RP headed for ‘corn crisis’

DAGUPAN, Pangasinan – The country, a net importer of corn, appears headed for a "corn crisis" in the next five years as major corn exporting countries are aggressively converting corn into ethanol as a cheaper fuel substitute for crude oil.

"It’s a foregone conclusion if we don’t get get our acts together, increase local corn production and install adequate postharvest facilities to maximize the shelf life of the commodity, we might end up not having any corn to import," said Roderico Bioco in the 4th National Corn Congress.

Bioco pointed out that as a result of the continued spike in crude oil prices, the world’s largest corn producers and exporters are putting up new ethanol plants, with a huge portion of their corn surplus that are regularly dumped into the world market, now being converted for ethanol use.

"The corn surplus in the world market will evaporate in about five years and we have to be prepared for that eventuality," warned Bioco.

The United States for one, last year, produced 3.9 billion gallons of ethanol from about 35 million metric tons (MT) of corn. Out of the total corn production in the US of about 290 million MT in 2005, 200 million MT was for its domestic feedmill requirements while 35 million MT was gobbled up by ethanol processing plants. That left just 55 million MT for exports.

Another major producer, China, used to supply 20 million MT to the world market, but its increasing domestic demand has limited its exports to just two million MT in the last year.

Bioco noted that even the European Union is converting feed wheat into ethanol as one of critical interventions being done to cushion the impact of steadily rising crude prices.

World crude prices which reached a new all-time high of $72 per barrel this week, is now testing the $73 per barrel resistance level and with increasing global demand for fuel, especially by growing economies such as China and India, there are no signs of oil prices going down.

As a result, corn surplus now feeding ethanol plants are pushing up global corn prices as the surplus is thinning.

"Just like sugar prices have been tracking oil prices, so will corn. Corn into ethanol is now just as viable and the race is to build more ethanol plants, especially in the United States," said Bioco.