The Department of Agriculture (DA) announced on Thursday that the National Food Authority (NFA) is now implementing the government plan to buy at least 300,000 metric tons (MT) of yellow corn for a proposed commodities exchange.

In a press release, DA Sec. Arthur Yap said that the NFA has set aside P3.9 billion to bankroll this "massive corn buying program."

The stock will be bought from domestic growers at the higher support price of P13 a kilo starting in August.

The DA said that President Arroyo last month approved an increase in the NFA's buying price to P13 per kilo of yellow corn last month—from the previous rate of P11.50—to help farmers cope with spiraling production costs and close the demand-supply gap for the grain.

"This rate adjustment will be the second in seven months as the government already increased the per-kilo support price from P10 to P11.50 in November last year," the DA said.

The higher support price of P13 a kilo for yellow corn also puts the cereal at par with the buying rate for white corn.

The DA said this "will provide farmers the flexibility to sell their corn in different parts of the country through the NFA's electronic trading system."

Under this electronic system, Yap said a corn farmer in Bukidnon can command a price of P13 a kilo using the new support price of the NFA for yellow corn, to sell his produce to a feed miller in Bulacan.

The Bukidnon farmer can then deposit his corn at the NFA warehouse in the province and the feed miller in Bulacan can pick up the stocks at an NFA warehouse nearest him in Bulacan.

Yap said this could be the precursor of a futures exchange system, which will help ensure quality and stabilize prices of grains in the country.

Corn farmers have welcomed the increase in the crop’s support price, saying the move will help the sector to attain its production target this year, following a 2 percent growth decline in the first quarter.