Will Corn be the Next Rice?
The various patterns of the market trend for corn goes beyond agriculture. It is connected to the country’s political and social spheres
Much like rice, corn is a vital crop in the Philippines. Its array of preparations makes it a worldwide staple food-from cereals to bourbon whiskey, and even as a substitute for rice. Much of the harvests also become stock feeds. In fact, the first months of 2008 indicated an increase for corn consumption as feed (5300 on the ratio of 1000HA), indicating an increase in the demand and also encouraging production. With the global price of oil on the rise, foreign countries, like the United States, are also delving into newer ways of utilizing corn by converting it into cheaper biofuels (ethanol).
Indeed, the many ways with which we can expend corn entail the kind of importance the crop has. Over the past years, the supply of corn in the country is stable. There was even an instance where corn became a bumper crop during Mr. Jesus Tanchanco’s time as Food Minister in the 1970s, steering the introduction of corn rice to Metro Manila and mitigating a rice problem back then. But now that the market is exposed to many import and production related problems, coupled with the global food price hikes, it will become difficult for the country to catch up with the big producers, like Argentina (for grains) and the US. This also goes to big consumers like China. Will corn follow the path of rice in its shortage problems?
Not enough corn?
The agricultural industry here seems to have very good potential. Feedmilling, for instance, is now a more substantial part of agriculture in the country nearly 80% of livestock and fishery expenditures are spent on feeds, and on the average, the 700 feedmills in the country spend more or less $77M importing yellow corn. But since global prices are on the rise, the demand for local feed corn is increasing. The May 2008 report of Global Agriculture Information Network (GAIN) of the USDA Foreign Agricultural Service offers that the country’s corn production will likely be better due to an increased food and feed consumption. From 2006’s 4700 (per 1000HA/1000MT) feed consumption, it has steadily increased to 5300. By also expanding land areas with which corn can be planted-from 2605 (per 1000HA/1000MT) last 2006 to 2650 this year-it seems plausible to think that the crop does well enough in over-all production. Mr. Cris Balila, municipal agriculturalist of Sto. Tomas, Pangasinan, says that 5000 hectares are used in the town to plant white corn every year.
On the other hand, the underdeveloped state of agriculture in the country may also prove to be the very reason why experts are forecasting worse scenarios. The same GAIN report suggests postharvest deficits against a more increasing demand for the crop. While importing corn may temporarily resolve it, experts are uncertain of the implications it can bring to the sector. Last May at the Cebu International Convention Center, the city has already reported a shortage. Mabolo, Cebu’s white corn grits’ (for human consumption) price increased from Php16 to Php23 last February. The government responded by initiating investigations in the distribution of corn, as well as adding corn products into NFA retailers (Bigasan ni Gloria sa Palengke and Tindahan Natin) to stabilize the price.
Whether the shortage was set off by hoarding or uneven distribution, it’s certainly not enough. Vice President for Northstar Commodity Investments Mark Schultz says that countries “are in a buying panic about corn and soybeans.” Bloomberg posts a 59% increase in the price of corn ($6.06 per bushel last May and $6.29 for December), while soybeans, which can be an integral part in the feeds sector, increased in price to 88% compared last year, reaching almost $16 per bushel. With this in mind, the government supported the call for an emergency meeting for Asian countries in making resolutions.
No corn to buy?
So far, the country can only do so much. Prices keep on rising, and exporters are starting to decline deliveries. When the problem about rice shortage hit the country, the Philippines spent $1.17B (amounting to PhP48.7B) to increase production and help the farmers. The government also opted to import two million tons of rice from neighboring countries, making us the biggest importer. Prices went from $30o up to $1200 a ton. Egypt and India decided to export only premium grades, while Indonesia and Vietnam cut its exports fourfold. Now, Kazakhstan has joined in banning consignments of grains.
Hence, it’s not really that implausible to say that our corn imports may as well be reduced as more major corn producers interdict their exports. Previously at the Fourth National Corn Congress, Roderico Bioco has already expressed unease about the availability of corn in the world market considering that Philippines is a net-importer. The US just converted 35M metric tons of corn to 3.9B gallons of ethanol (biofuel derived from fermentation of corn’s starch) as substitute for transport fuel, and as Reuters reported, United Nation’s Rajendra Pachauri voiced concerns about its implications to food security. PCARRD’s (Philippine Council for Agriculture Resource and Research Development) Dr. Syrian Baguio aptly says, “even if we have the money to buy the commodity, it is not accessible for us anymore.” His case in point is China, cutting its export from 2oM metric tons to 2M, and with growing demand of rice and corn. Such a demand entails that they import more, and when the country becomes the biggest importer of corn, our access to the crop may be directly affected.
Not enough corn to harvest? Ricardo Oblena of the Department of Agriculture-Central Visayas reports that Cebu, getting its supply from Mindanao provinces, expended roughly 197,000 metric tons while production was merely 106,000, where 10,000 went to seeds and feeds. While Bohol may be self-sufficient in corn production, it just implies that it yields more than how many its populace consumes.
Postharvest deficits also contribute to the difficulties facing corn production. Dr. Syrian Baguio suggests that keeping the crops dry is difficult in the sense that the country’s native humidity keeps us from maximizing production while the cost for removing water from the products can get costly. PAFMI’s (Philippine Association of Feed Millers, Inc.) Dr. Franklin Viado implies that post-harvest facilities and infrastructures, specifically roadways, can influence up to 30% in domestic production losses, risking price increase and crop quality.
