A group of bakers is mulling over plans to take legal action against the Department of Agriculture for issuing an administrative order that will effectively raise the tariff on flour to 20 percent.
Benito Lim, president of the Filipino-Chinese Bakery Association Inc. (FCBAI), said the recommendation of Agriculture Secretary Proceso Alcala was “premature” as it has yet to undergo a more thorough evaluation.
Lim added that the proposal was based on a petition that contained fundamental errors.
“We will file a certiorari with the Court of Tax Appeals for grave abuse of discretion amounting to lack or excess of jurisdiction. The DA should not have accepted that petition, which failed to meet requirements,” Lim on Friday told the Inquirer by phone.
Lim was referring to a petition filed by the Philippine Association of Flour Millers (Pafmil). The group recommended a hike in the tariff slapped on flour to 20 percent from the current 7 percent.
Members of Pafmil claimed that Turkish millers have been exporting flour to the Philippines “at dumping prices, which is in violation of World Trade Organization rules.”
This, Pafmil said, puts local millers at a disadvantage.
But Lim argued that the petition is not valid because the arguments presented by Pafmil does not support the group’s “dumping” claims.
Dumping occurs when a company sells a product to another country at prices lower than the current market prices in the country of origin.
Lim defined the grounds for dumping: The products in contention must be of the same quality; and local materials are seen to suffer from the entry of products from the foreign firm.
But this is not the case in the country, Lim said, as local flour millers reported rising revenues last year.
Also, Turkish flour represented only 9 percent of the total supply in the country, while the bulk of supply (89 percent) still came from local millers, most of whom are members of Pafmil.
Lim further said that when it came out with the petition, Pafmil only considered the welfare of local flour millers.
There are other stakeholders involved, he said, such as the community bakers and consumers, who will bear the brunt of high bread prices.
A hike in tariff may result in the closure of some small bakeries and in higher prices of bread.
It was estimated that the price of “Pinoy tasty” will go up by up to P4 a loaf from its current price of P37, while the cost of a 10-piece pack of “Pinoy pandesal” may increase by up to P2.
Produced by small neighborhood bakers, Pinoy tasty and Pinoy pandesal are affordable bread products that are said to be made of cheaper Turkish flour.
FCBAI said in a earlier statement that small bakers have expressed their concern over the inability of importers to supply Turkish flour “because this means that they will be forced to use higher priced local flour to produce breads, particularly the Pinoy tasty and Pinoy pandesal.”
Flour importers have already stopped importing Turkish flour due to the pending petition submitted by Pafmil.
With the recommendation of the Agriculture department, the petition will now be brought to the Tariff Commission for review and final recommendation.
“If they will maintain that decision to hike tariff, then so be it,” Lim said.
But the FCBAI head remains confident that the commission will reverse the recommendation of the Agriculture department and thumb down the Pafmil petition due to lack of merit.
“If we will be given fair trial, we will win,” Lim said.