The Philippines may import more corn as local production is not enough to meet increasing demand for animal feed ingredient, according to the US Department of Agriculture (USDA).
In a report, the foreign agency estimated that the country’s corn imports could reach 800,000 metric tons (MT) for marketing year 2022 to 2023, which it said could be the “second highest on record.”
The projected volume marked an upward revision from the estimate of 700,000 MT made by the USDA in December 2022.
“The improved outlook for corn imports is due to lower domestic corn production and higher feed demand,” the report read.
Local corn production slightly decreased to 8.26 million MT in 2022 from 8.3 million MT the year prior, based on the data from the Philippine Statistics Authority.
The USDA noted that higher meat consumption has spurred demand for animal feed since May last year. Corn is a vital ingredient for animal feed alongside other industrial uses.
“Growing demand for corn coincided with smaller domestic supplies. While high global corn prices in the summer of 2022 pushed farm-gate prices to attractive levels, the increased cost of inputs such as fertilizer made corn less favorable than other crops for domestic production,” said the USDA.
“The last pandemic restrictions were lifted in the second half of 2022, resulting in a return to prepandemic meat consumption patterns by consumers as holidays, school and workers resumed in-person activities,” it added.
Competitive imports
The USDA also said the government’s decision to extend the validity of reduced tariff rates for various commodities such as corn until December 2023 has made imported corn more competitive in terms of pricing relative ton domestic supply.
To recall, in December last year, President Ferdinand Marcos Jr signed Executive Order No. 10 that retained the most favored nation rate on corn at 5 percent for in-quota and 15 percent for out-quota volume.
The USDA’s Foreign Agricultural Service estimated that domestic farm-gate corn prices reached $330 per ton in November. This was higher than the farm-gate prices of about $317 per ton for imported corn coming from Southeast Asian partners such as Burma and about $297 per ton for imports from other trading partners including Brazil.
“Rising corn imports also reflect changes in the market for feed substitutes,” the USDA said.
It noted that feed demand for the marketing year 2021 to 2022 had been met by substituting corn with low-cost Australian barley.
However, Australian barley has become costlier now, with prices surging to more than $317 per ton in November 2022 from $275 per ton in the same period a year prior.
“The higher cost of barley in 2022 has pushed buyers toward larger corn imports,” it added.
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