Philippines represents growing US trade partner

The Philippines is home to 105 million people and the third largest feed market in Southeast Asia behind Vietnam and Indonesia, representing 18 million metric tons (nearly 709 million bushels) in annual demand. Yet, prohibitive domestic policies and lack of technical knowledge related to U.S. distillers dried grains with solubles has limited U.S. market share. As a result, the U.S. Grains Council is working to increase efforts to capture the growing demand of this Southeast Asian market.

“The Council must stay vigilant in its efforts to identify, engage and cultivate new demand areas for U.S. coarse grains and co-products,” said Manuel Sanchez, USGC regional director for Southeast Asia. “Despite the current barriers to trade in the Philippines, the Council sees opportunity on the horizon in this large and growing Southeast Asian market.”

The Council actively works with the feed industry in the Philippines to encourage growth in imports of U.S. corn and DDGS.

Domestic policy in the Philippines has historically limited market access for U.S. corn. The government enforces a 50 percent tax on out-of-quota corn imports from the United States, as part of an effort to support domestic corn producers. As a result, this policy effectively caps opportunities for U.S. corn imports.

Despite this policy, corn stocks across Southeast Asia are extremely tight this year. As a result, domestic prices have spiked to as much as double the cost of importing U.S. origin corn. As a result, U.S.-origin corn is starting to flow into Philippine ports. Thus far in the 2017-2018 marketing year (September 2017 to February 2018), the Philippines has imported nearly 104,000 tons (4.09 million bushels) of U.S. corn, a dramatic increase from 6,500 tons (nearly 256,00 bushels) the same time period the prior marketing year.

The second barrier to trade in the Philippines has been a general lack of technical education on the benefits of contributing DDGS to low-cost feed formulations by the feed market. The Council has responded to this need and the rising demand for low-cost, high-protein sources by increasing outreach activities. As a result, DDGS imports have steadily increased over the past four years, reaching nearly 153,000 tons in 2016-2017. Thus far in the current marketing year, the Philippines has imported 66,000 tons of U.S. DDGS.

To continue these efforts, the Council recently participated in a joint partner-member/USGC DDGS rollout in Manila, which included information on U.S. corn processors unveiling new lines of high-protein DDGS in the region, which will provide even more value to the ever-growing aquaculture and poultry sectors.

The Council participated in the seminar, engaged with traders and formulators from the major importing companies and reported productive discussions related to modern DDGS nutrition, feed formulation, contracting and trade policy.

“All left the discussion eager to capitalize on the potential of U.S. DDGS as a staple part of the Philippine feed ration,” Sanchez said. “We will continue to engage the Philippines as new opportunities arise for demand sources for U.S. farmer products and co-products.”