Yap earns the wrath of corn farmers, traders

Farmers and traders are venting their ire on Agriculture Secretary Arthur Yap after the collapse of the local corn market. From a high of P26 a kilo in January this year, corn prices have fallen below P9 in early September, discouraging farmers from planting the crop and leaving traders helpless after building up their stock.

Roger Navarro, president of the Philippine Maize Federation, warned that many corn farmers were close to losing their livelihood after the government reneged on its commitment to buy their produce at subsidy prices. Market conditions have also dramatically changed as wheat feed imports flooded the Philippines.

“We strongly believe that Secretary Yap together with his policy advisory group has no moral ascendancy on holding on to their leadership and advisory positions in the department,” says Navarro.

Falling prices in the global market and the government’s decision to reduce the import tariff on wheat feed, a substitute to corn feed, to zero are partly to blame for the industry mess.

President Gloria Macapagal Arroyo issued Executive Order 765 early this year, lowering the tariff on wheat feed imports to zero. The directive aimed to encourage wheat imports amid a corn supply shortage at the beginning of the year and keep the prices of hog and poultry products stable. Corn prices in early 2009 were hovering at P16 a kilo in the face of a tight production.

A tight supply drove corn prices higher in the early part of the year, prompting farmers to plant the crop in the hope of cashing in and with the assurance that state-owned National Food Authority would support prices at P13 a kilo. The Agriculture Department, meanwhile, ordered the importation of 300,000 metric tons of corn feed and 120,000 metric tons of wheat feed to assure supply to hog and poultry raisers.

Long-term solution

Heavy corn feed and wheat feed imports, however, displaced local corn farmers. Hog and poultry growers, according to a trader, bought imported wheat feed at zero tariff (for later delivery) at an equivalent price of P7 a kilo in January and February this year. EO 818 restored the duty on the imports to 7 percent, or equivalent to P9 a kilo.

An industry source said local corn farmers had a hard time competing even against P9 a kilo because of depressed prices. “Contracted volumes of imports that enjoyed zero tariff early in the year are still coming in,” he said.

The government, meanwhile, lowered its support price to P10 a kilo from P13 in May, adding to the woes of corn farmers and traders.

Robust corn production and imports have ironically produced a “glut” in the market, prompting President Arroyo to consider shipping the grain to Kenya to help lift local prices. The Philippines may export corn for the first time as production is forecast to increase in the second half. Corn production is expected to rise 2.3 percent to 7.09 million MT this year on increased yields and planting.

Fluctuating corn prices highlight the need in the Philippines to build more storage and drying facilities to protect farmers.

“Corn farmers and traders can store their produce in times of low prices. They can withhold their stock from the market and release them later when prices go up. These post-harvest facilities will preserve their crops and assure them of good prices,” the trader said. –Ray Enano, Manila Standard Today