DTI expects flour prices going below P900 per bag

Flour millers should reduce their prices to below P900 per 25-kilogram bag to be in line with the Department of Trade and Industry’s computations, which were based on the movement of wheat prices in the world market and the current cost of other production inputs.

Trade Secretary Gregory Domingo said the DTI was still reviewing its computations. At this point, however, it had been determined that prices above P900 per bag were too high.

“Flour prices should be lower than what they are now. Within the next few days, we should see a reduction. It should be less than P900 a bag,” he told reporters on Tuesday.

Asked if prices should be near P800 a bag that bakers claimed was the appropriate level, given movements in wheat prices, Domingo said no. The appropriate price should be on the upper band of the P800-P900 range, he added.

Local bakers earlier said they could reduce the prices of pan de sal to P2 apiece and cut prices of loaf bread by P2 if flour millers would bring prices down to P800 a bag.

Walter Co, immediate past president of the Philippine Baking Industry Group (PhilBaking), said world wheat prices were now at a level that would allow local millers to reduce prices to just around P800.

Citing data from the United States Wheat Associates, he said wheat prices in September had dropped to $401 per metric ton (MT) from as high as $526 per MT at the beginning of the year. Including freight costs, the landed cost of wheat as of end-September was placed at $435 per MT.

He said there was a time a few years ago when flour prices were sold for less than P800 a bag. At that time, wheat prices were even higher at $458 per MT.

Based on these figures, he said local millers could very well afford to bring their prices down to P800 a bag, he said. Right now, flour prices ranged from P880 to P930 a bag.

PhilBaking president Simplicio Umali Jr. said the DTI would have to find out the specific import values that millers used, to enable it to determine whether or not current flour prices were justified.

This was necessary, he said, especially considering “the significant downward trend in wheat prices in the world market.”