Indonesian flour keeps local bread prices down

MANILA, Philippines - Bread prices did not go up last December and early this month in spite of the seasonality and spike in oil prices because the entry of imported flour has given bakers the option to use cheaper flour.

In an interview, Philippine Baking Industry Group (Philbaking) past president Walter Co said most bakers were able to hold off any price adjustment because they have the option to buy Indonesian flour, which is the same quality as locally milled flour which both use wheat from US, Canada and Australia.

According to Co, bakers usually adjust their prices in December. Only a few did so because imported soft and hard flour are available. Hard flour is used for bread, while soft flour is for cookies and noodles.

 Flour importer Ernesto Chua, the president of Malabon Long Life, said his import volume for Indonesian flour has gone up this month. Last November, it was at 20 containers. Currently it is now 50 containers per month. This is approximately 50,000 bags. This volume, Chua said, is 1.5 percent of the monthly consumption.

Chua said Indonesian flour is P110 per bag cheaper than locally milled flour. Local flour is P900 to P950 per bag while Indonesian flour is P840 per bag. In spite of the entry of imported flour, Chua said local millers need not worry because imported flour is only around 12 percent of total flour sales.

“This is eventually good for consumers because competition drives down the price,” Chua said on the entry of imported flour. By this year, Chua said, he is planning on increasing his numbers which will push imported flour to 25 percent of the market. “It should not hurt the local production,” Chua said. Chua started importing from Indonesia July last year.

The Indonesian flour is milled by PT Eastern Flour Mill, one of the five biggest flour mill in the world.

Eastern Pearl Flour Mill President Jason Craig has assured the local bakers that they can provide the necessary supply given their capacity of 1.5 million metric tons per year. Likewise, Craig said that they can produce a custom made blend for the Philippine market in order to supply the demand.

Craig said they are importing 700,000 metric ton of wheat annually from North America, Black Sea and Australia.