Impact of trade liberalization on Philippine corn prices

Abstract

This paper analyzes corn prices and the policy environment for the crop in terms of import policies, tariffs, and other trade policies embodied in the General Agreement on Tariffs and Trade-World Trade Organization (GATT-WTO). Comparative analysis of trends between the pre-GATT years (1990-1995) and the post-GATT years (1996-2000) was done for the highest corn-producing regions in the Philippines (Southern Mindanao for white corn and Cagayan Valley for yellow corn and Northern Mindanao for both yellow and white corn). Compared with the pre-GATT years, the post-GATT years have resulted in higher production and higher profits for yellow corn farmers but lower production and lower profits for white corn farmers. Although both yellow and white corn farmers got higher prices for their products and were still highly protected, yellow corn farmers apparently benefited more from GATT. This may be attributed to the increasing demand for yellow corn in the feed industry. The price competitiveness analysis at the respective wholesale markets in the production areas showed domestic corn to be highly competitive with imported corn both at the in-quota and out-quota tariff rates. After adding marketing and distribution cost up to Manila from the respective production areas, domestic corn was found to be either marginally or not competitive at all with imported corn at the Manila wholesale market at the in-quota tariff rates. At the out-quota tariff rates, the price of domestic corn was competitive with that of imported corn.