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Higher domestic yellow corn production to ease the plight of feed millers

Food security is the best protection against rising prices, especially in a pandemic era where shipping woes and supply bottlenecks can easily disrupt global trade.

Geopolitical upheavals, the vagaries of the weather and trade wars often dictate the supply and demand of commodities, like metals, crops and crude oil. Industries mainly dependent on certain commodity imports could experience sharp swings in their production cost and market prices. They have little control over the supply of imported raw materials, unless domestic production is stable and sufficient.

The global supply of grains, particularly corn for instance, continues to tighten while demand steadily increases, jacking up prices and making the market highly volatile.

This situation makes it more imperative for the Philippines to aggressively pursue a comprehensive program to develop an efficient corn farming sector that will ensure self sufficiency in quality corn supply for food, feed manufacturing and several industrial uses.

Failure to do so will keep the country heavily dependent on imports and highly vulnerable to the global market volatility.

The global supply of corn tightens as production growth slows due to a host of factors, including natural calamities such as drought and flooding in major producing countries like the US and Brazil.

Demand, however, has been increasing markedly, as western countries have been using more corn not only for food and animal feeds manufacturing but also for the production of ethanol and its byproducts. Also, demand from China has increased substantially. China has been practically buying all available corn in the market to support its own requirements.

In the Philippines, corn production, especially yellow corn or those used by feed millers, has been falling short of the requirements of feed millers and the livestock and poultry sector. Yellow corn is a major ingredient in animal feed manufacturing.

Department of Agriculture data show yellow corn production this year is projected to fall short of the requirement, mainly of feed manufacturers, by 47 percent. The gap in the supply and demand is expected to widen to more than 63 percent, after removing the portion of the supply that is deemed of poor quality and not fit for animal feed manufacturing.

Yellow corn production this year, according to the data, is projected to reach 5.39 million metric tons, while the requirement for animal feed manufacturing is estimated at 9.25 million MT, up 6.8 percent and 4.5 percent, respectively, from their year-ago levels.

Actual production of yellow corn for feeds in the first half of the year reached 2.614 million MT, but the useable volume available to feed producers was just 2.22 million MT, with a nearly 15-percent fall off rate, or the percentage of output rejected for feed production.

The department has projected the useable yellow corn volume for feed millers for the entire year to end up at only 3.4 million MT, out of the expected yellow corn output of 5.39 million MT.

Given the huge gap between local supply and demand, feed millers were left with no other option but to import. They shipped in 1.19 million MT of feed inputs in the first half of the year, consisting of 128,067 MT of yellow corn and 1.063 million MT of feed wheat, a corn substitute.

Feed millers and animal feeds users such as livestock and poultry raisers, however, have to contend with the rising global prices of corn. The average price of imported corn jumped from P13.80 a kilo in 2020 to P19.92 a kilo in 2021.

The average price of local yellow corn also increased but at a slower pace, from P15.48 a kilo in 2020 to P16.01 a kilo in P2021. Given this, local yellow corn is deemed competitive, price-wise.

The bigger problem, however, is its availability and consistency in the quality of the local produce.

Increased domestic yellow corn production seems to be a plausible solution to rising import prices. The DA’s  proposed yellow corn industry development roadmap is a welcome initiative that could provide the answer to increasing prices.

The roadmap, if wholly supported by the government and with funding, will certainly boost yellow corn production and improve the quality supplied to feed millers. More importantly, the increased local yellow corn output will shield local feed millers from global market uncertainties.

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Topics: Ray Eñano , domestic yellow corn production , food security
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