P340 cut in price of 25-kg flour sought
By Ronnel Domingo
Philippine Daily Inquirer
First Posted 22:48:00 11/20/2008
Filed Under: Consumer Issues, Food
MANILA, Philippines—A group of big bakery companies said the removal of tariffs on imported wheat would not translate into significant reductions on prices of bread.
Simplicio Umali Jr., president of the Philippine Baking Industry Group (PhilBaking), said in an interview the move was only good for a price cut of 60 centavos per loaf and 30 centavos for a 10-piece pack of pan de sal.
PhilBaking groups large bread firms like brands such as Lemon Square, Le Coeur de France, Cindy's Bakeshop, Walter/Real Good, Gonuts Donuts, The French Baker, Gardenia, Julie's Bakeshop, Dunkin Donut, Fortune Bakeshop, Tiffany, and Mr. Donut and KFC.
"Instead, we are urging the government to persuade flour suppliers to bring down the price of a 25-kilogram bag to around P600 from P940," Umali said.
"That was the price in August 2007 and wheat prices have settled back to around $300 per metric ton, which was observed in the same period," he said. "Local flour prices should reflect the significant decrease in international prices."
Umali said that if the local price of flour slid by more than P300 per bag, the big bakers could reduce the price of pan de sal to P1.50 per piece.
"The small bakers, which serve a large part of the market, can even go back to selling the P1 pan de sal although each piece may be smaller," he added.
Last Wednesday, Trade Secretary Peter B. Favila announced in a briefing at Malacañang that President Gloria Macapagal-Arroyo signed Executive Order No. 765, temporarily removing the import duty on wheat for six months.
The EO will take effect 30 days after publication, but it has yet to see print.
In a separate interview, Ric Pinca, executive director of the Philippine Association of Flour Millers (Pafmil), said the group would reflect the decrease in import costs on the price of flour as soon upon the effectivity of the order.
Pafmil groups Liberty Flour Mills, Wellington Flour Mills, Universal Robina, Philippine Flour Mills, General Milling, Pilmico Foods and RFM.
"If the EO is published immediately, we can implement a price reduction as early as January," Pinca said.
Asked how much the tariff removal would translate to flour prices, he said this depended on the amount of cost and freight of wheat.
"At the September rate of $514 per metric ton, which is the prevailing price influence on our current inventory, zero tariff would mean a decrease of about P25 per bag of flour," he said. "That does not take into account other factors like the value-added tax."
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