Government won't extend zero-tariff privilege on cement, flour imports

MANILA, Philippines - The government is not keen on extending the zero tariff on cement and flour because there was no significant drop in the prices of the two commodities.

“I don’t think we are going to extend because we hardly saw the impact. We are not getting the full benefit of the reduction in revenue,” Trade and Industry Undersecretary Zenaida C. Maglaya said in an interview.

Zero tariff translates to lower tax collection for the Department of Finance (DOF). Maglaya said they will be recommending to the Tariff Commission that the tariff not be extended.

There has been movement in the price of both cement and flour recently. It has been reported that cement prices have gone up to as high as P270 per bag even if the suggested retail price is P205 to P210 per bag.

Meanwhile, flour prices ex-mill will have to go up by P20 per bag this month due to the higher cost of wheat in the world market brought about by the premium on protein, the Philippine Association of Flour Millers (PAFMIL) said.

According to them, recent harvests of wheat by the exporting countries are of lower protein causing the suppliers to put a higher price tag on high protein wheat.

Depending on the mill, brand and quality, flour prices at P750 - P770 per bag for hard flour and P650 -670 per bag for soft flour.

These are ex-mill prices or the price of goods picked up at the mills. Retail prices especially in the provinces are higher due to transport costs and margins of local traders. 

Hard flour is used for breads such as pandesal, loaf bread and monay, among others. while soft flour is for pastries, cakes and cookies.

World wheat prices are still expected to further go up as the supply depletes until the next harvest sometime in October this year.

The Philippines bought two million tons of wheat last year, around 65 percent of which is the high protein Dark Northern Spring (DNS) wheat from the United States, Canada and Australia. The DNS wheat is known as the “Mercedes Benz” of wheat due to its high protein which local bakers prefer due to its consistent rising quality. The US supplies around 90 percent of Philippine wheat requirements.

The Philippines is the fifth largest buyer of US wheat with 1.7 million metric tons purchased in 2008. Japan is the leading US buyer followed by Nigeria, Mexico and Egypt.