MANILA, Philippines - The Department of Trade and Industry (DTI) is recommending the indefinite extension of the zero tariff on imported wheat and cement to keep the price of bread and cement from going up.
The zero tariff on cement and wheat is set to expire on July 14.
In an interview with reporters, Trade Secretary Gregory L. Domingo said they are in favor of extending the zero tariff especially on wheat. “This is very targeted to the people,” Domingo said. He explained that the price of wheat directly affects the price of bread thus affecting almost all consumers.
The tariff on wheat is only three percent and flour millers already said they do not mind if the tariff is re-imposed because it only corresponds to a P20 per bag increase in the price of flour.
Recently, local bakers inplemented a P1 price increase for loaf bread because of high flour prices. As a result, DTI has asked bakers to show their computation in order to justify the increase.
In response to the threat of the show cause order of the DTI bakers released a statement saying that wheat prices have gone down by 10 percent from its price of $526/mt in February to $476 this June based on the data of US Wheat Associates. Despite this downward trend in wheat as well as in freight costs, local flour prices are continuously increasing from P840/25kg sack to P930 in June or an increase of 11 percent.
Bakers urged the government through the DTI to have a dialogue with the flour millers who are members of the Champflour and the Philippine Association of Four Millers (PAFMIL) to explain the reason behind the 11 percent increase in flour prices given the 10 percent drop in wheat prices. Local millers can inform the DTI when they will reflect the decrease in wheat prices to their flour prices so bread prices can also start declining.
According to the bakers, in the past, PAFMILsaid it takes three months from purchase date for wheat to become flour due to shipping time from the United States. The Philippines buys wheat mostly from the US.
“We are all anticipating the overdue drop in the price of flour as according to the millers it takes three months for them to convert wheat into flour. It has been already four months and we are hoping prices will start to decline,” Walter Co, president of PhilBaking, said.
Comparatively, same premium grade flour from Asean countries can be brought here in the Philippines at P100-P130 cheaper than the prevailing price of flour.