DTI may restore tariff on wheat, cement

MANILA, Philippines - The Department of Trade and Industry (DTI) said they are inclined to restore the tariff on imported cement and wheat since there has been no significant impact on the price of these products when the government reduced the tariff to zero.

“We might not extend the zero tariff on wheat and cement because the consumers did not feel any benefit from the tariff elimination,” Trade Undersecretary for Consumer Welfare Zenaida C. Maglaya told reporters.

According to Maglaya, cutting the tariff translates to revenue reduction from the government because imported cement and wheat could come in tariff free. However, since the move did not result in any significant reduction on the prices of wheat and cement, Maglaya said they will recommend for the restoration of the tariff.

She said the zero tariff will end in July and they will review the matter in June.

At the same time, Maglaya said that they are hopeful that flour millers will cut their prices given the zero tariff in wheat and the drop in the price of wheat in the world market.

“We gave them one week to explain why their price is not lower,” Maglaya said. Once flour millers agree to cut their prices, Maglaya said bakers are expected to follow suit and reduce the price of loaf bread and pandesal.

“The bakers are saying that the flour here is overpriced. They are saying that the price should go down,” Maglaya noted.

Last week, DTI asked flour millers to explain why they have high prices in spite of the reduction in the price of wheat in the world market.  DTI said the price of wheat now is comparable to 2007 prices and yet the price of flour is significantly higher.

Maglaya said they understand that millers have other operational costs but since wheat makes up 80 percent of their production cost, a significant drop in wheat prices should translate to lower flour prices also.

The Philippine Association of Flour Millers (PAFMIL) has already said the discreparcy between 2007 flour prices and the current price is only two percent. PAFMIL Executive Director Ric M. Pinca said they are not going to reduce their price but they are open to discussions with the DTI.