5th May, 2005: Manila, Philippines - Jumping into the topic of yellow corn isn't exactly my idea of a good topic to talk about here because it's such a boring subject.
But this is something that had been bothering me these past weeks in the global markets. For starters, the country don't have enough yellow corn to export - fact is, the Philippines don't even have enough corn to feed the country's fast-rising poultry industry.
Merly Cruz, regional head of the trade and industry here, said "we're a net importer of yellow corn."
Yup, don't be impressed by all the corn fields you see here in Mindanao. Kulang pa kana sa ato-a.
Even our friend Romy Serra of the Eaga Business Council has been going around neighboring Indonesia hoping to find yellow corn that's cheaper than the corn Mindanao farmers offer.
What he found out shocked him -- Indonesian corn is more expensive than Philippine corn. This will probably surprise, no, shock Merly who told me the same thing. Indonesian corn suppliers sell yellow corn (for poultry feeds) at US$160 per metric ton.
I thought that was the CIF (cost, insurance, freight) price, you know, the delivered price to the buyer. No, that's the FOB (free on board) price. You have to add the freight and insurance on top of that price. So, if the freight is $50/MT, you have to add this 50 to 160 to make it $210/MT. Paskang mahala oy!
In contrast, you can buy yellow corn (grade 2 or grade 3) from Argentina or Brazil for only US$120/mt FOB. (Minimum volume: 25,000MT)
If you're a poultry feed industry player who badly needs yellow corn to keep your chickens alive and healthy, of course, will go for this cheaper corn instead of the one from Indonesia.
The only consolation I got from learning that Indonesian yellow corn price is too high was discovering only last week that the yellow corn from India and Pakistan almost match the price of Indonesia - ranging from $155 to $158/MT FOB.
Yellow corn could have been a good starting point for BIMP-Eaga countries for real, honest-to-goodness trade cooperation - Indonesians selling cheaper corn and the Philippines marketing this commodity to voracious global buyers.
By Aurelio A. Pena