Local flour millers urged to reduce prices

MANILA, Philippines - The Department of Trade and Industry (DTI) has called on local flour millers to reduce their prices following the drop in international wheat prices. 

However, Philippine Association of Flour Millers (PAFMIL) executive director Ric M. Pinca said that the current price is just right because they need to factor in other costs like production cost.

 “I doubt we will lower the price this month but we are willing to sit down with the DTI to discuss this,” Pinca said in a telephone interview.

Pinca added that they have not yet received any communication from the DTI regarding the matter but DTI said they have already sent letter to various flour millers to explain their side.

Based on DTI monitoring of wheat prices from January 2010 to May 2010, the price of wheat ranged from $259 to $277, freight cost from $42 to $45 while the foreign exchange rate ranged from 46.028 to 45.225 to a dollar.

The DTI said these cost factors are nearly the same as those in 2007, wherein prices from January 2007 to September 2007 of wheat ranged from a low of $217 to $334 per metric ton (MT). The foreign exchange rate for the same period ranged from 45.62 to 48.91 to $1 and the freight cost ranged from $39.50 to $86.

Further, despite the zero tariff on wheat from 2009 to 2010, there is a big difference in the 2007 and 2010 ex-mill and monitored prices of flour. The January 2007 to September 2007 ex-mill price ranged from P610 to P670 while the ex-mill price from January 2010 to May 2010 is P790 or a difference of P120 to P180 per bag of flour.

Likewise, the monitored prices from January 2007 to September 2007 ranged from P630 to P680 while the January 2010 to May 2010 monitored prices ranged from a low of P805 to P820 or a difference of P140 to P175 per bag of flour.

Pinca explained that in 2007, the difference between wheat and flour prices is 23 percent. Currently, the difference is 24 percent. “We are just one percent higher now when compared to 2007,” he said.

Bread flour today costs P760 per bag, 24 percent higher than the P610 per bag in May 2007. This means flour prices today are only one percent higher than in May 2007, basically mirroring the movement in the cost of wheat. 

 “I believe we are priced fairly because the price of labor and power is higher now than in 2007,” Pinca said.

 “The price of bread flour has dropped by 23 percent from P970 per bag in 2008 to only P760. If anything should go down now, it’s the price of bread from the big supermarket brands that has remained at a high of P55 per loaf of only 600 grams,” he added.