The Philippine Association of Flour Millers (Pafmil) also said it does not help that the current economic situation remains bleak which is expected to result in bread consumption being maintained at its current low levels.
“Flour from Turkey and Indonesia is priced 10 percent to 15 percent cheaper than those produced locally. Turkish flour, for one, is highly subsidized by their government making it easier for exporters to sell it cheaper to countries, such as the Philippines,” Ric Pinca, Pafmil executive director, told reporters in press briefing on Wednesday.
Turkey, Pinca noted, is the second biggest exporter of flour next to Kazahkstan. It has a highly competitive flour-milling industry and has around 1,200 flour millers.
“The Turkish government allowed the removal of the 135-percent duty imposed on milling wheat. Also, [imported milling wheat] is free from value-added tax,” he said.
Pinca said these allow traders from Turkey to sell flour to countries, such as the Philippines, at around $300 per metric ton (MT).
Based on industry records, he said the Philippines imported 86,000 MT of flour from Turkey in 2010.
“But the official figure from the Turkish government showed that the Philippines imported more than 100,000 MT of flour last year,” said Pinca.
Indonesia, Pafmil noted, is another threat to the local flour milling industry.
“Indonesia has 10 times more milling capacity than the Philippines,” Pinca said.
Bogasari Flour Mills alone, he said, has a milling capacity of 8 million metric tons (MMT). This is double the total milling capacity in the Philippines pegged at 4 MMT.
So far, some 20,000 MT of flour from Indonesia have been imported into the country. Pafmil expects this figure to go up this year.
Around 80 percent of flour from Turkey, said Pinca, was bought by Malabon Longlife Trading Corp., a company which manufactures flour-based products, such as noodles.
What aggravates the situation for local flour millers, he said, is the Filipinos’ low per-capita consumption of wheat-based products pegged by the National Statistics Office at 15 kilograms annually. This is significantly lower than the 120 kilos per-capita rice consumption of Filipinos.
For 2011 Pafmil said the industry imported around 2 MMT of milling wheat. The group does not expect this figure to go up next year due to the challenges confronting the industry.
