Wheat imports feared to cause downward spiral on the already depressed corn price of P12 per kilo; govt urged to invest in storage, buy farmers’ produce

September 1, 2020

Domestic corn price is feared to go through a downward spiral from the already depressed P12 per kilo due to feed wheat imports coinciding with the harvest, compelling corn farmers to press government to show political will by prohibiting import arrival at harvest.

   Corn farmers have also challenged government to address perennial poverty among corn farmers by intervening in putting up corn storage facilities.  The lack of such storage facilities compel Filipino farmers to give in to low prices, or their produce just spoils. This renders farmers helpless at the mercy of traders trying to haggle for bargain prices.

      The Philippine Maize Federation Inc. (Philmaize) and the Philippine Chamber of Agriculture and Food Inc. (PCAFI) have denounced that Department of Agriculture-Bureau of Plant Industry (DA-BPI) allowed feed wheat import arrival during this current corn harvest.

   Feed millers’ recent importation of a reported 81,200 metric tons (MT) of feed wheat is unfortunately bringing price further down to P12 per kilo or below. This is against expected farmgate of say P15 per kilo and above.  Feed wheat is a usual cheaper substitute to corn.

   “Imports of feed wheat accounts for only 1 to 2% of corn production.  But still, their effect on pushing down local corn price is significant. It becomes worse as the NFA (National Food Authority) no longer supports corn price as it now has a different mandate due to the RTL,” said PMFI President Roger V. Navarro.

   NFA is no longer buying corn from farmers even as its function has been limited by the Rice Tarrification Law implemented since 2018-2019.

   PCAFI President Danilo V. Fausto said government must continue its price support function for corn even especially amid the pandemic.

   “Government should immediately initiate aprogram to buy the corn being harvested at a viable price from the farmers for storage as buffer stock to support future demand during non-harvest season,” said Fausto.

   State competition-policing agency Philippine Competition Commission (PCC) has just released a study showing local corn price is significantly adversely affected  by feed wheat imports.

   “The Philippines imports feed wheat every month and therefore, when local corn harvest coincides with the arrival of feed wheat, the price of local corn is usually depressed, “ according to the study commissioned by PCC.

   “This is a more pronounced during the third quarter when the Philippines has the big bulk of local harvest and the quality of which is affected by lack of mechanical dryers.”

   Navarro said DA-BPI which issues import permits and Sanitary and Phytosanitary Import Clearance (SPICS) should have known beforehand of this import arrival.

   “Feed wheat imports can arrive year-round because they have storage facilities from their origin. But they are timing arrivals even during the corn harvest just to take advantage of lower prices,” said Navarro.

   Philippines’ feed wheat imports come from Australia, Bulgaria, United States, Canada, India, Russia, Brazil, European Union, and Black Sea.

   With the Bayanihan 2 program intended to uplift Filipinos’ livelihood, the government should immediately intervene in supporting corn price and put up storage. This is along with providing technology and funding to counter the highly devastating Fall armyworm, Fausto said.

   “Corn is one of our major crops where millions of our farmers depend on for their livelihood. It represents around 10% of total crop production.  Government should protect our corn farmers especially during this time of crisis to allow them to survive. Importation of corn substitutes such as feed wheat should be regulated when corn is being harvested,” said Fausto.

    A PCC-commissioned study carried out by the Asian Social Project Services INc. (ASPSI) came up with this conclusion:

  • Local farm gate prices of corn go down even if international market prices might be high; this is primarily due to the lack of storage capacity when import delivery (corn and/or feed wheat) coincides with local harvest
    • Lower price (and income) dampens the interest and capacity of farmers to plant the next season hence feed millers have to buy high the next time around because of reduced local supply
    • This explains the boom and bust cycle in the Philippine yellow corn industry; but with more feed wheat imports, yellow corn farm gate prices might continue to be in a bust. Melody Mendoza Aguiba

ATTACHMENT:  Philippine Competition Commission study by ASPSI

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