CORN INDUSTRY DEVELOPMENT ROADMAP

2011-2017

DEPARTMENT OF AGRICULTURE Corn Program

ASEC. EDILBERTO M. DE LUNA National Corn Program Coordinator

LOCAL SCENARIO

IMPORTANCE OF CORN Yellow corn is mainly used and traded as raw material for animal feeds (almost 70% of national corn annual produce) White corn serves as main food staple for about 15% of the total population (mostly in major islands of Visayas and Mindanao) Around 1.5 million farmers depend on corn production

ECONOMIC VALUE OF CORN, 2012

Corn-livestock-poultry integrated industries contribute 32.79% of GVA to AF in 2012, at current prices. These sub-industries has a combined 2012 economic value of PhP347.66 Billion, at current prices.

Units in Billion Pesos except for percentages; Constant Prices based on 2000 Prices Source: NSCB

2012% SHARE TO GVA

2012% SHARE TO GVA

GVA in AGRICULTURE & FISHERY

1,253.39 100 694.77 100

A. AGRICULTURE 1,060 84.59 565 81.31Palay 279.53 26.37 140.74 24.91Corn 82.07 7.74 40.25 7.13Coconut 86.89 8.20 30.52 5.40Sugarcane 28.96 2.73 16.63 2.94Cassava 16.31 1.54 8.32 1.47Other Crops 217.79 20.54 110.79 19.61Livestock 152.98 14.43 93.26 16.51Poultry 112.61 10.62 74.54 13.19Activities & Services 83.09 7.84 49.84 8.82

B. FISHERY 193.16 15.41 129.89 18.69

INDUSTRY GROUP

CURRENT PRICES CONSTANT PRICES

CORN PRODUCTION PERFORMANCE, 2001-2012

Source: BAS

4.53

7.41

1.92 2.17

2.61

5.24

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Combined 4.89% White 1.35% Yellow 7.13%AAGR

Mill

ion

MT

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

205

383

1,809

256

865 960

171 168

364

151 241

623

VOLU

ME

('000

MT)

CORN PRODUCTION BY REGION, 2012

PROVINCE VOLUME (MT) % SHARE PROVINCE VOLUME (MT) % SHAREIsabela 1,183,123 23 Maguindanao 396,468 18 Bukidnon 780,267 15 Lanao del Sur 223,782 10 Cagayan 396,658 8 Lanao del Norte 205,799 10 South Cotabato 382,249 7 Zamboanga del Sur 120,078 6 North Cotabato 316,920 6 Cebu 90,122 4 Pangasinan 264,335 5 Sarangani 73,487 3 Sultan Kudarat 189,111 4 North Cotabato 68,558 3 Quirino 166,280 3 Bukidnon 65,247 3 Iloilo 145,273 3 Negros Oriental 64,323 3 Camarines Sur 126,638 2 South Cotabato 53,732 2

WHITE CORNYELLOW CORN

TOP 10 CORN PRODUCING RPOVINCES, 2012

CORN AREA HARVESTED, 2001-2012

Source: BAS

2.49 2.59

1.571.31

0.92

1.28

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Combined 0.45% White (1.54%) Yellow 3.35%AAGR

Mill

ion

HA

1.82

2.86

1.23

1.65

2.83

4.09

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Combined 4.28% White 2.86% Yellow 3.48%

CORN AVERAGE YIELD, 2001-2012

Source: BAS

AAGR

MT/

HA

CORN FARMGATE PRICES, 2001-2012

Source: BAS

6.50

12.62

6.84

14.34

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

P/kg

Yellow White

YELLOW CORN SUPPLY & DEMAND, 2001-2012

Source: BAS, LDC, PAFMI

172 86

913

1,645

3,725

5,198

2,607

5,241

-

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

VOLU

ME (

'000

MT)

YC Import FW Import Local Demand Local Production

CORN-FEED SUPPLY & DEMAND, 2013

Source: BAS, LDC

CORN CORN + CASSAVASUPPLY of Yellow Corn & Corn Substitutes 7,167 7,767 Beginning Stock (includes cassava and feedwheat) 2,386 2,386 Net Local Yellow Corn Available 4,781 4,781 Local Yellow Corn Production 5,254 5,254 Less: 9% Postharvest Losses 473 473

