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Economy

Bakers scramble to cope amid spike in flour prices

A baker prepares to put bread in an oven in a bakery in Dapitan, Manila, June 5. — PHILIPPINE STAR/ EDD GUMBAN

By Revin Mikhael D. Ochave, Reporter

BAKERS are struggling to keep prices of bread and pastries low amid the spike in flour prices caused by the Russia-Ukraine war and disruptions in the global supply of wheat.

Several bakery owners interviewed by BusinessWorld said that prices of flour, depending on the quality, have gone up by around 20% to nearly 50% in recent months.

“Flour and wheat supplies seem sufficient in the Philippines. We have no problem buying, but the flour prices are increasing continuously since March due to volatility of world supply, I think, because of the Ukraine-Russia war. It was P810 per 25-kilogram (kg) sack of flour in January, now it’s at P955 per sack,” Wilson Lee Flores, owner of Kamuning Bakery Café, said in a mobile phone interview.

The Philippines is a major importer of milling-quality wheat, as it has no commercial production of wheat. It mainly imports wheat from the United States, Australia and Canada, according to Luisito Chavez, former vice-president of the Philippine Federation of Bakers’ Association, Inc.   

“We import 100% of wheat for our flour mills to process into flour. We use flour for pandesal, breads, cakes, biscuits, cookies, instant noodles and pasta. The Ukraine-Russia conflict, plus economic or trade sanctions of the West on Russia have destabilized global wheat prices and supplies,” Mr. Flores said.

Russia and Ukraine account for around a third of global wheat supply.

Jundio C. Salvador, owner of Pan de Amerikana bakery and restaurant, said in a mobile phone interview that the flour they use for making bread and other pastries have increased to P1,070 per 25 kg, from P870 per 25 kg previously.

“(Flour) supply-wise, we are not encountering any problems as of the moment. We are concerned only with the rising prices at an average of 22% for the past previous month,” Mr. Salvador said.   

PRICE HIKEKamuning Bakery Café has already raised the price of pandesal to P4 a piece, from P3 previously, Mr. Flores said.

“We have no choice but to adjust a little some of our bread prices, but not too high because we do not want customers to suffer and we don’t want customers to buy and eat less pandesal. Some bakeries and fastfood restaurants reduce size, density, and quality of their breads and foods, but we continue to uphold our standard, classic sizes and taste of the bread here,” he said.

To address the spike in prices, Mr. Flores suggested bakeries and restaurants should consider local substitutes such as cassava flour, or shift to local ingredients.

At Pan de Amerikana, Mr. Salvador said the price of pandesal has not been adjusted as of now.

“Increasing our price will definitely affect our sales. Our customers are very familiar with the size and weight of our pandesal and request us not to reduce them but rather increase the price instead. We expect this move will only translate to less sales,” he said.

A March 24 report by the US Department of Agriculture – Foreign Agriculture Service in Manila said the share of milling wheat to the total cost of bread production is 71%.

Ram M. Morales II, co-founder of Pomodoro Pizza, said in a mobile phone interview that they raised the price of their pizzas by P5 to P20 per order.

“Before, we were getting flour for P540 per 25-kg sack. Now, the flour we use is priced at over P1,000 per sack… It is hard on our end because the flour that we use is very specific. We cannot just substitute our raw material with locally available flour,” Mr. Morales said.   

The recent spike in flour prices has prompted Mr. Morales and his investors to consider shifting from pizza to coffee or all-day breakfast offerings.

“We are looking at other concepts that do not depend on pizza so that the business will continue,” Mr. Morales said.   

Philippine Baking Industry Group (PhilBaking) President Johnlu Koa earlier said that the group is seeking to raise the price of the 450-gram Pinoy Tasty bread to P42.50 from the current price of P38.50, and the price of the Pinoy Pandesal to P27.50 from the current price of P23.50.

Trade Undersecretary Ruth B. Castelo said in a mobile phone message to BusinessWorld that the Department of Trade and Industry is still validating PhilBaking’s proposed price adjustment. 

“We are still validating (the proposal),” Ms. Castelo said.

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