The Philippine wheat flour milling industry faces a challenging year with higher raw material prices and new competitors.
Philippine Association of Flour Millers Inc. said the wheat commodity futures market had consistently moved up in recent days due to the strong demand from foreign markets.
The local flour market expanded 4.6 percent in 2016, fueled by a strong economy and higher purchasing power from the consumer sector.
The Philippines imported 2.6 million metric tons of wheat last year, up 4 percent from 2.5 million MT in 2015.
Flour consumption, including imports, reached 84.6 million bags of 25 kilos each, 4.6 percent higher than the previous year’s.
The Philippines imported 95.2 percent of its wheat requirements from the United States last year.
The US is the only reliable supplier of hard and soft wheat varieties that local millers prefer due to their consistent quality. High protein hard flour from US spring wheat is used to produce loaf bread and pandesal, while soft flour serves as the main ingredient the production of cookies, pastries and cakes.
With strong competition from new flour mills, the Philippines industry expects to import more wheat this year to assurea stable supply of flour for a growing and more sophisticated bakery industry.
The imposition of dumping duty on Turkish flour reduced Turkish flour imports from over 6 million tons annually to just 4.6 million tons in 2016.
The government imposed the dumping duty after it found out that Turkish flour exports to the Philippines were sold at prices lower than in local Turkish market.
The first eight local flour mills were established in the 1960s. These were RFM Corp., General Milling Corp., Wellington Flour Mills, Pacific Flour Mills, Pilmico Foods Corp., Philippine Flour Mills, Liberty Flour Mills and Universal Robina Corp..
San Miguel Corp., Philippine Foremost Milling Corp., Morning Star Flour Mills and Delta Milling Corp. established their own mills in the 1990s.
Newer mills have joined the industry and made competition stronger. These are Monde Nissin Corp., Atlantic Grains Corp., Asian Grains Corp., Agri-Pacific Rebisco Flour Mills, Great Earth Industrial Corp., New Hope Flour Mills, North Star Flour Mills and Big C Agriflour Corp.
Late this year, a multinational joint venture between the Salim family of Indonesia and Australian CBH group is expected to open their latest flour milling venture in Asia, the Mabuhay Interflour Mills in Subic Bay.