Cassava Substitute (corn equivalent) 600 DEMAND of Yellow Corn for Feeds 5,265 5,265 ENDING STOCK of Yellow Corn & Corn Substitutes 1,902 2,502 No. of months to last 4.33 5.70

ITEMVOLUME ('000 MT)

CONSTRAINTS AND CONSTRAINTS AND OPPORTUNITIESOPPORTUNITIES

for YELLOW CORNfor YELLOW CORNCONSTRAINTS OPPORTUNITIES

• RISING COST OF INPUTS Total production cost of

PhP35,182/Ha in 2012 as compared to PhP28,664/Ha in 2011

• LIMITED POSTHARVEST FACILITIES

161 DA village-type dryers, 12 NABCOR CPHPTC, 3 NFA corn centers and 50 units from private sector as of 2012 with total annual rated capacity of 556,870 MT (10% of the total YC production)

• TIGHT WORLD SUPPLY Corn for bio-fuel production

and adverse weather condition resulting in high world market prices (USD315/MT FOB or PhP12.92/kg in 2012 as compared to USD292/MT FOB or PhP12.56/kg in 2011)

At least 4 million MT yellow corn is imported annually by ASEAN from US and the Americas

CONSTRAINTS OPPORTUNITIES• NEGATIVE EFFECTS OF

CLIMATE CHANGE Average of 18 typhoons every

year from 2006 to 2011 and frequency of El Nino occurrence is during the first semester from 2002 to 2010

• LOW QUALITY OF GRAIN DUE TO HIGH AFLATOXIN LEVEL

Aflatoxin level of greater than 20ppb for food and 50ppb for feeds

• INCREASING DOMESTIC DEMAND FOR CORN

High growth rates of hog and poultry sectors will require greater corn supplies (average annual growth rates of 1% and 5%, respectively based on target demand 2012-2017)

Emerging needs for food and industrial uses (e.g. starch production)

• AVAILABILITY OF HIGH-YIELDING VARIETIES AND OPEN-POLLINATED VARIETIES

Hybrid seed potential of 7-10 mt/ha; OPV seed potential of 4-5 mt/ha

CONSTRAINTS OPPORTUNITIES

• Negative perception that corn grits are only for the poor

• Low productivity• Requires special packaging of

white corn grains and grits• High cost of processing due to

lack of post harvest facilities• Inaccessibility of white corn

grits in urban areas• Climate change – many areas in

the Philippines are vulnerable to drought and flooding

• Increasing prices of inputs (e.g. fertilizer, seeds)

• Increasing corn consumption will definitely contribute to the Food Staples Sufficiency Program

• Health food – low glycemic index prevents diabetes and helps build stamina

• Availability of high-yielding open pollinated varieties

• Tight world supply and increasing price of rice

CONSTRAINTS AND CONSTRAINTS AND OPPORTUNITIESOPPORTUNITIESfor WHITE CORNfor WHITE CORN

YELLOW CORN: COST & RETURN ANALYSIS, YELLOW CORN: COST & RETURN ANALYSIS, 20122012

COST (P/HA)

COST (P/KG)

COST (P/HA)

COST (P/KG)

PRODUCTION 25,215 5.04 29,580 3.70 Seeds 4,500 0.90 7,980 1.00 Fertilizer 7,470 1.49 9,960 1.25 Pesticide 1,645 0.33 Labor 9,100 1.82 9,120 1.14

Land Rental 2,500 0.50 2,520 0.32 POST PRODUCTION 9,967 1.99 11,460 1.43 Harvesting & Hauling 2,750 0.55 2,880 0.36 Shelling 2,500 0.50 3,000 0.38 Drying 1,500 0.30 1,800 0.23 Sacks 1,200 0.24 1,440 0.18 Interest 2,017 0.40 2,340 0.29 TOTAL COST 35,182 7.03 41,040 5.13 AVERAGE YIELD (KG/HA) 5,000 7,000 FARMGATE PRICE 12.50 12.50 GROSS INCOME 62,500 87,500 NET INCOME 27,318 5.47 46,460 7.37

NATIONAL REGION 2ITEM

WHITE CORN: COST & RETURN ANALYSIS, WHITE CORN: COST & RETURN ANALYSIS, 20122012

COST (P/HA)

