DTI permanently removes wheat tariff

MANILA, Philippines - The government has removed the three percent tariff on wheat to level the playing field between local millers who use imported wheat and flour importers, the Department of Trade and Industry (DTI) said.

The zero tariff may lower the price of flour and result in subsequent lowering of bread prices but the DTI said they cannot say this for sure because it also depends on the price of wheat in the world market and on the local millers.

In a chance interview, Trade and Industry Secretary Gregory L. Domingo confirmed that since Jan. 14, the tariff on imported wheat is already zero. He said the wheat tariff was included in the comprehensive tariff review.

In the past, the zero tariff was only good for six months and the government has to review the tariff reductions.

 “It gives the millers a level playing field,” Domingo said. Data show that for 2011, 10 percent of flour consumed in the country are imported. 

Domingo said he has met with millers who requested for the lifting of the tariff after imported Indonesian flour started coming in the market last year.

The imported flour are from Indonesia and Turkey. Domingo said that Turkish flour use wheat from Turkey so they do not have any tariff. On the other hand, he said he is not sure if Indonesia imposes any tariff on wheat from the US, Canada and Australia. Indonesia reportedly has a five percent tariff on imported wheat, higher than the Philippine tariff of three percent.

The Philippines also sources its wheat from the US, Canada and Australia.

Indonesian flour is P840 per bag while local flour is P900 to P950 per bag.

The DTI has been asking millers to reduce their price for months, but so far Domingo said they have not monitored any significant decreases. The DTI has asked millers to lower their price given that global wheat prices have been going down since July last year.

Earlier, flour millers said that they do not mind the three percent tariff. They said the cost of the three percent tariff on wheat is only P20 per bag. Even with the tariff in place, millers have not increased their price.

The P20 per bag is not enough to move bread prices because bakers said they need P40 per bag reduction in flour prices before they can implement a P1 per loaf reduction in prices.