Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Allow Free Importation of Corn

Posted by butalidnl on 22 February 2011

I think that the Philippines should lift the tariff on imported corn (35-50%); it will actually benefit the country to do so.

Poultry and Pork Producers
Cheap poultry and pork are being imported, and our poultry and pork producers are suffering. ( Philippines: Chicken and Pork Imports Jumped in 2010 ) They are suffering because the government has high tariffs (up to 50%) that prevents the importation of corn. Corn is used for feed. Philippine poultry and pork products are more expensive than imported meat, because our pigs and chickens are fed with our more expensive corn.

If you really think about it, the Philippines is already practically importing corn.  The chicken and pork imports imbibe foreign corn, plus a hefty profit for the foreign producers.  It would be much better to simply import the corn; it would also end up being much cheaper.

Meat producers are an untapped potential for exports. If we allow the free importation of corn, it may be possible for the country to actually export meat. Thailand exports chicken, and they are using imported grains to help them do it; so, why can’t we?

One Million Corn Farmers?
The government says that it can’t help, since they are concerned with the welfare of up to a million corn farmers. I take this statement with a grain of salt. Even if there are actually a million people who at present are dependent on the planting of corn, I would still hesitate to use this as an excuse to have tariffs on imported corn.

In the first place, people who plant corn today could easily shift to planting something else next season.  If there are indeed a million farmers planting corn  (I think it the million people includes the children of those farmers) it would be probably because they enjoy the benefits of “protected” local corn, hiding behind tariff walls. If the tariffs are gone, and Filipinos could import corn, how many of this million will stick to corn growing? and how many would shift to other crops?

Corn is not really a staple crop, unlike rice. Even though there is a small minority of people who do eat corn everyday (instead of rice),  corn should be treated like any other crop. Thus, it shouldn’t hide behind tariff walls. Farmers should be able to plant corn or not plant it, depending on whether this is the most profitable thing to do (considering soil quality, necessary inputs, expected rainfall, etc).

And since corn is not a staple crop, it should also be possible to liberalize the importation of it. Thus, the government does not need to be involved in its importation.  Companies should be able to compete in importing corn and distributing it to meat producers. This would help ensure that the price of corn remains as low as possible.

Rising World Prices
Now would be a good time to lift tariffs on corn. The world price for all grains is rising fast. I think that the present domestic price for corn is not too far above the world corn price. Thus, the immediate effect on farmers will not be as great as if tariffs were raised 2 years ago.

Of course, prices go up, and they could go down. That’s part of the risk of opening up to the world market. But I think that we should look at corn prices as a source of opportunity, and not as a threat. If prices do go down later, the country could buy up more corn, and produce more chicken and pork. And corn farmers could shift to other crops. If prices go up, farmers could shift into planting corn.

The Philippines should use this occasion to streamline our agricultural sector. There should be more done to help our farmers produce more, and to shift to higher-value crops. Local businesses should be encouraged to invest in agriculture.  Agricultural extension workers should be mobilized in larger numbers, to advise farmers about suitable crops, technology, etc. Post-harvest facilities should be built, as well as more farm-to-market roads.

There is under-investment in agriculture. The government should take steps to promote agriculture in the country. Not only because of the large number of families engaged in it. But also because there is a potential for economic growth in agriculture.


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