Buying prices raised for corn

THE Philippines, Southeast Asia’s second-biggest corn producer, will double planned state purchases of the grain to 600,000 metric tons this year to help support local prices and protect farmers’ incomes, an official said yesterday.

The government will buy half of the total from farmers at P10 a kilogram and the other half at P12.50, Agriculture Secretary Arthur Yap said in an e-mailed statement.

Domestic corn prices had fallen below cost, discouraging farmers from planting the crop, Roger Navarro, president of the Philippine Maize Federation Inc., which represents growers, said Aug. 31.

This would potentially cut production by as much as 30 percent in the first half of 2010 and lift imports, he said.

The price private buyers, including traders, pay farmers for corn slumped to P8.58 a kilogram in the first week of September, a drop of 18 percent from P10.44 pesos a year earlier, according to the Bureau of Agricultural Statistics.

Corn cost P9.50 a kilogram to grow, Navarro said last month.

But an official said the government’s corn procurement would now be brisker after it raised its prices to P12.30 for quality corn and P10 for compromised corn.

“The government took into consideration the persistent clamor of corn farmers for better prices,” Assistant Agriculture Secretary Dennis Araullo said.

Yap said the higher buying prices would stoke demand in Mindanao and other areas where corn buying had stopped due to poor prices.

He said the Finance Department helped him obtain Palace approval of extra financing to increase his department’s support prices for corn.

The department has been lending its drying facilities to farmers to help them preserve the quality of their corn.

The government projects a surplus of about 600,000 metric tons of corn and plans to export this volume to Vietnam, Korea and Japan. –Othel V. Campos with Bloomberg