DA defers action on millers’ bid to import corn duty-free

The Department of Agriculture (DA) put off for two weeks its decision on an urgent appeal by feed millers to import duty-free corn for arrival in the second quarter this year.

"We understand your concern, but your request requires more study and we also need to consult the corn sector," said Agriculture Secretary Luis Lorenzo Jr. in a recent talk with the Philippine Association of Feed Millers Inc. (PAFMI).

Lorenzo told PAFMI president George Nava that the group should be more specific about its proposal by stating the estimated time of arrival, volume and the manner by which the commodity will be distributed.

During the meeting, Nava failed to specify the volume PAFMI needs to import. Based on earlier reports, the feed millers wanted an initial shipment of at least 150,000 metric tons of duty-free corn scheduled for arrival between April and June this year.

The volume should offset the failed import program for 150,000 MT of corn bid out by government last September to make up for the estimated damage of 300,000 MT of corn wrought by Typhoon Harurot which hit key corn-growing areas of the country in July 2003.

The program did not spark feed millers’ interest because the 20-percent tariff equivalent charge imposed by the National Food Authority then made the import offer too expensive to bring the commodity in.

This failure eventually led to the rise in local buying prices of yellow corn. While it benefited corn farmers in Mindanao and Cagayan Valley, it adversely affected earnings of not only feed millers but also poultry and livestock producers.

The landed cost of corn in Luzon feed milling plants is currently around P9.80 per kilo, almost the same for the last two months way above the P8 per kilo level last year.

Rising feed costs had sharply cut feed millers margins considering that corn comprises 40 to 70 percent of millers‚ raw material costs.

While DA said prices will likely soften due to bumper corn harvest beginning February 2004, PAFMI said a second quarter tax-free corn importation was still required because historically, the country has often been short each year by 800,000 to one million mt of the grain.

The group also doused fears that the imported corn will dampen local prices at farmers’ expense, saying that even if the shipment arrives tax-free, landed cost will still be above P10 per kilo, a level farmers should be happy about because it means they can sell their crop at a competitive price.

Farmgate price of corn in Mindanao has been hovering around P7.50 to P8 per kilogram since December. – Rocel Felix