COST (P/KG)

COST (P/HA)

COST (P/KG)

CASH COSTS 6,302 3.89 7,124 2.85

Farm Inputs (Seeds, Fertilizer, Pesticide) Paid in Cash 2,561 1.58 2,746 1.10 Hired Labor 1,836 1.13 705 0.28 Others Paid in Cash 1,905 1.18 3,673 1.47

NON-CASH COSTS 2,097 1.29 4,136 1.65

Farm Inputs (Seeds, Fertilizer, Pesticide) Paid in Kind 235 0.15 514 0.21 Hired Labor Paid in Kind 297 0.18 1,265 0.51 Others Paid in Kind 1,565 0.97 2,357 0.94

IMPUTED COSTS 8,873 5.48 11,266 4.50 Farm Inputs (Seeds, Fertilizer, Pesticide) 62 0.04 2 0.00 Labor 6,701 4.14 9,717 3.88 Others 2,110 1.30 1,547 0.62

TOTAL COSTS 17,272 10.66 22,526 9.00 AVERAGE YIELD (KG/HA) 1,620 2,503 FARMGATE PRICE 13.73 14.08 GROSS RETURNS 22,243 35,242 NET RETURNS 4,971 3.07 12,716 5.08

ITEMNATIONAL ARMM

PROGRAM DIRECTIONS

PROGRAM GOAL: Increase production of quality corn for human

consumption, feeds and industrial uses, as well as empower the farmers to increase their income, thereby improving their quality of life.

OBJECTIVES:• Attain self-sufficiency and/or surplus in corn by 2013 • Increase corn production from 6.97 MMT in

2011 to 8.73 MMT in 2014• Increase yearly income per hectare of farmers

MAJOR STRATEGIESMAJOR STRATEGIES

A. ENHANCING PRODUCTION• Increase area thru development of

idle and new lands suitable for corn production and promote intercropping of corn to coconut and/or cassava

• Increase yield thru the use of quality planting materials and cost-reducing technologies or varietal shift from traditional and OPV to high yielding varieties

PRODUCTION TARGETPRODUCTION TARGET

Combined White Yellow Combined White Yellow Combined White Yellow2011 6,971 2,150 4,821 2,545 1,284 1,261 2.74 1.67 3.82 2012 7,407 2,166 5,241 2,594 1,312 1,282 2.86 1.65 4.09 2013 8,213 2,487 5,726 2,696 1,406 1,290 3.05 1.77 4.44 2014 8,730 2,518 6,212 2,717 1,415 1,302 3.21 1.78 4.77 2015 9,277 2,860 6,417 2,756 1,447 1,309 3.37 1.98 4.90 2016 9,863 3,079 6,784 2,792 1,478 1,314 3.53 2.08 5.16 2017 10,532 3,373 7,160 2,852 1,514 1,338 3.69 2.23 5.35

YEARPRODUCTION ('000 MT) AREA ('000 HA) YIELD (MT/HA)

*2011-2012 Actual Data; 2013-2017 Target

B. REDUCING POSTHARVEST LOSSES• Establish more PHFs and equipment in major

corn producing areas to reduce losses• Maintain premium quality corn grains and grits

in accordance with the approved standards thru trainings and positioning of appropriate technologies

POSTHARVEST LOSS REDUCTION TARGETPOSTHARVEST LOSS REDUCTION TARGET

%VOLUME ('000 MT)

% DIFF

VOLUME ('000 MT)

VALUE ('000 PHP)

2011 6,971 15 1,046 5,925 2012 7,407 12.7 941 6,466 2.3 170 2,129,513 2013 8,213 9 739 7,474 3.7 304 3,798,513 2014 8,729 7 611 8,118 2 175 2,182,250 2015 9,277 6 557 8,720 1 93 1,159,625 2016 9,863 5 493 9,370 1 99 1,232,875 2017 10,533 4 421 10,112 1 105 1,316,625

YEARPRODUCTION

('000 MT)

PH LOSS SAVINGSNET AVAILABLE CORN ('000 MT)

Notes:1. Value savings is based on constant price of Php12.5 per kilogram. 2. Net Available Corn is based on Annual Production less PH Loss Volume.

