Let it be a fair (food) fight

“Let’s fight fair” is the appeal of a group of exporters of Turkish flour now facing possible sanctions and increased tariff rates on accusations of “dumping” their produce in local markets.

Ernesto Chua of the Philippine-Turkish Business Council and, through his Malabon Longlife Trading Corp., an importer of flour from Turkey, has a different appeal: “Let’s find a balance. But let us also give priority to poor Filipinos who deserve to eat food they can afford.”

Addressing the media forum “Bulong Pulungan sa Sofitel,” Chua and lawyer Kristine Alcantara of the “Trade Advisory Group” stoutly denied claims made by local flour millers that Turkish firms and their importer-partners here are “dumping” Turkish flour—milled and packaged in Turkey but sourced from other countries as well—in the Philippine market.

“The word ‘dumping’ has a very specific meaning,” said Alcantara. Not only does it mean pricing an imported good lower than its price in its home country, it also entails having “an intent to cause injury” to the recipient country, she said.

But as Chua told it, his and other importers’ decision to bring in flour from Turkey was simply a reaction to the high prices of flour in the local market whose distribution was dominated by 14 flour millers, seven of whom belonged to the group Pafmil (which is leading the charge against Turkish flour), five of which have banded into “Champflour” and two new flour mills.

“Milling is one of the most profitable [industries] in the country,” noted Chua, citing the high profit margins imposed by millers on buyers, mainly bakers and other food manufacturers, who in turn pass on the added costs to the public. It was when bakers and other buyers began loudly complaining about the rising prices of flour that Chua said he and other traders began looking for alternative sources of the commodity. (The Philippines does not grow or produce any wheat or flour. Much of the flour it imports comes from the United States.)

These sources were China and Turkey, the latter being one of the world’s top 10 wheat producers. But in 2002, said Chua, China stopped exporting flour due to concerns about its own food security.

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Is Turkish flour dominating the local flour industry? Far from it, said Chua. He said about 65 percent of the market is dominated by “hard” flour, which is mostly sourced from the United States (and imported by the dominant millers) and used for bread and other baked products. The rest of the market (35 percent) is “soft” flour, used in noodles and other products, and that is what Turkey exports.

Most of the buyers of Turkish flour are “small bakeries in rural areas, and makers of noodles that are sold in public markets,” added Chua. In short, the sort of businesses that poor Filipinos patronize. In a statement, the Turkish Flour Yeast and Ingredients Promotions Group, represented by Alcantara, said that “with its affordability, Turkish flour has allowed small and medium-scale businesses to operate and provide livelihood to hundreds of thousands of Filipinos… [Turkish flour] has given millions of Filipinos access to affordable and nutritious bread, noodles and other flour-based food items.”

Because we are a rice-eating people, bread occupies but a small portion of our diet. And whatever bread we eat is mostly pan de sal. In fact, said Chua, Turks are a “bread-eating people” who each consume on average 200 kg of flour per year, while the average Filipino consumes a mere 20 kg of flour a year. And when times are hard or food prices rise, among the first items to go in the Filipino family’s diet is bread.

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Still, there is a lot at stake in this tug-of-war between the Turkish flour importers and the local flour millers (who import flour from America).

For one thing, claimed Chua, “the Philippines is the second biggest importer of US wheat,” which may explain why, when we earlier asked a Pafmil representative if the US government is behind their campaign against Turkish flour, he said that “they (America) only provide us with the data we need.”

After the local flour millers brought their concerns about alleged dumping of Turkish flour first to the Department of Trade and Industry and then to the Department of Agriculture and the Tariff Commission, the government, through the DA, imposed a “provisional antidumping measure” against eight (out of 16) Turkish exporters. Currently, the Tariff Commission is studying the imposition of a permanent higher tariff on Turkish flour. In fact, a group from the commission is set to visit Turkey soon to look into the issue.

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Meanwhile, the “campaign” against Turkish flour seems to have gained some ground. In 2012, recalled Chua, sales of imported Turkish flour rose by 9 percent in the local market, but when allegations about dumping and the safety of imported flour were aired in the media, the figure fell to 7 percent. “These slowed down the importation of [Turkish] flour,” noted Chua.

This means, he said, that their customers, who belong to the lower rungs of society, either cut down their consumption of bread and noodles, or ended up paying higher for these commodities.

As Chua said, while the big players, from Turkish and American exporters, to Filipino importers and millers, fight for dominance of the market, let the voices of the “small” consumers be heard, too.

We can just say “let them eat rice” at this point, but as Chua pointed out, “even the price of rice has been going up.”