Tariff-less trade can be detrimental

Our business leaders say that the global economic rebound is now happening. Actually, the optimist in me believes that so much of this is true. However, for the consumers in the country now, many feel that the tail end of the crisis is still very much here and now, and it certainly looks to be lingering in fact.

Prices of prime commodities are starting to go up this month, and the Philippine Association of Supermarkets Inc. (PASI) says that by mid-February, we can expect another round of price increases of commodities such as noodles, bread, and other flour-based products. Traditionally, January is when prices soften a bit because the buying binge ceases abruptly after January 1st and consumers are back to their old spending habits, pulling back a bit after they have exhausted their 13th month pay and other holiday bonuses.

The price of flour is now between P770-790/bag, not P750 as reported in many dailies for hard flour, which is the flour of choice for our Filipino bakers. This is according to the Philippine Association of Flour Millers Inc., so this figure must be more accurate. It could be higher in the provinces because of transport costs, etc. It is now up by P20/bag, which is really not much considering that the industry is now reacting to news reports that the flour millers are now looking at a three percent tariff versus the zero tariff they enjoyed for about a year from 2008.

Our bakers favor the hard flour and premium wheat which is higher in protein content, hence more expensive. We are importing the DNS14 which bakers all over the world consider as the Mercedes Benz of wheat. Purportedly, this wheat gives bread a much higher rise, which is what Filipino bread lovers look for in bread-the higher rise, the better, so we pay for this premium.

In 2008, before the tariff was completely scrapped in response to the urgent request of the country’s flour millers, the price of flour in the world market soared to $600 per metric ton. With those prices, our flour in the local market sold at P970/bag. With duties removed, the cost went down to P750/bag, which was a huge help to our bakers and noodle/biscuit manufacturers. With the three percent tariff back, the resultant increase is only P20/bag, which many find fair and reasonable.

We had a chat with Ric Pinca, executive director of the Philippine Association of Flour Millers Inc. who was very engaging and who let us in on some interesting tidbits about the bread-loving Pinoys. I never realized that the Filipino bread lover likes his bread soft and sweet, unlike most other European or American bread lovers for instance. For this sweet dough, our flour millers have to import the high protein wheat dark Northern Spring to come up with what many bakers say is the sweetest bread in the world. In fact, our local bakers use between 16 percent to 20 percent sugar in our local pan de sal and sliced bread, and while many foreigners favor hard bread, ours are soft and sweet. Mr. Pinca adds that before, our bread was not as sweet, hence many still found the need for palaman to make it more tasty. Shifting to sweet dough, many could eat it plain, without any need for palaman. All boils down to economics.

There was a pan de sal rage all over the country about two decades ago where hot pan de sal was offered 24 hours/day, and many of these corner bakeries are still operating now. These self-taught bakers are still churning hot pan de sal round the clock, though it has shrunk in size and bulk over the years. A foreigner here on vacation about two years ago remarked to me that he has never seen so many small bakeries bunched together. In every corner there was one, and certainly in every street. How do they stay afloat?

Most of these are family-operated small businesses, with the family quarters just above or behind the bakeries, and the family members themselves run the bakery and store, so operating costs are brought down to minimal. Only about 20 percent of the country’s bakeries are mechanized, with the 80 percent still using bare hands or what they call in the bakery lexicon as “sagwan” to mix the dough. What many of them don’t realize is that improperly mixed dough does not rise as well as dough that has been mixed right. Mechanized, there is no room for guesswork and less opportunity for lapses.

With the new technology in baking, they now use percentages in the ingredients for the dough, no longer a handful of this and a pinch of that. And, as all bakers worth their dough know, sanitation plays a very important role in baking. If your bakery is clean, your bread has a longer shelf life.

The Philippine Association of Flour Millers intends to embark on a number of projects to help educate and empower our small bakers, especially in the countryside. First, they intend to teach them to use the type of flour which is produced locally by our millers. Next, they intend to put up baking schools which will teach these bakers not only how to use scientifically correct systems and percentages of ingredients, they also intend to include bakery management and baking accounting in the curriculum. Baking is not only about knowing how to mix and bake the dough. Like any business, there is management and a lot of accounting unique to baking involved in order to make it a profitable venture. While at it, they would like to educate our small bakers on how to improve the sanitation conditions in their bakeries in order to prolong the shelf life of their products.

Significant event not to be missed

The largest ICT/BPO event in the country will be held on Feb. 8-9 at the SMX Convention Center in Pasay City.

This is the 10th edition of the e-Services Global Sourcing Conference and Exhibition which is a government-led business event. After ten years in the service of IT-enabling our BPOs, e-Services hopes to inject fresh initiatives into the industry as new trends evolve in the outsourcing industry.

In 2001, the country started with just a few call centers. It was a fledgling industry that already employed thousands of new graduates and many saw its potentials. Now, the BPO industry in the country is valued at $6 billion and is now recognized as the single biggest employment growth sector in the country.

The DTI hopes to target 120 exhibitors and 1,440 trade buyers for this show

Way to go!

Mabuhay!!! Be proud to be a Filipino.

For comments: (e-mail) [email protected]