Some economic aspects of the supply and consumption of Philippine corn

Abstract

The versatility of corn (zea mays) as a crop makes it important in the Philippines. The major uses of corn are as human staple food and as an input to the livestock, poultry and food manufacturing industries. Corn growing is common to all regions. In 1985, the highest production came from Mindanao, particularly Southern and Central Mindanao. Until about 1960-61, the Philippines was self-sufficient in corn, but in 1962 the country started to import, as a result of corn supply deficits, to meet the growing demand stemming from the livestock industries. From 1961 to 1985, while production of corn increased by 4.9 per cent per annum, this growth did not suffice to meet the rising demand for stockfeed which is growing at about 8.7 per cent per annum. Government policies are aimed at price stability and enhancing the growth in corn production to provide an adequate domestic corn supply. Although production has increased, most of the increase in output has however, relied on the expansion of area under corn rather than on increases in productivity. Along with yield increasing programmes, the government has instituted price policies for both corn farmers and the consuming populace. Philippine corn farmers respond positively to changes in the price of corn, however, the estimated elasticities were somewhat low. The supply of corn were inelastic with respect to corn prices in the short-run. In the long-run, the supply of corn were also found to be inelastic except for Southern Mindanao. Demand for corn as feed was analyzed and showed that the livestock and poultry industries respond negatively to changes in prices which is a valid result on a priori ground. The other explanatory variable that significantly explain the demand for corn from these sectors was the number of animals receiving corn. Food consumption analysis showed price elasticity to be negative but not significant. Income elasticity of demand for corn in the Philippines was found to be negative, confirming corn as an inferior good. Also, wheat was found to be a substitute for corn as human food.