Department of Agriculture nixes tariff-free corn importation

The Department of Agriculture (DA) has turned down the appeal of the poultry, hog and feedmilling sector to allow the tariff-free importation of corn.

In a meeting last week, Agriculture Secretary Arthur C. Yap told poultry and hog growers, as well as feedmillers, that the government cannot allow zero tariff corn imports “because it will hurt over a million corn farmers who were also subjected to high fertilizer prices and should get good prices for their corn if they are to make money and continue to be motivated to plant.”

“At zero tariff,” Yap explained, “imported corn will have a landed cost of about P11 a kilo as against the prevailing government support price of P11.50.”

To appease the poultry and hog growers, and the feedmillers, the DA has agreed to allow the National Food Authority (NFA) to import an initial 200,000 metric tons of corn primarily for the benefit of small industry players.

According to Yap the 200,000 MT corn import would “address the temporary tightening of yellow corn supply arising from a number of factors, including climate related events that have altered the local planting season as well as financial difficulties of small and medium players in the livestock industry.”

At the same time, Yap said the DA is now studying ways on how to establish a buffer stock for corn to benefit small players that do not have the means to import the commodity during temporary supply tightness and address seasonal volatilities in the production and demand for corn.

Corn imports, Yap explained, have already been liberalized.

This means, Yap said, that the government’s involvement in importing the grain should only be limited to meeting the Philippines’ World Trade Organization (WTO) commitment on the minimum access volume (MAV) on corn.

With a liberalized product like corn, the private sector takes the lead in addressing any domestic supply gap, Yap clarified.

Yap and other DA officials met with 50 private stakeholders in the corn industry and agreed on an initial course of action to address the temporary shortage and price spike of corn which now sells at over P16 per kilo compared to last year’s prevailing rate of just P13 a kilo.

The current situation is expected to improve by February when the imports of corn and feed wheat have arrived.

Yap assured the poultry and hog growers and feedmillers that the DA would use all legal means possible to run after possible hoarders and profiteers to flush out corn and corn substitutes in private warehouses.

Those who met with Yap and DA officials included representatives from the Corn Board, Philippine Association of Feed Millers, Inc. (PAFMI), the National Federation of Hog Farmers Inc. (NFHFI), United Broilers Association (UBRA), Swift, Fil-Am Foods Inc., National Hog Raisers Association (NAHRA), Philippine Association of Broiler Integrators (PABI), Foremost Farms, Philmaize, and AGAP party-list Rep. Nicanor Briones, who represented the sub-sector of small livestock stakeholders.

Yap explained that corn is already a liberalized commodity, “so we can only come in to help address the woes of the industry when the private sector asks for our help, as what has happened now with the temporary tightening of supply, which is expected to last for two or three weeks.”

Yap stressed that “the courses of action we are now undertaking are being done in close consultation with leaders of the corn industry and will do in a manner that does not unnecessarily disadvantage corn farmers.”

Unlike rice where the DA can project demand based on human population.

Corn estimation of demand, Yap said, is better done by the private sector as they are in a better position to know what their chicken and populations are.

Yap said the NFA would import 200,000 MT of corn and then sell the grain to small industry players at a price equivalent to its acquisition cost plus a service fee that would just be enough for the food agency to recover its expenses and set a price that would not hurt local corn growers and continue to encourage them to plant more corn.