Bakers to raise prices of bread on higher flour cost

Bakers are set to raise prices of bread products by 10.50 to 11.50 per loaf as flour millers are increasing prices by 130-60 per 25 kilogram bag on higher cost of wheat in the international market due to drought affecting wheat growing areas of the United States.

Walter Co, president of Philippine Baking Industry Group (PhilBaking), a group of the country’s biggest bakery brands, said this after the Philippine Association of Flour Millers (PAFMIL) announced of price increase starting this week.

Co, who also owns Creative Bakers Co., Inc. producer of one of the country’s big bread brands – Walter – said it will depend on individual bakeries when they should increase their prices.

Simplicio Umali, Jr., president and general manager of the country’s largest bread manufacturer Gardenia Bakeries Philippines, Inc., said they are getting flour at 1700 per bag at present.

“We don’t yet how much we are going to increase, we are still waiting for the flour prices to be firmed up,” Umali said.

Meantime, Trade and Industry Undersecretary Teodoro Pascua said they are not aware of any plans by the flour millers to raise prices.

“I am unaware of that, we will ask the Consumer Protection and Advocacy Bureau,” said Pascua, the supervising undersecretary for consumer welfare and protection group of DTI.

On Wednesday, Executive Director Ric Pinca said flour millers are increasing prices by 130 to 160 per bag starting August as prices of wheat started going up since May this year. The lowest ex mill bread flour costs 1650 per bag, he said.

According to Pinca, some mills, such as Pilmico Foods and Universal Robina Corporation (URC) have already raised prices in mid July.

Pinca justified the increase in flour prices to drought hitting the wheat growing areas of the United States triggering world wheat prices to go up as much as 50 percent in early July.

The Philippines buys about 95 percent of its milling wheat requirements from the United States. The rest are sourced from Canada, and Australia.

US wheat commodity futures prices started going up in May this year and peaked at $8.12 per bushel on July 3, up by $2.72 per bushel from the May 15 level of $5.40 per bushel, or an increase of 50.4 percent. Prices have since hovered around the $8.50-7.50 per bushel level.

Increase in flour prices, he said, will depend on the company, brand, quality and other marketing considerations. Lower protein bread flour is cheaper than high protein brands. The higher protein flour, which is the quality of the US wheat, causes the bread to rise to bigger in volume and have softer texture. Local flour millers also prefer the US wheat.

Seventy percent of Philippine flour requirements go into bread production, the balance go to noodles, cakes, pastries, and other uses.

In addition, Pinca said that there is now a strong competition among domestic flour millers.

There are now around 20 flour mills in the country, from only 12 mills around two years ago.

PAFMIL has seven members while the Chamber of Philippine Flour Mills (Champflour) has four while the nine other milling companies are not members of either organization.