Phil Corn Industry - Prospects
Phil Corn Industry - Prospects
Phil Corn Industry - Prospects
Prospects
of the
Philippine
Corn Industry
Hazel Tanchuling
Editors:
Joyce Sierra
Jessica Reyes-Cantos
Copyright 2007
Rice Watch and Action Network
All rights reserved.
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Rationale
C
orn is an important crop in the Philippines. Just like rice, it
is also a staple for Filipinos specifically those from the
Southern Philippines.
Rice Watch and Action Network (R1) wanted to work on both
rice and corn in its earlier stage. However, the network decided to
initially focus on rice crops because corn was as complex a sector
with multifaceted issues as rice. It might be difficult for R1 to pursue
the different issues covering the sector.
After two years of existence, R1 now sees the need to study the
corn sector and bring to the front of the network’s issues and agenda.
But this is actually a perfect time to study the sector.
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Issues and Prospects on the Philippine Corn Industry
In recent years, the rising cost of oil propels the need to develop
renewable sources of energy such as the use of bio-fuels. The United
States—a major producer of corn has been saving its corn produce
for its bio fuel industry for some time now. This has pushed the corn
prices at its highest in recent history. While the farmers are happy
about it, the livestock sector is not. Although consumed as food, corn’s
other biggest purpose is the production of animal feeds. And the
growing livestock and poultry sectors are already complaining about
the high cost of inputs.
To guide R1 in its attempt to develop its position on the corn
sector, this paper provides an overview of the sector’s performance,
the industry’s major issues and concerns as well as trends and expe-
riences in the international market.
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I.
Brief Industry
Situationer
D
ata from the Bureau of Agricultural Statistics reveal that the
country is almost sufficient in corn at 99%. Our sufficiency
ratio has gone up over the years from 96% in 2001 to 99%
in 2004-2005.
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Issues and Prospects on the Philippine Corn Industry
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Table 2. CORN: Supply and Utilization Accounts, Philippines, 1990 -2005
(in thousand metric tons)
S U P P LY U T I L I Z AT I O N
Net Food Disposable
Beginning Gross Feeds and Per Capita Grams Ending
YEAR Production Imports Exports Seeds Processing Total
Stock Supply Waste Kg./Yr. /Day Sock
2001 190 4525 172 4887 a/ 50 2941 604 1115 14.31 39.21 177
2002 177 4319 278 4774 a/ 48 2807 576 1111 13.97 38.27 232
2003 232 4616 100 4948 a/ 48 3000 616 1073 13.23 36.25 211
2004 211 5413 23 5647 a/ 51 3518 722 1165 14.09 38.60 191
2005P 191 5253 71 5515 a/ 49 3414 701 1147 13.46 36.88 204
Rice Watch and Action Network
P - Preliminary data
a/ - Less than 1 thousand metric tons
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Issues and Prospects on the Philippine Corn Industry
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Table 3. continued
Yield Per
Production Area Hectarage
Hectare
Western Visayas
All 193,736 107,030 1.47
White 52,821 45,988 0.80
Yellow 140,915 61,042 2.40
Central Visyas
All 188,525 246,463 1.81
White 170,859 235,094 1.15
Yellow 17,666 11,369 2.31
Eastern Visayas
All 68,416 58,589 0.76
White 63,772 55,264 0.73
Yellow 4,644 3,325 1.55
Zamboanga Peninsula
All 223,208 163,365 1.37
White 206,847 157,218 1.32
Yellow 16,361 6,147 2.66
Northern Mindanao
All 938,227 381,499 2.46
White 339,889 219,401 1.55
Yellow 598,338 162,098 3.69
Davao
All 293,413 200,409 1.46
White 215,174 172,257 1.25
Yellow 78,239 28,152 2.78
SOCCSKSARGEN
All 959,286 398,343 2.41
White 397,273 196,406 2.02
Yellow 562,013 201,937 2.78
CARAGA
All 98,595 55,765 1.77
White 75,521 49,129 1.54
Yellow 23,074 6,636 3.48
ARMM
All 630,889 265,328 2.38
White 517,346 227,651 2.27
Yellow 113,543 37,677 3.01
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Issues and Prospects on the Philippine Corn Industry
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II.
