The Turkish flour saga continues

The anti-dumping issue raised by the Philippine Association of Flour Millers (PAFMIL) against Turkish flour may still be unresolved by now, but an important development has come up that directly impacts the row between PAFMIL on one hand, and the Chinese-Filipino Bakers Association on the other.

In a position paper submitted to the Department of Agriculture, PAFMIL has reportedly asked DA Secretary Proceso Alcala to recommend that Turkish flour be levied with a higher tariff (it now stands at seven percent). To level the playing field, PAFMIL said, tariff should be fixed at 20 percent, if indeed there is dumping.

When B&L talked with the Secretary just recently for our One-on-One segment in the show, Sec. Alcala said that while he endorsed the recommendation of the flour millers, the Tariff Commission has denied the petition of PAFMIL for higher tariff for Turkish flour. Meanwhile, the Department of Agriculture is studying the issue to determine if Turkish flour is indeed being dumped in the country.

I wrote about the local bakers’ position in this anti-dumping issue a couple of issues back. Benito Lim, the bakers’ association president, in his lengthy discourse, had this preamble: the three elements of the law include 1. protection against the industry; 2. welfare of the consumers; 3. welfare of related industries. The bakery sector, which is covered by element no. 3, is getting bigger in the country, and while not too many are big enough, the small ones are considered home cottage industries which should be protected as well, said Mr. Lim.

The difference between Turkish flour and local flour is between P170-P180 per sack, so we can imagine where the bakers are coming from. To the local millers’ accusation of unfair trade practice involving dumped Turkish flour, the bakers howl unfair competition, because when the Turkish flour is slapped with a 20-percent tariff rate, their production costs will naturally rise, by at least 13 percent since the rate is now at seven percent.

PAFMIL president Mr. Ric Pinca, who has been a resource person for the show on many issues involving the flour milling industry in the country, readily obliged with an interview in response to our invitation to air their side in this controversy. He said that at the core of this issue, as far as they are concerned is the crime of dumping; their petition for increased tariff rates is to level the playing field, as confirmed by Sec. Alcala.

For those not too familiar with the anti-dumping law which is a World Trade Organization global law meant to regulate the manner of trading among countries, dumping occurs when, in this instance, flour is sold in Turkey for a specified amount, but the same flour is sold to other countries at a much lesser price. WTO, says Mr. Pinca, recognizes that this is unfair to the related industry of the country where the commodity is exported, wreaking havoc on their pricing. Our local government, of course, has likewise maintained the same position, thus our own version of the anti-dumping.

PAFMIL maintains that instead of patronizing imported flour which is illegally dumped into the country, we should endeavor to protect instead the local industry which employs thousands of workers. Some quarters label this stance as protectionist, which should not happen in this day and age. I must also add that the same quarters also maintain that this big flour milling industry is actually composed of a very few, about five to eight big boys who control the industry, led by San Miguel Corp. and Republic Flour Mills. RFM, says Mr. Pinca, used to be the biggest flour milling company, but they are now only no. 6 because Turkish flour has eaten well into their market.

The PAFMIL official also said that other countries like Indonesia have lodged complaints of dumping particularly for Turkish flour, and they have successfully proven their claim. PAFMIL, on the other hand, has taken years to painstakingly gather all the documents to support their dumping claim, even hiring a Turkish lawyer to represent them, and has asked help and support from the Philippine Embassy in Turkey. They have finished the long drawn-out task of gathering receipts and other documents which they have presented to the authorities to validate their claim.

They claim that it is not the competition that they are up against.  Flour coming from India, Indonesia and Vietnam come into the Philippines at zero duty, Mr. Pinca says, and they have no issue with that. But they will not tolerate the blatant disregard for an international trade law—dumping is a crime and whatever gains may be had from it will not excuse the tolerance of the crime.

He cautions our local bakers: if Turkish flour will eventually kill the local flour milling industry, do you think Turkey will keep the prices at the same low rate, knowing that there is no more competition? Of course not, Mr. Pinca says, they will raise the prices, and the local bakers will no longer have a choice, because the local industry is dead.

In all these, I as a consumer, wonder: why can’t the local industry at least match the price of Turkish flour which, according to Mr. Pinca, is inferior to ours? PAFMIL claims that the Turkish government is extending subsidy to their flour industry, which is why they can sell them to other countries at a much lower rate. But how long can this government subsidy last? Can’t we somehow adjust our local prices, and with a dialogue with our bakers convince them that quality compensates for the price difference?  It has to be a two-way street. The bottom line of the bakers’ issue is economics; our flour millers are protecting a well-entrenched industry and upholding an international trade law. PAFMIL says that with their better quality flour, the bakers can bake more bread and in fact earn more.  If this were true, why aren’t our bakers biting the bait? Can we reduce this to pesos and centavos to prove the point and show the way?

With the Tariff Commission’s denial of higher tariff, the ball is in the hands of the DA and the DTI.

Mabuhay!!! Be proud to be a Filipino.

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