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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


09 March 2012

USDA GAIN: Philippines Grain and Feed Annual 2012USDA GAIN: Philippines Grain and Feed Annual 2012

The Philippines is one of the world's largest rice importers, a top five market for U.S. wheat and a minor importer of corn. Total rice imports are expected to increase from 1.3 million tons in MY10/11(July-June) to 1.5 million tons in MY11/12, inclusive of unregistered imports
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Imports are projected to remain flat at 1.5 million tons in MY12/13 due to a predicted production increase, constrained demand among the poor as a result of increasing prices, and the Philippine government?s cap on rice imports. Due to increased commodity prices and U.S. market share of imports in CY2011, U.S. wheat sales to the Philippines reached a record $705 million, compared with the previous year?s level of $407 million. Total wheat imports are expected to marginally decline from 3.24 million tons in MY 10/11 to 3.20 million tons in MY11/12 due to dampened food demand, but recover in MY12/13 to 3.30 million tons as the Philippine economy improves. Further economic growth and the expanding middle class are likely to result in increasing sales of higher-value U.S. wheat through MY12/13. Corn imports are likely to stay at the MY11/12 level (50,000 tons) in MY12/13 due to a predicted increase in local production and a shift away from yellow corn to feed wheat use.

Executive Summary:

Rice production in MY11/12 is expected to increase from the previous year?s level of 16.7 million tons to 16.9 million tons despite the strong typhoons in 2011 as a result of steady rainfall in early 2012. Corn output in MY11/12, however, will likely decline from 7.27 million tons in the previous year to 7.14 million tons due to the same severe weather patterns. Barring any major natural calamity or prolonged weather disturbance, local rice and corn production is expected to increase to 17.14 million tons and 7.2 million tons, respectively, in MY12/13 due to the considerable boost in the Philippine Department of Agriculture?s (DA) budget for improving irrigation systems, farm to market roads and post harvest facilities. There continues to be no commercial wheat production in the Philippines.

Rice and white corn consumption will likely contract in MY11/12 as a result of the typhoons in 2011 which reduced the incomes of the already impoverished population. In response, the Philippine government (GPH) will expand a cash transfer program for the poor in 2012, which is expected to result in a slight increase in rice consumption in MY12/13. White corn consumption in MY12/13, on the other hand, is expected to remain at the MY11/12 level due to increasing food and fuel prices. For wheat, demand is expected to stay flat in MY11/12 due to the slowdown of the Philippine economy in 2011 as well as high wheat prices. In CY2011, U.S. wheat imports reached 1.93 MMT (an increase of 210,000 MT over the previous year?s level) with sales reaching a record-level of $705 million (compared with the previous year?s level of $407 million). Overall wheat imports, including those from the U.S., are predicted to increase slightly in MY12/13 as economic growth accelerates and wheat prices stabilize at lower levels.

Feed demand is expected to remain firm through MY12/13 due to the improved economic outlook in 2012. Economic improvement is expected to enhance changing dietary preferences of a growing middles class for more protein sources. In addition, meat export opportunities as a result of the 2011 declaration by the Office International des Epizooties (OIE) that the Philippines is Foot-and-Mouth Disease (FMD) free, and the shift from backyard operations to more large-scale, commercial operations will likely cause increased feed demand in the country. Feed wheat imports are expected to grow through MY12/13 due to high yellow corn prices, quality issues of locally produced feed corn, and increased availability of low-grade wheat from Australia. Imports of yellow corn will likely decline in MY11/12 due to an expected shift to feed wheat, and stay at this level in MY12/13 due to increased local production.

The GPH is maintaining its rice self-sufficiency target by 2013 although imports will still be needed for buffer stock purposes. Imports significantly declined in CY2011, due to the cap on imports of 860,000 MT imposed by the National Food Authority (NFA). According to industry contacts however, unregistered imports continued to enter the country at a rate of 400,000 – 600,000 MT/year, spurred by domestic rice prices above international markets. Total rice imports, including unregistered trade, are expected to increase from 1.3 million tons in MY10/11(July-June) to 1.5 million tons in MY11/12. Imports are projected to remain flat at 1.5 million tons in MY12/13 due to the predicted production increase, constrained demand among the poor as a result of increasing prices, and the Philippine government?s continued cap on rice imports.

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