Major Stakeholders
of the Corn Industry
Government
T
he Department of Agriculture is implementing the Corn Pro-
gram that focuses on the intensification of yellow corn pro-
duction. Areas or farm clusters were selected for planting of
yellow corn hybrids, either from the single cross hybrid (IPB-911)
variety or triple corn hybrid variety. The program aims to engage
some 75,000 corn farmers in
100,000 hectares with a poten-
tial annual production of 1.0
MMT.
The regional units of the DA
have a dedicated program for
this with coordinators who will
implement the corn program in
their respective areas.
Corn Farmers
There are almost a million corn
farmers in the country. Many of
them are mostly smallholders
and marginal, dependent totally
on rainfall.
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Issues and Prospects on the Philippine Corn Industry
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Table 4. continued
Unit
Activity Unit Qty Cost Total Cost
(Php) (Php) /kg
II. Material Cost 12,693 2.54
10.Seed Bag 12,200 2,200 0.44
12. Fertilizer 8,904 1.78
a.Urea Bag 3 820 2,460 0.49
b.14-14-14 Bag 2 732 1,464 0.29
c.Di-Ammonium Phosphate Bag 3 1,300 3,900 0.78
d.Chicken Manure Bag 40 20 800 0.16
e.Lime Bag 80 4 280 0.06
13.Insecticide Bottle 1.25 585 731 0.15
14.Sacks (for corn in cobs,2 uses) Pcs. 225 2.5 563 0.11
15.Sacks (for grains use,2 uses) Pcs. . 2.5 250 0.05
16.Twines Kg. 1 45 45 0.01
Total Cost of Production 28,290 5.66
Yield (kg./Ha) 5,000
Corn Price ( P/kg.) 9
Gross Income 45,000
Net Income 16,710 3.34
Source: National Corn Competitiveness Board
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Issues and Prospects on the Philippine Corn Industry
Feedmillers
Feedmillers are the ones who process yellow corn as feeds. The end
users of feeds are the livestock and poultry sectors. The Philippine
Association of Feed Millers, Incorporated (PAFMI) represents some
of the biggest stakeholders in the feedmilling sector. PAFMI is com-
posed of companies also known to have big stakes in agri-agro pro-
duction, like San Miguel Foods, VITARICH, General Milling Corpora-
tion, Universal Robina Corporation, Swift Foods, Liberty Flour Mills,
Far East Agricultural Supply, Foremost Farms, Purefoods Corporation
and a lot more from the big agribusiness companies.
In 2006, PAFMI requested the government to increase the WTO-
approved Minimum Access Volume (MAV) Plus mechanism increas-
ing corn imports from 216,000 tons to 336,000 tons or 120,000
tons more. This would allow the Philippines to import corn at the
preferred tariff duty of 35 percent as opposed to over-MAV tariff
rate of 50.2
2. http://www.grains.org/galleries/market_perspectives/Market%20Perspectives%206-
2-06.pdf, US Grains Council, 2 JUNE 2006 MARKET PERSPECTIVES
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Issues and Prospects on the Philippine Corn Industry
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Issues and Prospects on the Philippine Corn Industry
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III.
Trends in World Corn
Supply and Demand
I
n 2005, the United States Department of Agriculture (USDA) re-
ported that the year registered the lowest in international corn
supply stocks in 25 years because consumption is indeed increas-
ing. Prices increased further due to falling global wheat production-
a corn substitute. Wheat production in recent years has suffered pro-
duction losses due to drought and other calamities. According to an
importer, “Eight percent of US wheat is having drought. Russia and
wheat-producing areas in Eastern Europe are being hit by Russian
cane or winter kill. Southern hemisphere-producing wheat (Argen-
tina) will also produce less”3
3. Statement by trader Eric Bailon of Paritas Trading Corp as cited by Melody Aguiba in
http://www.mb.com.ph/issues/2006/02/11/BSNS2006021156079.html, Melody Aguiba ,
Manila Bulletin Online
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Issues and Prospects on the Philippine Corn Industry
US and China are the two largest producers of corn. The US re-
mains the biggest corn producer at 41% of world production or
255.54 Million metric tons of the world’s total production of 624.33
million metric tons. China produces about half of the US' production.
