Jul 162013

MANILA, Philippines – A group of bakery owners and bread producers warned that prices of Pinoy pandesal, other bread products, biscuits and noodles would increase by 10 to 15 percent, if the government gives in to the demand of an influential lobby group to restrict the entry of affordable flour from Turkey.

The Filipino-Chinese Bakery Association Inc. (FCBA), the group of bakery owners or producers of bread, noodles, cakes, pastries, pizza, siopao, pandesal, cookies, and biscuits from Luzon, Visayas and Mindanao, said imposing a higher tariff on flour imported from Turkey would increase the price of Pinoy pandesal by 50 centavos to P3.50 per piece from the current P3 apiece.

Pinoy pandesal is the brand of affordable bread products produced by small community bakers. “Because of cheaper Turkish flour, Filipino consumers enjoy lower priced breads and other flour-based products such as dry noodles, biscuits and fishballs,” the FCBA said.

The FCBA said flour represents more than 50 percent of the total cost of bread production, and an increase in the price of flour would automatically translate to 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,” the FCBA said.

The FCBA said the Philippine Association of Flour Millers Inc. (PAFMIL), which has monopoly of the local flour market, is using its influence on the government to push the Turkish flour out of the country so that they could dictate the prices of flour.

Turkish flour is about P200 or 30 percent cheaper than the locally milled flour and is preferred by bread and noodle makers. Hard flour or bread flour from Turkey is sold at P700 per 25-kilogram bag while soft flour costs P620 per bag.  On the other hand, locally-milled flour costs anywhere from P900 to P950 a bag.  

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Flour prices in the Philippines are also among the highest in the world, with the hard flour costing more than $700 per metric ton at the mill.  In comparison, mill prices of hard flour stand at only $580 per MT in Indonesia, $570 per MT in Korea and $570 per MT in Vietnam.

According to FCBA, this is because PAFMIL controls 89 percent of the local flour market. To retain its monopoly, PAFMIL asked the government to increase its tariff duty on Turkish flour from seven percent to 20 percent.  Turkish flour accounts for only nine percent of the flour supply in the Philippines, while the two-percent balance represents imports from other countries such as Indonesia and China.

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