With the series of oil price rollbacks coupled with the downward trend of wheat prices in the world market, a bakers’ association in Cebu is now optimistic that bread sizes may eventually increase during the holidays.
Cebu Bakery Association, Inc. (CEBA) president Christopher Ebisa said that due to the constant decreases of wheat in the world market and the recent imposition of zero tariffs on wheat and cement, either low prices of bread or bigger sizes can be expected by their consumers this holiday season.
Recently, President Arroyo issued Executive Orders 765 and 766 that remove tariffs on imported wheat and cement, which is expected to prompt flour millers to lower their prices. Tariffs on imported flour from countries such as Australia and the United States are pegged at seven percent, while a lower five percent tariff are imposed on flour from within Southeast Asia.
However, Ebisa pointed out that since the zero tariff imposed by the government will only take effect for six months, this will not permanently make a significant change in the industry.
Ebisa said that aside from decreasing the revenues of the government in terms of importation taxes, flour prices will still eventually go up next year after the orders are imposed.
“This is a palliative and temporary solution only. We need to have a permanent solution like increasing the purchasing power of the consumers through providing more job opportunities so that businesses like ours will thrive in the country and if we impose price increases people can still afford to buy our products,” said Ebisa.
He said that even if the zero tariffs will be imposed, bakers are not even sure if millers will lower their flour prices because they have a different scheme in increasing and decreasing their prices.
Ebisa said that if flour prices will be lowered to only around P50, this will not be a significant reason for bakers to decrease their prices because flour will still be expensive compared to last year wherein it was priced at around P600 per sack.
He said that prices now for flour at their level reach from P960 to as high as P980.
“Gamay ra gihapon ang P50 kutob P100 nga decrease kontra sa niaging tuig. (A P50 to P100 pesos decrease is still minimal compared to last year’s price) so we may not expect a big effect to our bakery prices especially that flour is not only the ingredient in making bread and prices of other ingredients like milk, vegetable oil and sugar are still high,” said Ebisa.
Major components in bread production include packaging materials, labor and energy like LPG and diesel, and flour accounts for around 60 to 70 percent of the total production costs.
But Ebisa stressed that if flour millers will impose a significant decrease for flour prices, bakers will gladly lower their bread prices to satisfy their consumers especially this holiday season.
He also said that instead of lower bread prices, consumers can also expect bigger and heavier bread once prices for flour will be lowered.
Currently here in Cebu, prices for pan de sal is at two pesos to P2.50 while loaf bread is at P36 to P40.
“If millers will decrease their prices, we will either increase the volume and sizes of our bread or decrease its prices but it would depend upon the decision of individual bakery owners. But affordable bread prices will be good for our industry because many consumers will afford to buy bread,” said Ebisa.
But if there will be no significant decreases of flour prices, Ebisa said that bakers may impose stable bread prices this year-end because wheat prices next year will likely increase in time for the planting season.