A look at the quantity of exports of these two countries over the
last five years would reveal that the loss of one is the gain of the
other. When the US’ exports dropped in 2003, China's exports sig-
nificantly rose only to go down in 2004 when the US recovered on
the same year.
However, the US lowered its corn exports in 2005 when its corn
use for ethanol doubled from 17% in 2003 to 27% in 2005. The use
of corn for ethanol is said to contribute to the increasing demand for
corn.
China is as well believed to be gearing up for increased use of
biofuels as its economy grows bigger. It is already investing in other
biofuel crops like sorghum as in the case in the Philippines through
the recently-signed RP-China Agreement. In recent years, the Philip-
pines has been buying most of its corn from China as freight costs
from Chinese ports were seen to be much lower than the rates from
the ports of US and Argentina .
Dr. Binamira summarized the US’ possible hand in the increas-
ing corn prices. The US, by developing and subsidizing its ethanol
industry, has created an assured domestic market for corn. They can
command the movement of corn prices in the world market because
they are, by far, the biggest corn producer in the world. According to
Mr. Binamira, this saves the US government on subsidies to corn farm-
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Issues and Prospects on the Philippine Corn Industry
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IV.
Identifying Potential
Policy Issues in Corn
T
he corn sector is a vital industry. Addressing the needs of the
corn sector would also lead to benefiting its allied industries-
livestock and poultry sectors, etc. The competitive advantage
of local livestock and poultry in the domestic and export markets
will depend on the cost-efficiency of the domestic corn industry. Corn,
on the other hand will have to contend with cheaper imported corn
and feed substitutes.
Corn in terms of importance, remains second only to rice. The
sector received very little public investment compared to rice.
PHILMAIZE is advocating for more support to the corn industry
coming from ACEF to improve its competitiveness and effectively
supporting poultry and livestock industries in the end. They argue
that all tariffs generated by corn imports should go to a competitive-
ness fund for the corn industry. Please see table below for actual
amount of tariff earnings from corn from 1998 to 2001 (see last
column of Table 11).
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Issues and Prospects on the Philippine Corn Industry
Total 3,886,500,199.80
Source: http://www.da.gov.ph/cornprogram/acep/Introduction.html, sourced, July 2, 2007
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5. BT Corn claims to be corn borer resistant. Hence, it will be possible to plant corn even
during months when corn borer normally attacks.
6. USDA, GAIN Report, 2003
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Issues and Prospects on the Philippine Corn Industry
Although the demand for corn for bio ethanol is valid, the politi-
cal economy of corn has to also be given some thought. The US is a
big player in world corn production that in the end, having a sound
policy for corn self-sufficiency should be foremost in the government’s
agenda.
The rising cost of oil—a major input in fertilizers can also be
seen as an opportunity to demand for the shift to organic inputs. The
use of Bio-N—a biological fertilizer that replaces the chemical fertil-
izer, for example, has been found to be effective in reducing require-
ments for chemical inputs in corn. Bio-N has been promoted in Cebu
where corn is a staple crop. The use of Bio-N increased corn produc-
tion by up to 6.0 tons/ha from the average of 0.5-2.0 tons/ha.7
Another issue is the accessibility of inputs. If this becomes ac-
cessible and affordable, then farmers would surely use the right
amount of inputs for their corn farms. According to Mr. Umengan,
farmers normally use lower amounts of needed inputs.
Finally, the productivity issue also brings to fore the contentious
issue of the use of BT corn. The commercialization of Bt corn is still
allowed although the Department of Agriculture has not pursued it
with the same vigor as during the time of Sec. Cito Lorenzo. This
implies that the BT corn issue will remain and this is something that
organizations, like R1, that are opposed to genetic engineering of
life forms, such as crops should think about as it tries to develop
further its campaign and analysis on GMOs.
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