Zero-tariff corn imports may not push through

There may be no need after all to push through with the importation of 350,000 metric tons (MT) of corn at zero percent tariff.

Artemio M. Salazar, program director of the GMA Corn Program said that initial monitoring of on-going corn harvest in various corn-producing regions in the country indicate there may be enough volume to fill the requirements of local feedmillers and livestock producers.

He said that corn end-users should reconsider their plans to import corn even if this will be coming in duty-free because the landed price estimate of P11 per kilo is the same as the current price of local corn based on industry data.

Salazar who expects a bumper harvest this quarter, said the improved prices of corn towards the end of 2003 encouraged farmers to increase their corn hectarage.

Last year, the second quarter corn crop was wiped out by three supertyphoons and resulted in a supply shortfall that pushed corn prices to a high of P12 per kilo from P9 per kilo.

The National Federation of Hog Farmers Inc. and the Philippine Association of Feedmillers (PAFMI) requested the duty-free importation to address the meat shortage and the increasing prices of feeds.

Salazar said, however, that since the request was made and subsequently approved, demand for chicken waned because of the avian flu scare while the hog producers depopulated because of rising production costs.

In contrast, local corn supply is increasing and could even reverse the earlier first semester forecast corn supply deficit of 575,170 MT by the Bureau of Agricultural Statistics.

Local corn farmers are objecting to the proposal of the hog raisers and feedmillers saying this will depress prices of domestically-produced corn.

Rod Bioco, president of the Philippine Maize Federation Inc. (Philmaize) accused the corn end-users of maneuvering to bring down local corn prices.

"The intent to dampen the corn market through government intervention is very clear. Even if the landed cost is P11 per kilo, the importation itself while there is still enough supply after the harvest season will have a preemptive effect on the local market," Bioco said.

Bioco said the end-users shifted to buying local corn when imported corn and corn substitutes went up in the world market in recent months. But the rush to grab local corn at P9 to P9.50 per kilo led to an increase in corn prices to P12 per kilo in November up to February, thus, the request to buy corn at zero tariff.

Earlier, hog raisers said that a zero-duty importation should be granted as the entire supply chain is being adversely affected by the crisis brought about by the depopulation of commercial hog raisers and the closure of small backyard raisers.

Albert T. Lim, NFHGI president noted previously that since the price of corn which makes up the bulk of their feed meal requirements rose to as high as P12 per kilo, this also forced hog raisers to increase the farmgate price of hogs, now at P92 per kilo from the yearago level of P78 per kilo. Thus, the need to bring in corn at duty-free rates.

Bioco however, refuted this contention.

"The current issue of rising costs of meat products has been the battle cry of the proponents of corn tariff reduction. But the government should analyze closely the effect of corn farmers on meat prices. For every P1 per kilo increase in corn prices, the direct effect attributable to corn in terms of increase in meat prices is only P1.90 per kilo for liveweight hogs and P1.50 on dressed," Bioco stressed.

Bioco added the cost increase of soybean meal actually contributes higher in the rise of feed costs and subsequently, on meat prices. Other feed commodities also increased significantly, particularly feed wheat, rice bran, copra meal, cassava and most feed additives.

"The devaluation of the Philippine currency also contributed to the significant increase of imported commodities. The corn farmers should not be penalized for these uncontrollable factors," Bioco said.