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Farmers to dump rice for corn when QR ends

In Photo: In this file photo this December 8, 2016, photo shows a farmer in a corn plantation in Davao.

The country’s paddy-rice output could decline to below 18 million metric tons (MMT), after the quantitative restriction (QR) on rice is scrapped on June 30, according to a Global Agriculture Information Network (Gain) report.

The Gain report, which was published by the US Department of Agriculture’s Foreign Agricultural Service (FAS) in Manila, noted that the expiration of the rice QR could result in the displacement of Filipino farmers. “The expiration of the QR waiver on June 30, however, may allow a surge of cheaper rice imports. This is expected to discourage and dampen investments into the rice industry, including much-needed farm credit in the form of production loans to small farmers,” the report read.

“Hence, rice production is forecast to decline 3 percent from 18.5 MMT in marketing year (MY) 16/17 to below 18 MMT in MY 17/18,” it added.

The USDA’s marketing year for rice begins on August 1.

According to the Gain report, paddy- rice output in MY 2017-2018 could settle at 17.93 MMT, lower than the 18.52 MMT projected for the current MY 2016-2017, which would end on July 31.

With the projected decline in unmilled rice output, the Gain report noted that imports could double to 2 MMT during MY 2017-2018.

“For rice, MY 17/18 imports are anticipated to considerably increase from the previous year’s level, due to the expected decline in local production as a result of the expiration of the QR and to replenish low stock level,” the report read.

As rice farmers are expected to shift to planting corn, the report projected that local corn output could reach 8.3 MMT in MY 2017-2018, 2 percent higher than the 8.1 MMT estimated output in MY 2016-2017. “For MY 17/18, corn production will likely increase…due to consistent and firm feed demand by the expanding domestic livestock and poultry industries,” the report  read.

“In addition, some farmers are expected to shift away from rice to corn as a result of the expiration of the QR on rice imports at the turn of MY 16/17,” the report added.

With the expected increase in local corn production, the country’s corn imports could decline to 500,000 metric tons (MT) in MY 2017-2018, from 600,000 MT in MY 2016-2017, according to the report. As for wheat imports, the FAS in Manila said the Philippines could increase its purchases by 2.72 percent to 5.65 MMT in MY 2017-2018, from the 5.5 MMT it imported in MY 2016-2017.

“Wheat imports are forecast to rise…due to an expanding population, economic growth and low prices,” the Gain report read.

“On a long-term basis, the ongoing expansion and modernization of the local food and feed-milling industries, supported by the Philippine government’s aggressive infrastructure-development program, are expected to ensure increased wheat consumption for both food and feed uses,” it added.

Currently, there are 17 flour mills operating in the Philippines, with an aggregate milling capacity of over 5 MMT, up from 15, with an estimated capacity of 4.2 MMT in 2016.

“Several mills underwent expansion in recent years, and at least two plants are scheduled for commissioning in 2017. Another two mills are expected to be commissioned in 2018,” the report read.

Also, the report noted there are currently 545 registered feed mills in the Philippines, 85 percent of which are considered commercial. Citing sources, FAS in Manila said overall feed output last year reached 11.75 MMT, 3 percent higher than the 11.38 MMT produced in 2015.

Image credits: Nonie Reyes

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