Agro Perspectiva

Philippine flour millers say prices to rise in September

19.08.2010 11:34 "Agro Perspectiva" (Kyiv) — FLOUR PRICES will increase by as much as a tenth next month with a drought abroad reportedly making the cost of wheat — an input — more expensive, an industry group yesterday said. Hard flour used for bread will sell for P750-P760 per 25-kilo bag, or up to P70 more than the current P690-P700 ex-mill levels, the Philippine Association of Flour Millers (PAFMil) said in a statement. Soft flour used for cookies and similar pastries will also increase by roughly 12% to P650-P660 per bag, the group said. This comes as global wheat supplies dwindle due to a recent Russian move to secure that country’s food stocks amid a bad harvest season by banning grain exports, the group said. PAFMil cited the reported increase in prices in the global wheat futures market which the group claims was 43.5% higher in August than the June contracts. «Local wheat flour millers will have to raise flour prices to reflect the higher cost of wheat. The schedule of price increases will vary per mill due to their marketing strategies and market position,» the group said. PAFMil Executive Director Ricardo M. Pinca clarified via text, however, that the price hikes, while varying among companies, would take effect next month. Sought for comment, a bakers’ group said the planned price hike — which they complained was premature — would cause an increase in bread prices and therefore hurt their sales. «If they (flour millers) buy their wheat now, it usually takes three months to mill. The price hike is too premature,» Philippine Baking Industry Group President Walter Co said in a telephone interview. The flour price hike will cause loaf prices to rise by P1-P1.50, while a 10-piece pack of pan de sal will cost P0.50 more, Mr. Co said. Currently, loaf prices stand at P48-P54 while one pan de sal can sell for P2.75-P3, he said. «We won’t be able to absorb the flour price increase [and put off a bread price hike]. Sugar prices are already high,» Mr. Co said. Plans for an industry-wide launch of a budget loaf next month will continue, he added, but prices may be less consumer-friendly than planned. «Definitely it (higher flour prices) will have an impact,» Mr. Co said. Trade officials could not be immediately reached to comment if the government will intervene. The Trade department had earlier hinted it will recommend keeping wheat tariffs at 0% to benefit consumers, as Executive Order 863 which temporarily eliminated the 3%-5% duty is slated to lapse this month. The Trade department had also earlier filed administrative charges against flour millers for alleged profiteering after orders to lower flour prices were ignored. The case had been dismissed on a technicality, although officials have said they will re-file the case in a bid to lower flour prices.