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THE
higher cost of wheat in the global market and the
diminishing purchasing power of Filipinos, who still
prefer rice over bread, have led local millers to plan
slightly reduced wheat imports this year—to 1.8 tons
from 1.9 tons in 2007.
Ric
Pinca, executive director of the Philippine Association
of Flour Millers (Pafmil), said, “This would mean lower
production because for every 100 bags of wheat, we
produce 75 bags of flour.”
The
millers cannot react accordingly to the price spikes of
wheat internationally because the Price Act allows only
a 10-percent increase in a 30-day period, and going
beyond this would put them under investigation for
profiteering, he added, in lamenting their claimed
expected losses.
The cost
of wheat, he said, went up by 20 percent to $600 per ton
in June from $500 per ton in March.
When
they opted to raise prices in August to P955-P970 for
hard flour and P847-P858 to P870 for soft flour from a
range of P946-P957 per 25-kg bag, he said the bakers
objected, forcing them to roll back prices on September
15.
“While
wheat prices began softening in July; projections are
that another wheat-price spike is due in October or
November this year due to the lower protein content in
wheat being harvested.
“If this
price spike occurs, this will be felt in the local flour
market sometime in January or February next year. It
takes local millers about three to four months before
purchased wheat is milled into flour due to freight and
inventory schedules,” he said.
Pinca
said imported flour, mostly smuggled from China, also
took around 7 percent of the flour market last year,
reducing industry-capacity utilization to only 50
percent.
As to
the return of the discounts that bakers are asking, he
said this is no longer an industry concern and should be
thrashed out on a company-to-company basis since
competition precludes companies disclosing how much
discounts they are giving to specific bakers.
The
domestic flour milling companies are market leader San
Miguel Mills, Philippine Foremost Flour Mills, Pilmico
Foods Inc., Universal Robina Corporation, Morning Star
Milling Corporation, General Milling Corporation, RFM
Corporation, Liberty Flour Mills, Wellington Flour
Mills, Philippine Flour Mills and Delta Milling
Corporation.
The
Trade department had given the bakers and the millers up
to Tuesday to come up with a resolution of the impasse
in flour prices. After this, the bakers can decide if
they want to push through with their planned P1
adjustment in the price of 600-gram loaves and P0.50
increase in 10-piece pandesal packs.
Simplicio Umali, president of the Philippine Baking
Industry Group and general manager of Gardenia Bakeries
Philippines, said as of Tuesday night, they were still
gathering data on the negotiations that the bakers had
with the millers. They will announce the results and
their future plans in a press conference today. |
