Flour prices expected to rise further

MANILA, Philippines — The prices of flour in the country are expected to rise, as prices of wheat in the world market continue to increase due to the war in Ukraine, the head of the Philippine Association of Flour Millers (PAFMIL) said.

In an interview with dzBB on Saturday, PAFMIL executive director Ric Pinca affirmed another increase in flour prices.

“Most likely the price has gone up, but the increase is not the same among flour millers because they have different pricing mechanisms and marketing,” Pinca said in Filipino.

“But really, the price of flour will increase because the price of wheat continues to increase in the world market,” he added.

Pinca explained that the higher prices of wheat in the world market are caused by the Ukraine-Russia war, as the two countries hold about 30 to 40 percent of the world’s exportable stocks of wheat.

Because the two countries are unable to sell wheat, buying countries are going to other wheat-producing countries to source their requirements.

In addition, Pinca explained that India, which is also a producer of wheat, implemented an export ban on wheat to ensure supply for its own population.

“So everyone is going to the US, Canada and Australia, where we buy. That’s why the price is going up. If there is more demand, of course, the price will also increase,” Pinca said.

The PAFMIL director explained that sometime last year, they were buying wheat at around $300 per metric ton (MT). However, as a result of the Ukraine war, they are now buying a metric ton of wheat for over $500.

“The coming stocks which we have bought have already reached $550 per MT. The others are already reaching $600 per MT. So it is still increasing,” Pinca said.

He stressed that prices in the third quarter may increase, emphasizing that increases are likely until the war in Ukraine ends.

Moreover, he cited the weakening Philippine peso, now at P56 against the US dollar, is another factor affecting the cost of wheat purchases.

With the higher prices of local flour, Pinca explained that the prices of pandesal, which used to be around P2 a piece, have already increased to around P2.50 to P3 per piece.

PAFMIL earlier urged the government to lower tariffs for other imported baking ingredients to help bakers amid the expected increase in flour prices.

He said earlier the Philippines imports 100 percent of all its wheat needs for flour mills. The Philippines buys 90 percent of its wheat requirements from the US, while the rest are sourced from Canada and Australia.

Given high prices, Pinca said one way the government can help bakers is to reduce the import tariffs of other baking ingredients like yeast. And while wheat importation is already zero, it is subject to value-added tax or VAT.

To further help bakers, Pinca suggested that the government address the cost of fuel, citing that bakers use liquefied petroleum gas (LPG) to produce their products, as well as lower tariffs on imported sugar.

He added that maybe the government can lower tax on LPG and lower tariffs on sugar on a temporary basis while the war in Ukraine continues.