Millers oppose plan to remove tariff on imported flour

MANILA, Philippines – Local flour millers warned that removing the tariff on imported flour will have a negative effect on them because importers might “undercut” them.

In an interview, Alfonso Uy, chairman of Philippine Foremost Milling Corp., said that the local flour millers “are not against importation but it must be a level playing field.”

Earlier, Trade Undersecretary Zenaida C. Maglaya said that they are mulling the possibility of reducing the tariff on flour to zero. Should this happen, Maglaya estimated that bakers can get up to 50 percent savings per sack of flour.

The savings, Maglaya said, will make it possible for bakers to again sell pan de sal at P1 per piece.

Flour production is expected to go down by an additional five percent this year after decreasing by 22 percent last year.

Uy said that the reason for the lower production is the contraction in demand. He said that although flour is the second staple food of Filipinos the demand has gone down significantly due to the slowdown in global economy.

He said that despite the drop in demand prices are low because the competition keeps it that way.

Meanwhile, flour millers are asking the Department of Trade and Industry (DTI) to extend the duty free importation of milling wheat in order to keep the price of bread and other flour-based products stable.

In a letter, Philippine Association of Flour Millers (PAFMIL) president Ric M. Pinca has asked Trade Secretary Peter Favila for the extension of Executive Order 765 which removed the tariff on imported milling wheat.

From December 21, 2008 when EO 765 took effect, wheat flour prices have dropped from a range of P915 - P930 per 25 kg bag to as low as P760 - P780 per bag.

Likewise, Pinca noted that bread prices dropped as a consequence of lower flour prices. Pandesal which previously retailed at P2 - P2.50 per piece of 25 grams went down to P1.50 per piece.