April 1, 2003

by Melody M. Aguiba
Manila Bulletin
via SEARCA Biotech News Updates

The government will level in the corn sector by not allowing tariff free importation of corn and by restructuring tariff rate for corn substitutes while raising productivity so to push corn prices down to a highly competitive P4.64 per kilo.

The Grain Highway (GH), a corn productivity plan created by Agriculture Secretary Luis Lorenzo Jr. originally under the Million Jobs Program indicated that tariff rate of corn substitutes have to be leveled with corn "based on their property to replace corn as feeds."

At present, food wheat carries a tariff level of seven percent while feed wheat at three percent which has widely distorted corn price as Indian wheat used as corn carries a tariff of 65 percent for outside
minimum access volume (MAV) and 35 percent for MAV.

The Philippine Maize Federation Inc. has petitioned the Department of Agriculture (DA) to restructure tariff levels of corn and corn substitutes so as to protect local farmers. At the GH goal of reducing corn production cost to P4.64 per kilo local corn becomes highly competitive with United States corn with a landed cost of P8.50 per kilo and Indian wheat of P6.50 per kilo.

The program is confident of cutting down local production of logistics cost with the establishment of bulk handling facilities (silos) with a capacity of 6,000 MT in Cagayan de Oro port, 12,000 MT in Cebu, 8,000 MT in Batangas-Philippine National Oil Co., and 6,000 MT In General Santos.

A study indicated that the cost of shipping corn form Bukidnon to Manila which involves cost of sacks, trucking by assemblers and traders in Cagayan de Oro, port handling and wharfage and the Cagayan
de Oro port handling wharfage and trucking at the Manila Port ordinarily reaches to P1.81 per kilo. But the bulk handling facilities allow savings of P0.67 per kilo to P1.14, bringing logistics cost by P291.45 million per year.

The GH also planned cost savings from reduced post harvest (PH) loss amounting to P1.56 billion for 87,000 hectares. To reduce PH loss, 77 new drying facilities requiring P185 million will be acquire through loans provided by the Development Bank of the Philippines. While 6,000 Mt of corn dried under the sun will only fetch a price of P4 per kilo, mechanically dried corn will command a P7 per kilo price,
bringing higher farmer income.

Reduction in production cost of growing corn will also be derived form the encouragement for farmers to use the Asiatic corn borer resistant Bacillus thuringiensis (Bt) corn which requires only an investment of P72,150 over three croppings per year but will produce an income from farmers of P106,500 per year with a yield of five MT per hectare.