Bread prices to go up this week

MANILA, Philippines – Prices of bread products are scheduled to increase any time this week despite pronouncements of millers to roll back the price of flour.

Lucito Chavez, vice president of the Philippine Association of Bakers, said the price of loaf bread is expected to go up by P1 and the size of the breakfast favorite pan de sal would likely shrink.

Chavez explained bakers were not getting discounts on flour even before millers had announced they were posting heavy losses this year.  

Ric Pinca, executive director of the Philippine Association of Flour Millers (PAFMIL), said millers could not afford to give discounts to big bakers. “We already agreed to a rollback. We cannot give them discounts anymore because anyway they are big players,” Pinca explained.

Big bakers were receiving discounts of up to P30 per bag of flour, but this privilege ended last month.

“With their threat of raising the price of loaf bread if they fail to get additional P30 per bag discount, the big bakeries are holding the consumers hostage,” Pinca said.

“This does not speak well of the bakery industry,” he said.  

The Department of Trade and Industry (DTI) earlier urged flour millers to roll back prices to their March 2008 level of P957 per 25 kg bag.

“With the rollback, there is no more reason for them to raise prices since they claim that their price increase was due to higher cost of flour,” Pinca said.

“We rolled back flour prices to lend the government a hand during these difficult times,” he said.

With the world economy shaken by the US subprime market meltdown, Pinca said its effects are felt in the local stock market and the depreciation of the peso.

“We believe it is time for all of us to get together and cooperate with the government in stabilizing the price situation,” he said.

Pinca said the move of bakers to increase is not directed at recovering costs but in increasing margins.

He said with the threat of P1.50 per loaf price increase, the bakers stand to increase their gross earnings by P109 per bag and raise their total profit margin to P4,051.5 per bag.

This means they will earn more if the price of flour is raised by P13 per bag, he said.

A 25 kg bag of flour produces 80 loaves of bread weighing 550 grams. If a loaf weighs 600 grams, one bag will produce 73.3 loaves of bread.