Good and Bad Effects of Dirt-Cheap Imported Grain

Day 567, 06:05 • Published in Philippines Philippines • by Swagger McSwag

HACIENDA IN LUZON

Currently, our domestic grain companies are being blown away by foreign competition, particularly from Hungary and, more recently, Spain. Despite our 50% taxes on imported grain, they can still peddle they products here at dirt-cheap prices because of their high grain regions, which allow them to produce twice as much grain as companies in medium grain regions (like our companies).

One Q2 Spanish company is even offering grain at a phenomenally low price of 0.52 PHP per unit.

If this continues, our grain sector might collapse and our farmers and millers will be forced to work as oil drillers and iron miners (which is not so bad as long as we have enough companies to accommodate the spillover, and that demand for oil and iron products remain high enough).

On the upside, though, the dirt-cheap imported grain, aside from the fierce prices wars between companies, have been one of the chief contributing factors in driving our food prices down to record-low levels. If the imported grain goes away, food prices will have nowhere to go but up.

Furthermore, the hefty 50% tariff that we impose on grain imports pose as a lucrative source of income for the government. Although the average unit price of foreign grain is very, very low, it is exactly for this reason our food companies race with each other to take them off the market so that they sell for many hundreds of units per day. Since the government receives HALF of whatever these foreign companies make per unit grain sold, I can only imagine that foreign grain sales make a pretty significant portion of our daily tax revenue.

So, what are we to do?

Shall we protect our local grain companies and the jobs of our farmers by raising import tariffs to force foreign grain companies away from the country?

Or, shall we leave it be, and keep driving the food prices even further down, making them more than accessible to ALL (including minimum wage earners), while accelerating the growth rate of our government revenue?

Your thoughts, comments and opinions are much welcome.

To Congress Members, you may participate in the Congress forum discussion for this topic by following this link: http://ephilippines.forummotion.com/council-of-state-f7/good-and-bad-effects-of-dirt-cheap-foreign-grain-t594.htm

-Ariel, VP of the Philippines
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June 9, 2009