Flour millers yesterday said they can match the price of cheap imported flour if the government will import wheat from China.

Earlier, the government said it will import cheap flour from China to sell to local bakeries to maintain the current price of pan-de sal.

The Philippine Association of Flour Millers (PAFMIL) in a letter to trade undersecretary Zenaida C. Maglaya said that instead of importing flour, the government can import milling wheat which they can make into flour and sell at competitive prices.

PAFMIL executive director Ric Pinca said that by importing wheat the government can hit two birds in one stone, helping the industry at the same time keeping prices down for the public.

Pinca said the government can request for an allocation of 200,000 metric tons of milling wheat from the People’s Republic of China. The amount is equivalent to 10 percent of the country’s annual wheat use.

China is controlling the sale of its grains to ensure that it has enough for its population.

Maglaya earlier pointed out that Chinese flour, at current prices including shipping and handling, is cheaper by P130 per bag than locally milled flour.

Prices of hard flour range from a low of P670 to a high of P880 per bag while for soft flour, the range is P670 and P780.

Pinca said importation will further reduce the industry’s capacity utilization and unfairly compete with local producers in the market.

"This would lead to the demise of the local wheat flour milling industry and closure for some mills. Unemployment is sure to follow. Worse, this could make our food requirement unduly dependent on Chinese wheat flour supply which could be cut off anytime by the Chinese government," Pinca said.

PAFMIL said Chinese flour has taken nearly 7 percent of the market.

"To bring in another 150,000 mt would increase its share to 17 percent of the market, a share bigger than most local flour mills," Pinca said.

At present, local flour millers use only 50 percent of their capacity due to poor demand from an already weak market.

Pinca warned that with rising prices of wheat and other grains, products dependent on these commodities are bound to increase, not only bread but also poultry and meat products since production of these items depend on animal feeds that take up around 70 percent of the cost of production.

Last Monday, spring wheat in the Minneapolis Grain Exchange (MGE) settled at $24 per bushel, three times the cost of spring wheat in September last year; and the highest on record. At the Chicago Board of Trade soft wheat for May breached the $12-per bushel level for the first time.

Spring wheat is the raw material for the production of flour for pan de sal and loaf breads among others. Soft wheat is for pastry and cake flours.

Pinca said prices of other grains and grain-based commodities such as corn soybeans and soybean meal have also gone up.

At the Pacific Northwest loadport, Spring wheat was quoted at US$ 902 PMT fob for March shipment. Freight rates are also up, at around $70 per metric ton from PNW to Manila for a 40,000 handymax bulk ship.

Wheat prices from other exporting countries such as the United States and Canada are most likely to move up as well to take advantage of prevailing premium prices.