|
In the middle of a successful information campaign by
the Department of Agriculture, comes this report from the industry
grapevine: There is a projected shortfall in corn supply this year
at 1.8 million metric tons. Mind you, that is not a small matter.
Corn is a major component of
livestock and poultry feeds. The simple logic is—if corn prices
increase, so will food prices for the common tao increase too.
Hence, there is a need to rationalize the supply of corn, a task
which the government should lead in doing.
The Department of Agriculture,
through the National Food Authority (NFA), has already conducted a
successful bidding of imported corn totaling 120,000 metric tons.
This import is set to arrive in the Philippines in two batches—one
in June and another in July. Both will—at least initially—cover
the expected corn production deficit.
Just to show how important corn
is to our daily sustenance, the NFA board has approved a resolution
allowing the importation of another 280,000 metric tons of corn in
case the previous orders are not enough. This new order will serve
as buffer stocks, especially for the coming lean months.
With this successful bidding,
there is a little reason for local corn to increase in price in the
coming months, especially since a total of 280,00 metric tons will
be bid out.
It is expected that local prices
should start to “soften” a little bit as the traders are
expected to unload their existing stocks. The NFA importation will
become sort of a “ceiling” for local prices. The upside
potential for local prices of the grain is capped by the imported
price of NFA at P2 to P12.50 per kilogram.
But there is a negative angle to
this story. As a result of the still anticipated shortage of corn at
its current high price in the global market, some major traders and
middlemen are speculating and jacking up local prices to the
detriment of end users.
Worse, traders and middlemen are
allegedly hoarding corn to control prices in the local market. I
have the feeling that the officials of the NFA know which firms are
these—and who the people are behind the hoarding.
End-users are looking at a P10
farm gate price as an ideal price for both farmers and end-users.
However, middlemen are allegedly selling corn at more than P12 per
kilogram. Sobra naman yata’yan.
Beyond that price, end-users fear
that consumers would have to shoulder the higher price of livestock
and poultry along with other food items that use corn as an
ingredient.
In the Philippines, food accounts
for 50 percent of the basket of goods included in the consumer price
index, thus it is an inflation benchmark. Such a potential inflation
risk is definitely not a welcome development for the ordinary
Filipino who spends the bulk of his income on food items.
Perhaps, there is a policy
question that the DA should consider. Could it allow the private
sector to import more corn at zero tariff? If that happens, perhaps
this goal of trying to stabilize corn prices in the local market and
thus avert a food-price inflation may be achieved.
In the meantime that the policy
question is being considered, government may want ease the supply
problem on local corn. The DA may start clamping down on hoarding
and speculation to protect consumers form speculative sellers and a
possible increase in food prices due to higher corn price.
In addition, government can
import more corn to narrow the gap between supply and demand, which
would ensure that prices remain competitive for both suppliers and
end-users. The move could also prevent further inflationary
pressures to the detriment of consumers.
A word of caution to big traders
and the so-called cartel in the corn industry. Remember that
end-users can also exercise the option to buy directly from the
farmers. This has been done in other industries so it could also be
done in the vital corn industry. And when the end-users do that,
expect the public to applaud.
|
