Millers seek extension of 7% tariff on flour imports

MANILA, Philippines – The Philippine Association of Flour Millers (PAFMIL) is urging the government to maintain the seven-percent tariff on imported flour.

In a statement, PAFMIL executive director Ric M. Pinca said that the government should not cut the duty on flour coming from abroad because this would result in substantial revenue losses to the government without any corresponding benefit to local consumers.

In addition to this, Pinca said that it would be detrimental to the local industry because lowering the tariff would make local flour millers uncompetitive considering that imported flour is subsidized and already comes in at prices lower than locally produced flour.

Bureau of Customs records show that for this year alone, imported flour from Australia, Turkey and Russia have been coming in at very low prices despite the uptrend in world wheat costs.

Pinca said that it is obvious that some of these imports are subsidized. He further said that industrialized countries are notorious for providing subsidies despite the World Trade Organization’s ban on the unfair trade practice.

“What is ironic is that these imports are sold in the local market at prices just slightly lower than locally produced flour thereby generating huge returns for the importers and retailers. The consumers do not benefit at all,” Pinca said.

Russian flour comes in as low as $307 per metric ton or only P453.47 per bag inclusive of seven-percent duty and 12 percent value added tax. Yet, it is retailed at P653 per bag for a whopping 69 percent for P200 margin per bag.

Lowest priced flour from Turkey, according to BOC records is at $236 CNF per metric ton or P348.97 with seven-percent duty and 12- percent VAT. However, it is being retailed at around P620 per bag which is 56 percent more than the landed cost or a P271 per bag margin. 

Australian flour CNF cost ranges from $395 to $435 per metric ton CNF, or P584 — 642.54 per bag with duty and VAT. Retail price is around P760 per bag, or over P100 margin per bag.

To have flour import duty reduced would only increase the importers and retailers their margins at the expense of local consumers who do not benefit from the cut in import duties.