No price hike in flour

MANILA, Philippines – Local flour millers yesterday announced that there would be no more price increase for the rest of the year.

“I don’t think there will be any more price increases this year, although I must admit that the flour millers will be posting losses,” sad Ric Pinca, executive director of the Philippine Association of Flour Millers.

Pinca said the millers could not raise their prices anymore because the market will not be able to bear it.

Flour millers adjusted last month their prices, ranging from P946 to P957 per 25 kg bag, from P955 to P970 for hard flour, and from P847/P858 to P870 for soft flour.

The price, however, was rolled back on Sept. 15 to its previous levels at the behest of the Department of Trade and Industry (DTI) when big bakeries asked for lower flour prices, saying they would either increase the price of bread or shrink the size of bread further if they do not get the discount.

Pinca, however, warned that flour prices might again increase in January, as projections are that another wheat price spike is due in October or November due to the lower protein content in wheat being harvested. It takes local millers about three to four months before purchased wheat is milled into flour due to freight and inventory schedules.

“There is a big possibility that we will have to adjust our prices in January or February if the harvest is not good because we cannot absorb any more losses,” Pinca noted.

He said the local wheat flour milling industry sees losses this year due to escalating wheat import costs, a shrinking market and a consumer base with weakening purchasing power.

“We hope to rebound soon, but with the way the commodity market is shaping up, recovering next year might be an overly optimistic projection. Perhaps 2010 would be a more realistic target for recovery,” he explained.

Pinca described 2008 as an abnormally difficult year as higher world wheat consumption and low ending stocks plus a strong freight market caused the industry’s weighted average wheat import costs to shoot up in June this year to around $600 per metric ton, 20 percent higher than its March 2008 price level of $500 pmt.

Millers can only raise prices by 10 percent a month as mandated by Republic Act 7581 also known as the “Price Act.” Any price increase beyond 10 percent in a 30-day period is a violation of the law.

There are 11 flour milling companies in the Philippines led by San Miguel Mills, followed by Philippine Foremost Flour Mills, PILMICO Foods Inc., Universal Robina Corp., Morning Star Milling Corp., General Milling Corp., RFM Corp., Liberty Flour Mills, Wellington Flour Mills, Philippine Flour Mills and Delta Milling Corp.