MANILA, Philippines — Local feedmillers are pushing for the extension of lower tariff and the increase in allowable volume on imported corn to keep food prices in check and help the industry weather global food, feeds and fuel supply chain woes as well as rising interest rates.
The Philippine Association of Feed Millers Inc. (PAFMI), representing more than 30 feed millers in the country, made the call amid the continued volatility, uncertainty, complexity, and ambiguity of the global foods, feeds, and fuel supply chain that have caused global inflation.
Executive Order (EO) 171, signed by former president Rodrigo Duterte last May, lowered the tariff rates on yellow corn, as well as pork, rice, and coal until the end of the year.
The EO was intended to mitigate an expected worsening of inflation resulting from the Russian invasion of Ukraine in February and the expected disruption of global supply chains, particularly of oil, fertilizers and grains.
PAFMI said imported yellow corn, which augments local production, is a vital ingredient in feeds for by the livestock and poultry sectors—accounting for about 50 to 70 percent of the total cost of feeds.
The lowering of tariff on imported corn this year provided a much-needed reprieve to counter rising pork prices after local production was severely affected by the spread of the African swine fever, the group said.
“With EO 171, the country has been able to import yellow corn at lower tariffs of five percent in quota, and 15 percent for out of quota. This has translated to a significant drop in the production cost of poultry, pork, eggs, and fish,” PAFMI said.
However, the successive interest rate hikes imposed by the US Federal Reserve this year, which reached a cumulative total of 3.75 basis points on Nov. 2 intended to bring down the US’ own inflation rates, had dampened the effectiveness of EO 171.
Feedmillers said a resulting strong US dollar weakened the Philippine peso, increasing the country’s cost of imports.
“The Philippine government continues to apply various measures to manage local inflation, and PAFMI believes that maintaining the lowered tariff on imported yellow corn for an extended period in 2023 would help keep pork and chicken prices at levels that would not exacerbate inflation further,” the group said.
“Furthermore, PAFMI is asking the government to increase the allowed minimum access volumes for imported corn to expand the benefit that accrues from lower tariffs, especially with inflation expected to remain elevated well into the next year,” it said.
Based on its projections, PAFMI said global demand for grains and oil seeds will remain in a high price environment, and some countries are already resorting to importing grains for storage.
“With the region heavily dependent on imported grains, additional measures are needed to ensure that importation of wheat and corn for feed use is not exposed to further uncertainties,” it said.
In producing feeds, about half of the yellow corn volume is supplied through imports, and the remaining from local farms.
Source: Philstar
November 25, 2022
