Safeguard Duty on Flour Sought from PAFMil

"We believe that seeking a safeguard protection would be proper for us," PAFMil (THE PHILIPPINE Association of Flour Millers) Executive Director Ricardo M. Pinca told reporters January 25, 2011.


"The Philippines should stop the unabated entry of subsidized competition; it is disrupting the local industry in the sense that it reduces the consumption of local flour."


Industry data show that flour imports increased by 9.67% to 94,733 metric tons (MT) last year from 86,379 MT in 2009, Mr. Pinca said.


Local production of flour averages 1.5 million MT annually, he added.


Demand volume was not immediately available.


About 70% of the yearly local output consists of "hard flour," which is used for bread; the remaining 30% is "soft flour" for cakes and pastries, Mr. Pinca said.


"While importation surges, ang local production hindi tumataas [volume of local production remains the same]," he noted.


Mr. Pinca said that the process will begin by filing a petition before the Department of Trade and Industry, which can slap a provisional safeguard duty.


The review will then be elevated to the interagency Committee on Tariff and Related Matters, which will then recommend action to the Office of the President.


Mr. Pinca said his group will file its petition by March.


He would not say how much safeguard duty his group will seek.


Wheat flour imported from Association of Southeast Asian Nations and Australia now has 0% tariff, while those imported outside these arrangements are slapped with a 7% tariff.


Of the imported flour last year, 88% was sourced from Turkey, in which flour is a "highly subsidized commodity," Mr. Pinca noted.


"Turkey imports wheat from neighboring countries to produce low-quality flour...what small bakers do is they use this Turkish flour to blend into their flour...to lower their cost," Mr. Pinca said, adding that Turkey has "over 1,000 flour mills."


Mr. Pinca added that industry data only accounts for "legitimate importation" and not smuggled flour.


"Smuggling is really our problem, so if the government will not do anything about this, we may not have bread in the morning. We’re ready for competition...what we are not ready is unfair competition brought by smuggling," Mr. Pinca said.


He added that "there is a possibility of lesser importation [of flour] because of high-cost in wheat...bread prices will remain high, because wheat prices worldwide remain high."


Average US wheat price has risen to about $9.20 per bushel this month from US$4.80 per bushel in June last year, Mr. Pinca said.