Agriculture Secretary William Dar issued Special Order No. 540, forming a technical working group to look at temporarily bringing down the tariff on imported yellow corn – a move that should give poultry and livestock raisers as well as fishers access to cheaper animal feeds.
For yellow corn coming from ASEAN countries, the current import tariff stood at 35 percent under the minimum access volume, while it is 50 percent outside the MAV quota. Imported yellow corn from non-ASEAN are slapped with 50 percent tariff.
This makes the inputs for feeds very expensive for the local Filipino poultry and hogs farmers, who are already faced with a contraction in demand and costly production.
An industry source said it is ironic that imported pork with the increase of MAV has a tariff that is now ranging from 5 to 15 percent, while tariffs of imported chicken are at 40 percent. ”Why does the finished product have lower tariff vs its inputs? It is blatant tariff distortion, he said.
Navarro said the local corn industry is currently valued at P100 billion, but only receives P1.4 billion worth of support from the government every year.
“In the last two years, when we implemented RTL [Rice Tariffication Law], corn has huge production that even carried the growth of agriculture. But the prices then was down below to the farmers’ graves with no government support,” Navarro said.