Tariff on Turkish flour will hike ‘pan de sal’ price

We are already in the age of free trade and globalization but monopolies, cartels and oligopolies in the Philippines still run to government for protection like crybabies running to their mamas for every little thing. Remember the cement cartel of foreign-owned companies that control the local cement industry? When cheaper cement imports began cutting into the cement cartel’s market, it ran to the Department of Trade and Industry crying that other countries are dumping their cement in the Philippines to the detriment of the local cement industry which employs thousands of Filipino workers. It asked the DTI to either ban imported cement or impose a protective tariff on it.

And the DTI, like a mother spoiling her crybaby son, imposed a protective tariff on cement imports despite the fact that there was a construction boom in the Philippines and there was a big demand for cement. Cheaper cement means cheaper houses and condominium units for Filipino buyers, but the DTI would rather protect the foreign-owned cement cartel rather than the Filipino homebuyers. Result: Despite the glut in condominiums, units are still beyond the reach of even the lower-middle class.

Now comes another cartel. This time, local flour millers belonging to the Philippine Association of Flour Millers (Pafmil) have run to the Department of Agriculture crying that Turkish flour is being dumped in the country to the detriment of local flour millers and their thousands of Filipino workers.

But what is the truth?

Last Saturday, representatives of the Turkish Flour Yeast and Ingredients Promotion Group, an organization exporting and promoting wheat flour and other wheat products in the international market, were at the Kapihan sa Quezon City to explain why Turkish flour is cheaper than American wheat flour which Pafmil is importing. They reiterated that Turkish flour is not being dumped in the Philippine market and asked for due diligence in the ongoing investigation by the Tariff Commission.

Avsin Kasikci, head of the delegation, explained that a number of factors make the price of Turkish flour lower than the price of locally milled flour and other imported flour in the market.

“As a leading wheat flour producer in the world,” he said, “Turkey enjoys the economies of scale advantage which allows its exporters to share the cost benefits (with) their trade partners in over 120 countries. In Turkey, wheat has different varieties and is milled into flour based on varying specifications, which helps explain the price variance of Turkish flour. Moreover, Turkey has in place World Trade Organization-authorized rules and regulations.”

Turkey has over 1,200 wheat flour factories with high production capacity, operating in nearly every province to meet both domestic and global demands. The scale and efficiency of its wheat and wheat flour industries give Turkey the cost advantage over other producers.

Since Turkish flour entered the Philippine market in 2008, malicious and baseless accusations have been made against the integrity of the product, its exporters and its importers. In the Senate and in media, Turkish flour was said to be contaminated and toxic and the government was urged to ban it. These accusations were all proven false after an investigation by the Food and Drug Administration under the Department of Health, which said that Turkish flour is safe and fit for human consumption. Last year, Pafmil filed a petition seeking to impose a 20-percent additional tariff on Turkish flour, arguing that it is being dumped in the Philippine market and causes injury to the local flour milling industry. The US Wheat Associates, which supplies wheat to local flour millers, backed Pafmil’s petition.

An additional tariff is imposed only to protect a local industry. But we are not a wheat-producing country. We don’t grow our own wheat and we don’t have a wheat industry to protect. Local flour millers import the wheat, mainly from the United States and process it into flour.

Only a handful of local flour millers would benefit from a protective tariff on Turkish flour. The local flour market has always been dominated by the local flour millers, this despite the entry of Turkish flour which has only a measly 7-percent share of the market.

Pafmil insists that Turkish flour harms the local flour milling industry, and yet its members are among the top 1,000 corporations in the Philippines. Flour millers earn very high revenues so that new flour millers have set up shop. Where’s the harm there? And since when did having different suppliers become a bad thing in commerce?

On the other hand, with additional tariff on Turkish flour, the price of pan de sal and other breads being consumed by poor Filipino families would go up. It would also harm the scores of small- and medium-scale enterprises like community-based bakeries and noodle manufacturers that produce flour-based items consumed by Filipinos.

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NOTES: To answer queries from fans, Margaux Salcedo’s next gig at the Tap Room of the Manila Hotel is this Wednesday, May 28. She will probably sing love songs dedicated to her parents who are celebrating their wedding anniversary the next day, May 29.

The Tuesday Club at Shangri-la Edsa Plaza will fete its muse, Lisa Carreon, on her birthday tomorrow, Tuesday. Members are all invited to the breakfast at the coffee shop.