The price increase in fertilizers cannot be discounted as well. Dennis Araullo of the Department of Agriculture for Operations forecasts a setback in July-to-September corn yield due to the costs of fertilizers, with farmers intending to reduce planting the crop by 50% at the next season. The Bureau of Agricultural Statistics can attest to the 13-41% increase in the retailed price of urea compared last year, and 19% last 2006. Ammosul’s price increased to 50.71% during the January to April time, while complete fertilizer now costs Php1,155 per bag which only cost Php960 last year. Ammpohos increased its price at roughly the same rate with ammosul, going to Php1,400 from Php914 last year. Following the trend of transport price hikes, specifically in oil, even imported fertilizers bought at a moderate cost will still increase its price, ultimately raising production costs of planting the crop.
Corn surrogates?
The dangerous repercussions of increased production costs and the decreasing availability of corn are now being anticipated by our agriculturists. Currently, the government is working to exceed last year’s production of 2.75 million MT of corn. While we can anticipate delayed yields by the midyear, a heightened motivation towards the agricultural industry is now leading into various researches that would enable farmers to have better yields and reduce expenditures.
Department of Agriculture-Central Visayas Director Ricardo Oblena has already made initiatives to raise funds for white corn, which is to be planted in the clusters this off-season. Program officers were also made to buy 900 bags corn seeds for Central Visayas while 250 units of shellers (husk removers) are to be given by the department to farming associations to lessen harvest losses.
Surely enough, corn research becomes an integral part. PCCARD has already initiated corn variety development that would let corn be planted to farms that would otherwise not let the crop thrive. Because acidic and brackish soils are uninviting to staple crops, Dr. Syrian Baguio offers that corn varieties that can withstand such soils can help alleviate competition issues in land use. Furthermore, their research is also focused on high-lysine corn (an essential amino acid) that will help in the quality of feeds when proved to be viable.
Right now, however, corn feed alternatives are being considered like rice bran, soymeal, cassava and sweet potato. The current focus is on cassava, says Dr. Synan Baguio, because it yields better, and that its energy content is comparable to corn. The problem, conversely, lies in its production costs: soy, for example, is recently only cultivated for food because importing it is cheaper at the moment. The alternatives are kept from being implemented because the price of grains in the world market is increasing by the day. The costly process of drying cassava (and stretching its shelf life) keeps them from adapting it as a corn feed substitute; the former has 75% water content while the latter has less. What they are aiming, therefore, is maximizing the utilization of these grains. They are currently theorizing the inclusion of certain protein catalysts to ease such kind of scarceness.
More corn?
Will it do well in achieving a targeted 7.4 million MT this year? While reaching 94% self-sufficiency by the end of the year sounds too optimistic, the government is expanding its operations to increase production. In Zamboanga del Norte, a Php33M post-harvest facility was set up to increase production by io%, decrease post-harvest deficits by 10%, even out supply and afford investments and livelihood for the farmers. This year, the GMA-Corn Program (Ginintuang Masaganang Ani) has allotted Php658M for production costs to mainly help in post-harvest operations. Last June in Aurora, 5,000 hectares were built up as the department launched its hybrid corn projects, specifically yellow corn.
Expected to add 25,000 MT to the production, the department spent Php10M subsidizing the seeds, while four 4×4 trucks were given to the biggest corn-producing municipalities.
Together with the Philippine Coconut Authority, the department also expressed a future project where white corn will be intercropped underneath 100,000 hectares of coconut trees. Anticipated to add 200,000 MT of white corn, the program is slated to the eleven regions of Visayas and Mindanao, and is also set up to subsidize seeds and fertilizers. Like in the rice situation, this can indicate an opportunity the farmers can take advantage, since corn’s stringent world market can help in increasing the farmers’ income.
The department has also made budget forecasts in helping farms struck with the last typhoons. Because 42,764 MT of corn were damaged (amounting to 1.7% of overall production), the Php403-37M damage was estimated to recover from Php18.1M worth of hybrid seeds, Php4M for the open-pollinated, PhpS.IM for fertilizers and Php2.7M for program management.
Hence, the department’s corn program is strategizing how to multitask between decreasing losses, adopting hybrid seeds, farm clustering and increasing yield. The Ginintuang Masaganang Ani for Corn is gearing to shift traditional production means to better ones, like seed variety, credit/loan systems, fertilizers, soil and disease management and postharvest and marketing operations. Farm clustering, says the program, is based on a minimum of 400 hectares of corn strategically placed to enhance productivity. Complemented with programs inspiring competitiveness among farmers and collaboration with the private sectors and LGUs, the program will be catering to white and yellow corn.
Corn: a perspective
In the end, corn plays roles outside agriculture. The various patterns of the crop’s market trend have been an important aspect that one can see its ties to the country’s political and social spheres. The need for better road and transportation networks leads to the global problem about oil, while farmers complain of marketing support from the government. The availability of corn directly affects the hog and poultry sector; early months of the year showed a 24.61% markdown in the former’s production due to the increasing price of feeds, seeing that corn is an integral part of it.