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Strong competition keeps local flour prices affordable—Pafmil

The increasing capacity of flour millers and the entry of two more players will keep flour prices in the country competitive, according to the Philippine Association of Flour Millers Inc.

Data from Pafmil showed that despite the high prices of global wheat, Philippine flour prices declined to P670 per 25-kilogram bag this year from a range of P870 to P900 a bag four years ago.

“The industry continues to expand, putting a check on the competitiveness of prices which is good for the baking industry,” Pafmil executive director Ricardo Pinca said at the sidelines of the 9th Annual Southeast Asia Region Conference and Expo staged by the International Association of Operating Millers Monday.

Pinca said while retail prices of flour remained competitive, other inputs to baking rose because of inflation and the devaluation of the peso against the USdollar. Most inputs are imported.

The association said with the entry two more players, the industry’s capacity would expand to 7 million metric tons from the current 5.06 million MT. It will also add to the existing 21 players, bringing the total to 23 operating flour millers.

It said competition led to customization of flour requirements as prescribed by customers and bakeries. Research and development created different types of flour for different products, such as special flour and whole wheat flour.

The industry said the current capacity utilization is only about 51.3 percent.  Pinca said the industry might be anticipating an increase in the consumption of flour-based products in the near term due amid the growing health awareness and the increasing spending capacity of Filipino families.

The Philippines, a predominantly rice-consuming economy, has an estimated annual per capita consumption of 114 kilograms of rice and 20.6 kilograms of bread.

Pinca said there was still a huge potential to increase bread consumption, as spending capacity of families increased.

Flour demand in the country reached 86.26 million bags in 2017, with 92 percent of them supplied by local millers.

Topics: Philippine Association of Flour Millers Inc. , 9th Annual Southeast Asia Region Conference and Expo , International Association of Operating Millers
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