Bakers yet to adjust bread prices despite cheaper flour

MANILA, Philippines - Millers have begun using duty-free wheat to produce flour, causing local flour prices to fall by as much as P60 per sack from December levels, an industry official said Tuesday. Bread prices, however, will not budge until "sometime in March" as bakers are still using higher-priced inventories, another industry official said. "Flour millers should [have been using wheat imported at zero tariff] by now. Prices have been going down to P840 to P850 this February," Philippine Association of Flour Millers executive director Ricardo M. Pinca told BusinessWorld in a telephone interview Tuesday. In December, flour prices stood at P870 to P900 per 25-kilo bag, Mr. Pinca earlier said. Malacañang had issued Executive Order No. 765 to eliminate tariffs on imported wheat for six months, at the request of industry leaders. The Palace order took effect in December. Previously, the Philippines slapped a 3% tariff on wheat imported from countries in the Association of Southeast Asian Nations. For the rest of the world, the tariff rate on wheat was 5%. But cuts in flour costs won’t immediately be reflected in bread prices as most bakers are still using higher-priced stocks, Philippine Baking Industry Group President Simplicio P. Umali said. "Big bakers carry a one-month flour inventory while small community bakers carry [an inventory good for] two weeks to one month," Mr. Umali explained. "Any change in price is expected when flour stocks in use come from the revised [flour] prices ... which may happen in a few weeks, sometime in March," Mr. Umali said. As such, a 600-gram loaf will remain at around P45 to P55, while pan de sal will continue to sell for around P2 per piece based on January prices. — Jessica Anne D. Hermosa, BusinessWorld