Strong competition from new flour mills and imported flour mostly from Turkey, Vietnam and Indonesia is tempering the rise in the price of locally milled flour as millers and importers try to jockey for bigger share of the market.
Still due to the surge in wheat prices worldwide caused by drought in spring wheat growing areas of the United States, flour prices will have to go up in the next months leading to the harvest in October this year, the Philippine Association of Flour Millers Inc. said in a statement Monday.
There are eight new flour mills in the country, up from only 12 mills two years ago. There are around 12 major flour importers bringing in flour from Turkey Indonesia, Vietnam, India, Romania and lately, China.
Imported flour has taken 10 percent of the country's 82-million bag flour consumption with Turkey controlling 70 percent of the imported flour market share. Each flour bag weighs 25 kgs.
Wheat prices surged starting May this year and peaked at $8.22 per bushel, up 50.4 percent from $5.40 per bushel. The depreciation of the peso also contributed to the rise in wheat acquisition cost by local millers.
The Philippines imported 2.6 million metric tons of wheat last year, 95 percent of these from the United States. Other sources of wheat are Canada and Australia but both these countries are also affected by drought.
The only bright spot in the horizon is the expected better than anticipated wheat harvest from Russia which trade analysts say is looking at a possible 70.5 million metric ton harvest.
Russian wheat though is generally of lower protein compared to US spring wheat. Analysts anticipate that low quality wheat buyers like Egypt, Bangladesh and other flat bread consumers may shift their attention to the Russian source thus relieving supply pressure from the usual US suppliers.
Seventy percent of Philippine wheat imports is of the spring wheat variety, with protein level of 14 percent for the loaf bread and pandesal market.
Protein makes the bread rise to the height desired by local bakers for the bread loaf and pandesal.
The balance 30 percent of made up of soft wheat for the pastry, noodle and cake markets.
The old flour mills are San Miguel Mills Inc., Philippine Foremost Mills, Delta Flour Mills, Morning Star Milling Corp., Liberty Flour Mills, Wellington Flour Mills, RFM Corp. Universal Robina Corp., Philippine Flour Mills, General Milling Corp. and Pilmico Foods Corp., Monde Nissin Corp.
The New Mills are Atlantic Food Corp., Asian Grains Inc. New Hope Flour Mills, Great Earth Flour Mills, North Star Flour Mills and Big C Flour Mills.
Set to operate this year are Mabuhay Interflour Milling Corp. and Agri-Pacific Flour Mills, a sudsidiary of Republic Biscuit Corp.