C. IMPROVING MARKET LINKAGES• Facilitates marketing tie-ups and contract

growing arrangements• Provides timely price and market information• Promote corn exportation

D. HUMAN RESOURCE DEVELOPMENT

• Empower the present and future farmers by developing their skills, knowledge and attitude thru trainings such as FFS, FSTP, etc.

• Organize and strengthen more cluster areas

E. POLICY FORMULATION & ADVOCACY

• Identify the appropriate policies conducive to corn industry making it competitive over the long term

F. INFRASTRUCTURE SUPPORT• Provide farm machineries

and farm-to-market roads• Install small irrigation

systems in major strategic areas

G. PROGRAM MANAGEMENT• Facilitate linkages with

policy-makers, field implementers, LGUs, private sectors and other stakeholders

OTHER STRATEGIES• Conduct R&D for yellow and white

corn that include SSNM, IPM, CPAR and other researches

• Genetic conservation and utilization• Product and by-product

development and utilization• Coordinate with lending institutions

to provide guarantee to conduits, credit to farmers especially in new areas and insurance in highly vulnerable areas

SUFFICIENCY TESTSUFFICIENCY TEST

2011 2012 2013 2014 2015 2016 2017NET CROP AVAILABLE 6,541 7,396 8,553 9,434 10,244 11,234 12,241

White Corn 1,877 2,153 2,463 2,642 2,865 3,101 3,419 Yellow Corn 4,098 4,673 5,171 5,613 5,959 6,425 6,855 Cassava (in Corn Equivalent) 566 570 919 1,179 1,420 1,708 1,967

REQUIREMENT 6,730 7,034 7,250 7,480 7,744 8,016 8,293 Food 1,564 1,675 1,748 1,824 1,904 1,987 2,085 Feeds & Other Industrial Uses 5,166 5,359 5,502 5,656 5,840 6,029 6,208

SURPLUS/DEFICIT (502) (116) 588 1,136 1,539 2,104 2,614 FoodFeeds & Other Industrial Uses (502) (116) 588 1,136 1,539 2,104 2,614

SUFFICIENCY LEVEL 95% 99% 105% 110% 113% 117% 121%Food 100% 100% 100% 100% 100% 100% 100%Feeds & Other Industrial Uses 90% 98% 111% 120% 126% 135% 142%

VOLUME ('000 MT)ITEM

*2011-2012 Actual Data; 2013-2017 Target

*4% inflation rate on corn price every year; baseline data is sourced from BAS

INCOME & JOB TARGETINCOME & JOB TARGET

Combined White Yellow Combined White Yellow2011 36,088 20,010 55,053 45,000 15,000 30,000 2012 36,807 20,521 54,577 49,000 28,000 21,000 2013 40,840 22,865 61,633 102,000 94,000 8,000 2014 44,805 23,932 68,894 21,000 9,000 12,000 2015 48,813 27,645 73,614 39,000 32,000 7,000 2016 53,266 30,292 80,618 36,000 31,000 5,000 2017 57,913 33,690 86,902 60,000 36,000 24,000

JOB GENERATION (NO.)YEAR FARMERS INCOME* (PHP/HA)

PROGRAM BUDGETPROGRAM BUDGET

2011 2012 2013 2014GRAND TOTAL 483,642 950,739 1,524,302 1,796,965

PRODUCTION SUPPORT 302,500 380,022 605,217 881,481 IRRIGATION DEVELOPMENT 3,660 12,810 15,050 15,400 POSTHARVEST DEVELOPMENT 338,610 527,986 556,285 MARKETING DEVELOPMENT 5,105 5,105 14,839 14,824 CREDIT FACILITATIONEXTENSION SUPPORT 136,312 170,127 287,418 279,490 RESEARCH & DEVELOPMENT 19,380 28,380 49,115 49,485 REGULATORY 2,000 2,000 8,050 INFORMATION SUPPORT 10,185 9,185 8,040 POLICY FORMULATION 4,500 4,500 8,587

CORN PROGRAM BUDGET (PHP'000)ITEM

PROGRAM IMPACTPROGRAM IMPACT

•Sufficiency and/or surplus in yellow corn•Postharvest loss reduction•Increased farmers’ income•Price stability•Job generation•Net exporter of corn

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