Pafmi calls for review of corn tariff scheme

AS prices of both local and imported feed corn were hitting record highs, the Philippine Association of Feed Millers Inc. (Pafmi) urged the government to review the tariff structure on yellow corn to prevent a steeper rise in the cost of producing meat and poultry products.

In a statement, Pafmi stressed that the increasing prices of both local and imported feed corn is triggering an escalation in the price of animal feeds and the cost of producing meat, poultry products and fish, all of which would eventually have to be passed on to the end-consumers.

“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 country’s yellow corn importation is now more than what is locally available, and has a more significant impact on consumer foods,” Pafmi said.

With the current tariff structure, imported corn from non-Asean (Association of Southeast Asian Nations) countries is bloating the Philippines’ import costs to unrealistic levels, Pafmi pointed out, noting that this situation is further aggravated by the current tight demand for corn in the world market that has caused prices to escalate.

Currently, the country applies 5 percent corn tariff for those from Asean-member countries, 35 percent for supply falling under the country’s minimum access volume (MAV) commitment under the World Trade Organization, and 50 percent for imports over MAV.

At 50 percent tariff, feed corn imports could lead to landed costs as high P30.10 per kilo.

If local corn were available, the price today would only be at P21 to P23 per kilo. Last year, before this global corn supply and pricing crisis hit, local corn averaged only at P15.79 per kilo.

Pafmi said that the existing scarcity of corn allocated for export by Asean members as well as the globally elevated prices is likely to stay until 2022, which keeps a tight tab on grain supply and movements across countries.

At the same time, other Asean members have already subjected to a review of their tariffs on corn to support their livestock industry, not only to ensure stability of consumer prices of pork and poultry products, but also to support their livestock export industries.

“Local feed millers 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,” Pafmi stressed.

The association further said that “the Philippines cannot rely solely on the supply from its Asean peers as they are also heavy users of corn.”

Currently, 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.

According to Pafmi’s computations, a P1 increase in the price of feed corn per kilo would translate to a 3-percent increase 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 rise 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. All these will result in higher prices of pork, chicken, and eggs, according to Pafmi.

Pafmi is calling for a long-term solution government that pave the way for reliable and consistent local corn supplies. “The yellow corn value chain could be a major contributor to the country’s economy, while giving corn farmers better earnings,” it ended. EIREENE JAIREE GOMEZ