The Philippine Association of Feed Millers Inc. (PAFMI) urged the government to review the current tariff structure for yellow corn imports to temper the increase in animal feed costs.
PAFMI said the prices of both local and imported feed corn are “hitting record highs,” triggering an “escalation in the price of animal feeds” which may affect the cost of meat products.
“Tariffs are supposed to protect local corn growers, but with the significant supply gap, feed millers need to import more corn to be able to supply the requirements of livestock growers,” the group said in a statement on Wednesday.
“The country’s yellow corn importation is now more than what is locally available, and has a more significant impact on consumer foods.”
With the current tariff structure, PAFMI said imported corn from non-Asean countries “is bloating the Philippines’s import costs to unrealistic levels.”
The country has a three-tiered tariff structure on corn: 5 percent for those from Asean member-countries, 35 percent for supply falling under the country’s minimum access volume (MAV) World Trade Organization (WTO), and 50 percent for imports over MAV.
“At a 50-percent tariff, feed corn imports could lead to landed costs as high as P30.10 a kilo,” PAFMI said.
“If local corn were available, the price today would only be at P21 to P23 a kilo. Last year, before this global corn supply and pricing crisis hit, local corn averaged only at P15.79 a kilo.”
The group said the current situation is “further aggravated by the current tight demand for corn in the world market that has caused prices to escalate.”
“The existing scarcity of corn allocated for export by Asean members, plus the globally elevated prices, is likely to stay until 2022, according to the United States Department of Agriculture, which keeps a tight tab on grain supply and movements across countries. The US is a major exporter of corn.”
PAFMI noted that countries like Vietnam have started to review their tariffs on corn, with the inclination of lowering them, to support their livestock and poultry industries and keep meat prices stable.
“[We] want the country to adopt similar measures and shield Filipino consumers and corn-dependent domestic industries from the adverse impact of the rising world market prices of corn,” it said.
“The Philippines cannot rely solely on the supply from its Asean peers as they are also heavy users of corn.”
PAFMI said yellow corn accounts for 40 to 60 percent of the feed formulation, while feeds account for 60 to 70 percent of the cost of producing meat and poultry products.
Based on its own computations, PAFMI said a P1 increase in the price of feed corn per kilo would translate to a 3-percent rise in the cost of producing a kilo of broiler feeds, which in turn could result in a 1-percent rise in the cost of growing a broiler chicken.
“A 3-percent increase in the cost to produce a kilo of layer feeds could jack up by 2 percent the cost of producing an egg, and a 2-percent increase in the cost of producing a kilo of hog feeds could increase by 2 percent the cost of growing a hog,” it said. “All these will result in higher prices of pork, chicken, and eggs.”
Philippine Statistics Authority (PSA) data showed that the average farm-gate price of yellow corn in the first half grew by almost 4 percent to P12.9 per kilogram from P12.41 per kg recorded last year.
The average retail price of yellow corn expanded by 14 percent to P28.37 per kg from P24.88 per kg in the first half of last year, based on PSA data.