Debate over Turkish flour continues
In our column last May 26, we discussed the claim of the Philippine Association of Flour Millers (Pafmil) that Turkish flour (TF) is being dumped on the country and the denial by TF lobbyists. Since then, both Pafmil and the lobbyists have sent their comments on the column. We are running their comments so readers will have a balanced view of the issues.
Question: TF lobbyists claim that they are not dumping their product on the Philippines. Is this true?
Pafmil: No. It’s been confirmed by our Department of Agriculture that TF is being dumped on the Philippines. Dumping happens when the domestic selling price of a commodity in its country of origin is way higher than its export price.
TF lobbyists: The World Trade Organization (WTO) agreement defines dumping as when a product is “introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is ‘less than the comparable price,’ in the ordinary course of trade, for the like product when destined for consumption in the exporting country.”
It is not just a comparison of the export price and the domestic price but the comparison of export price versus the normal value for “comparable products.” Normal value is a calculated figure after certain adjustments. Pafmil’s insistence on comparing the export price with the domestic price in Turkey, without considering necessary adjustments, is a distortion of facts and an ignorant approach, against WTO rules, aiming to influence the public and the investigating authority.
Q: What are the numbers and facts that TF lobbyists are trying to hide?
Pafmil: That in 2012, the average export price of quality flour worldwide was $470 per metric ton, while TF’s export price to the Philippines was only $349 per MT, which is even cheaper than the quality wheat imported by local millers as raw material, and priced below that of wheat flour sold in Turkey for animal feed.
As such, dirt-cheap TF poses unfair competition to local millers who cannot sell quality flour below cost of production.
TF lobbyists: First of all, Turkish records do not confirm an export price of $349 per MT, as Pafmil claims. We suggest Pafmil double-check its data.
These prices, the alleged $349 and $470, are price comparisons on CIF (cost, insurance and freight) level. A Turkish exporter pays around $15/MT to ship his flour from Turkey to the Philippines. However, when he ships his flour to Africa, he pays between $65 and $140/MT, depending on the destination. For example, container freight to Angola is around $80/MT, where Turkey exported 100,000 MT of wheat flour last year alone. Freight to Congo is around $140/MT. So, presenting different price levels on CIF level is another trick of Pafmil to distort the facts, trying to prove that export prices to the Philippines were lower than the export prices to other destinations.
Second, 90-95 percent of the flour exported to the Philippines by Turkish exporters is
biscuit- and noodle-making flour. The flour consumed in Africa is high-protein, high-gluten, bread-making flour. The market price of bread-making flour is about $60-70/MT higher than the price of biscuit flour.
When you add up these two adjustments—the freight difference and the price difference in wheat for biscuit and bread—you will see that the prices are on the same level.
Q: Is the dubious quality of TF the reason a number of TF brands are being sold illegally in the Philippines, without the required quality testing and certification by the Food and Drug Administration (FDA)?
Pafmil: That’s a fair assumption. Why evade FDA testing if your product would easily pass and be certified for fortifications and food safety?
Our Department of Health has received complaints of TF being sold here without FDA certifications. Among the many illegal TF imports go by the brand names Tezcan, Naga Azul, and Naga Rosa.
TF lobbyists: No such complaint or finding has been communicated by the Philippine government to the Turkish government. There are many TF exporters, and each supplier has multiple brands. As far as we know, no Turkish company or any brand is in the watch list.
Q: Has the issue of TF quality, or lack of it, been resolved?
Pafmil: No. As admitted by the FDA, it was only the first time it was testing wheat flour for cancer-causing mycotoxin contamination, which Istanbul universities said is a very serious issue.
Recently, Ghana’s own FDA also raised an alert against TF because of the use of “lethal fumigants.” The use of fumigants would not be necessary if the flour is not contaminated.
TF lobbyists: Fumigation is done on almost any agricultural product for pest control, not because the product is toxic or unhealthy, but to prevent it from getting infested by weevils. It is shocking that Pafmil mentions the fumigation issue because Pafmil member-mills also fumigate their facilities at least every three months because this is a hygiene requirement in every modern flour mill in the world. They should also fumigate their wheat grains periodically. Otherwise, their flour would be infested by weevils. (To be continued)
