DA eyeing exports of corn to halt farm-gate price slide

THE Philippines is mulling over exporting corn to the world market to prevent a further slump in farm-gate prices, which have plunged to P9 per kilogram—a level at least 20 percent lower than production cost.

Agriculture Secretary William D. Dar confirmed to the Businessmirror that the Department of Agriculture (DA) is considering exporting local corn among the options to help farmers cope with the declining farm-gate prices.

Dar said they are studying the proper legal backbone to be able to allow corn farmers to export, since the National Food Authority (NFA) has been deregulated by the rice trade liberalization (RTL) law.

“We are looking at that as one option,” Dar told the Businessmirror via SMS, referring to the possible export of local corn.

The RTL law, passed in March 2019, deregulated the NFA, removing

its powers to oversee both the rice and corn industries. The law also lifted the quantitative export restriction on rice, but did not do the same for corn.

Prior to the RTL law, the NFA was mandated by the 1972 Presidential Decree No. 4 to greenlight the export of corn by certifying that there is a surplus in domestic supply.

Philippine Maize Federation Inc. (Philmaize) President Roger V. Navarro told the Businessmirror that Dar had told them a few weeks ago of the option to export corn in order to address low prices.

Navarro explained that exporting corn, especially during the harvest season, would stabilize and prevent further declines in farmgate prices of the crop.

“But for us that is a reactive [solution]; we want a proactive and sustainable one,” he said in a phone interview.

Foil vs import surge NAVARRO, a longtime advocate of allowing the export of corn to balance the entry of imported corn, said the government must find a legal way to pursue such a plan, citing the impact of RTL law on NFA and the corn industry.

In a letter addressed to Secretary Dar, Navarro pointed out that corn export is a “relief valve mechanism” to counter trade, manage and balance supply disruptions and displacements during harvest that result in “significant price drops.”

He explained that supply disruptions and displacements occur due to “uncontrolled, uncalibrated, unabated” importation of feed wheat and corn.

Navarro proposed that Philmaize be allowed to export surplus corn during harvest to stabilize prices, and be allowed to import duty-free corn in the lean season to ensure sufficient domestic supply. Navarro added that the volume that they would be allowed to import is the same amount they exported.

“This Game Theory strategy has been adopted over the competitive advantage theory in countries like Thailand, Vietnam, and Myanmar etc., as a privilege for farmers from displacement and disruptions to balance counter trade and benefit on the process,” he said in the letter dated September 7, a copy of which was obtained by the Businessmirror.

Navarro said farm-gate prices are hovering in the vicinity of P9 per kilogram, which is P2.5 lower than the P11.5 per kg average production cost.

He attributed the plunge in farm-gate prices to the continuous entry of imported feed wheat, with some volumes coinciding with the main harvest of yellow corn.

“To illustrate the losses of farmers, a P1 per kilo drop of corn price will translate to a P5-billion loss of farmers’ incomes. If the drop is double or at P2 per kg, the corn farmers will lose P10 billion,” he said in the letter.

“Without government monetary support, that P10 billion should have circulated in the countryside, creating economic activity in the rural areas,” he added.

Philippine Association of Feed Millers Inc. (Pafmi) President Stephanie Nicole S. Garcia told the Businessmirror they were forced to import feed wheat as prices of corn offered to them by traders are as high as P16.5 per kg. In comparison, the imported landed cost of feed wheat is about P14 to P15 per kilogram, Garcia added.

“Where is the P9 per kilogram price” If there is P9 per kilogram then we will buy it,” Garcia said in a phone interview.

“I asked my members what’s the buying price for corn delivered to their warehouses, they said it’s about P13 per kg in Mindanao,” she added.

Pafmi said the industry requires about 10 million metric tons (MMT) of yellow corn to supply the feed requirement of the livestock and poultry industries. Of this total requirement, the local corn industry can supply only about 4 MMT, thus forcing feed millers to import feed wheat and corn to plug the shortfall.

The country produces about 6 MMT of yellow corn, 2 MMT of which goes to producers of cornrelated snacks and food products, who also offer higher prices than feed millers, according to Garcia.

The country’s feed wheat imports in the first half declined by 33.63 percent to 1.259 MMT from 1.897 MMT recorded in the same period of last year, Philippine Statistics Authority (PSA) data showed.

PSA data also showed that corn imports during the six-month period fell by 12.5 percent to 192,349.261 MT from 219,915.42 MT.