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Bread, biscuit, noodle prices to go up 15% with higher tariff on Turkish flour

By: Amy R. Remo, July 14th, 2013 09:25 PM

MANILA, Philippines — Prices of bread products, biscuits and noodles may increase by up to 15 percent this coming September, should the government decide to slap a higher tariff on imported Turkish flour, according to the head of a business group.

This impending price hike is equivalent to a P1-increase in the prices of bread, and about 50 centavos for the Pinoy Pandesal to P3.50 per piece. Produced by small community bakers, Pinoy Pandesal is the brand of affordable bread products that uses the cheaper Turkish flour.

Ernesto Chua, chairman of the Filipino-Chinese Business Council, explained by phone on Sunday, that the impending price hike would depend on the decision of the Department of Agriculture on whether it would increase the tariff slapped on imported Turkish flour to 20 percent from the current 7 percent.

The decision would likely be released by middle of September, he added.

“We have already stopped importing Turkish flour because we don’t know what will happen. If the tariff on Turkish flour is increased, our products will no longer be competitive. So we are on a wait-and-see stance,” said Chua, also the president of flour importer Malabon Longlife Trading Corp.

Currently, Turkish flour costs about 30 percent (P200) cheaper than locally milled flour and is preferred by bread and noodle makers, according to a statement issued by the Filipino-Chinese Bakery Association Inc. (FCBA) dated July 14.

The group of bakery owners or producers of bread, noodles, cakes, pastries, pizza, siopao, pandesal, cookies, and biscuits disclosed that hard flour or bread flour from Turkey is sold at P700 per 25-kilogram bag while soft flour costs P620 per bag. In contrast, the price of locally milled flour costs anywhere from P900 to P950 a bag.

Since flour represented more than 50 percent of the cost of bread production, an increase in the price of flour will automatically translate into higher prices of bread.

“There are 25,000 bakeries operating in the Philippines and many small and medium-sized bakeries are using lower priced flour for them to offer breads within the reach of the Filipino consumers,” FCBA said.

The petition to slap higher tariffs on imported Turkish flour came from the Philippine Association of Flour Millers Inc. (PAFMIL), which, the FCBA claimed, “has the monopoly of the local flour market [and] is using its influence on the government to push the Turkish flour out of the country, so that they can dictate the prices of flour.”

Chua, however, pointed out that Turkish flour represented only 9 percent of total supply in the country, while the bulk of the volumes (89 percent) is still being supplied by Pafmil member companies, which include Liberty Flour Mills, San Miguel Purefoods, and RFM Corp., among others.

Data provided by the FCBA showed that while Turkish flour imports reached only 6.28 million bags or 9 percent of the total supply in 2012, local flour production amounted to 64.6 million bags in 2012, increasing substantially over the past five years from only 55.8 million bags in 2008.

Chua also underscored the sales growth posted by Pafmil members in 2012, proof that these companies have been unaffected by Turkish flour imports.

“They claim that they are affected by Turkish flour. How come local millers are expanding? One new mill just opened in Calamba, Laguna, another new one will open in Cebu late this year. Two new mills will open next year, one in Isabela and another one in Mindanao,” the FCBA added.

“The petition of Pafmil must be dismissed, in order to save the Filipino consumers and the baking industry from the monopoly of local flour millers… The welfare of the consumers and the general public should be protected ahead of the interest of a monopolized group such as Pafmil,” the FCBA further stressed.

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