The request of feed millers to import yellow corn at zero tariff even after the harvest season was thumbed down by the Department of Agriculture (DA) due to its detrimental effect on farmers.
Agriculture Secretary Emmanuel F. Piñol expressed his opposition to the scheme after stakeholders in the local farming sector met on August 10 to discuss the economic managers’ proposal to cut tariffs on certain food items to ease inflation.
Sources to the privy meeting said the request of the Philippine Association of Feed Millers Inc. (Pafmi) to import 200,000 metric tons (MT) of corn at zero tariff was tackled during the Friday meeting.
“In as far as the [corn] stakeholders are concerned, they reject zero tariff. They even asked: ‘If the price of domestic corn is low, would the feed millers come to our rescue with a fair price?’” Piñol told the BusinessMirror via SMS.
“Yes. They have to pay the tariffs,” he said when asked if he shares the sentiment of local corn farmers.
In end-July Pafmi wrote a letter to Piñol requesting for duty-free importation of yellow corn to augment local supply and ease the price of animal feed. The group made the request even before the economic managers floated the idea of reducing the tariff on corn imports.
“The Philippine Association of Feed Millers Inc. (Pafmi) respectfully requests for a duty-free import of 200,000 MT of yellow corn to support livestock and poultry requirements,” the group said in the letter dated July 27, a copy of which was obtained by the BusinessMirror.
Pafmi argued that the two successive typhoons—Henry and Josie along with the monsoon rains—which battered Northern Luzon “have adversely affected the quality and price of corn.”
Feed millers reduced their “acceptance parameters” to be able to purchase corn with “higher moisture content,” according to Pafmi. This, according to the group, led corn prices to shot up to P19.50 per kilogram (kg), from P15 per kg (Bulacan benchmark).
Furthermore, Pafmi argued that based on their surveys, farmers delayed their planting which could affect supply in the early part of 2019.
“Although there are feed-wheat imports coming in but this will not substitute for the corn requirements of the poultry industry,” the group said.
“We are cognizant of the expected harvest of local corn and recommends the imports arrive only between the months of November 2018 to January 2019. We feel this will complement the current supply of local corn and maintain prices to reasonable levels,” it added.
The country slaps a 35-percent tariff on corn imports within the minimum access volume, while those outside the quota are levied a 50-percent duty. Corn from Asean member-countries is slapped a tariff of 5 percent.
Philippine Maize Federation Inc. (PhilMaize) President Roger V. Navarro told the BusinessMirror that his group “vehemently” opposes the proposed tariff reduction on corn imports.
“We vehemently oppose this for reasons that the corn industry has been liberalized but no subsidies have been given to corn farmers,” Navarro said.
Raul Q. Montemayor, national business manager and program officer of the Federation of Free Farmers, said there is no need to cut the tariffs on corn to zero as feed millers have the option to import it from Asean countries at 5-percent tariff.
“Feed mills already have the option to import corn from Asean countries at 5-percent tariff or import feed wheat declared as food-grade wheat at zero tariff,” Montemayor told the BusinessMirror.
“They have a lot of options. But when corn prices are down, farmers do not have a refuge. They are saying that the quality of corn from Thailand is bad but they have been importing a lot from Thailand the past few years,” he added.
Image credits: Oliver Bunic/Bloomberg