Flour millers seek lower tariffs for imported baking ingredients

MANILA, Philippines — With flour prices seen to remain high due to external factors like the ongoing Russia-Ukraine conflict, the country’s flour millers are recommending lowering of tariffs for other imported baking ingredients to help bakers.

Philippine Association of Flour Millers Inc. executive director Ric Pinca said that while there is adequate local supply, flour prices are not expected to go down anytime soon given higher global wheat prices.

“This is a worldwide situation where three major factors caused the price increase. One is the Ukraine-Russia war. Number two, India banning exports and extreme drought in the US, particularly in areas where they grow wheat,” Pinca said during the Pandesal Forum at Kamuning Bakery Cafe yesterday.

He said the Philippines imports 100 percent of all its wheat needs for flour mills. The Philippines buys 90 percent of its wheat requirements from the US, while the rest are sourced from Canada and Australia.

Given high prices, Pinca said one way the government can help bakers is to reduce the import tariffs of other baking ingredients like yeast. And while wheat importation is already zero, it is subject to value-added tax (VAT).

“I doubt the government would reduce VAT because that is the only assured government revenue as far as imports are concerned,” he said.

He said bakers do not just face high costs of ingredients, but also high logistics costs.

With president-elect Ferdinand Marcos Jr. assuming the post of agriculture secretary, he said this is reassuring for the industry, as this would allow faster actions to respond to the world food crisis.

He said the decision also shows the incoming administration’s focus on food security.

Kamuning Bakery Cafe owner Wilson Lee Flores said around 80 to 95 percent of bakeries in the country are micro or small enterprises hit hard by increasing costs of baking ingredients like flour and sugar as well as of LPG (liquefied petroleum gas) and rising transport costs due to higher diesel and gasoline prices.

He said local bakeries could only adjust prices a little on pandesal and other bread products as they take into consideration the customer’s purchasing capacity.

For the incoming administration, he suggested leveraging the country’s independent foreign policy and good bilateral relations with Russia by exploring the possibility of importing fuel, fertilizers and even wheat from Russia at lower prices.

Russia is the world’s largest exporter of wheat and fertilizers, and is also among the biggest exporters of oil and gas.