US. ‘Enough wheat supply to ensure stable flour price’

29.07.2013

Forecasts of good wheat harvest in major producers such as the United States will ensure the stable price of flour in the local market, local flour millers said over the weekend.

This year the United States Department of Agriculture (USDA) said on July 11 that American farmers will boost wheat output by 29 percent to a record 13.95 million bushels. Wheat is the raw material used in producing flour.

Wheat futures rebounded from a 13-month low in Chicago on signs that cheaper grain is fueling purchases by importers.

Export sales of US wheat are up 45 percent since June 1, compared with the same period a year earlier, reaching 12.31 million metric tons (MMT) as of July 18, Washington reported on July 26.  Purchases by China, the world’s largest consumer, are up tenfold during the period at 3.45 million tons, while Brazil bought 1.2 million tons, up from 50,000 a year earlier. Futures dropped 28 percent in the 12 months through July 26.

Barring any major natural disasters that could cut wheat harvest, local flour millers said prospects of good wheat harvest will ensure that there will be enough supply of the crop.

“Wheat supply is expected to be stable until the end of the year. As long as the price of the commodity remains constant [in the international market], the price of hard flour sold locally will not go up,” said Philippine Association of Flour Millers (Pafmil) Executive Director Ric M. Pinca said.

Pinca said the price of hard flour—which is used for making bread products such as pan de sal—will be stable at P750 per 25-kilogram bag for the rest of 2013.

Local flour millers belonging to Pafmil had also assured that there will be enough supply of hard flour for bakeries.

Pafmil members include Republic Flour Mills, Liberty Flour Mills, Wellington Flour Mills, General Milling Corp., Philippine Flour Mills, Pilmico Foods Corp. and Universal Robina Corp.

These local flour millers import an average of 2 million metric tons (MMT) of wheat which they process into soft or hard flour.

In 2011 Pafmil had lamented the declining domestic demand for flour due to the reduction in the demand for bread products. Citing data from the National Statistics Office, the group noted that per capita consumption of wheat-based products in the Philippines is only at 15 kilograms per annum which is significantly lower than the 120 kilos per capita rice consumption.

In the last two years, Pafmil also said it had to contend with the influx of cheap Turkish flour which they said threatened the viability of the local flour milling industry. The increase in the availability of Turkish flour in the domestic
market prompted the group to recommend increasing tariff on the commodity to 20 percent from the current 7 percent.

Last week Agriculture Secretary Proceso J. Alcala said he has written the Tariff Commission to recommend the increase in the duty of Turkish flour to 20 percent.

Pafmil, however, refused to comment on the matter pending its receipt of the actual letter written by Alcala which effecctively approved the group’s recommendation to increase tariff on Turkish flour.

Community bakeries belonging to the Filipino-Chinese Bakery Association (FCBA), however, warned that the price of pan de sal could increase if the government would impose additional duty on Turkish flour.

The group said the price of Pinoy pan de sal, other bread products, biscuits and noodles could go up by 10 percent to 15 percent if additional duty is imposed on Turkish flour.

FCBA President Benito Lim said imposing a higher tariff on flour imported from Turkey will increase the price of Pinoy pan de sal by 50 centavos to P3.50 per piece from the current P3.

Pinoy pan de sal is the brand of affordable bread products produced by small community bakers.

“Due to cheaper Turkish flour, Filipino consumers enjoy lower priced breads and other flour-based products such as dry noodles, biscuits and fishballs,” the group said.


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