Prices of basic bread - Pinoy Tasty and Pinoy Pandesal – are likely to increase during the Christmas season as there has been no let up in the surge in prices of wheat in the international market, the Philippine Baking Industry Group (PhilBaking) said.
Johnlu Koa, president of PhilBaking -a group of commercial bakers in the country - said they will announce before end of November their decision as promised to the Department of Trade and Industry. Pinoy Tasty is sold for P35 per 450 grams and Pinoy Pandesal for P21.50 per 250 grams or 10 pieces per pack.
Koa, who also owns French Baker, quoted projections by the Philippine Association of Flour Millers (PAFMIL) showing higher price trajectory for wheat.
At present, the price of flour is already at P760 per 25-kilogram sack from P690 a year ago. But PAFMIL, Koa said, projected a gradual increase of P30 to P50 per bag until the price reaches P940 to P970. The rule of thumb is that for every P50 increase in prices of flour, there is a corresponding P1 increase in prices of bread.
“That is PAFMIL projection, but they also qualify that should prices of wheat go down they will mitigate price hikes,” he said. Local flour millers have a three month lag time for their wheat importation. This means the current prices of bread are based on wheat prices three months ago yet.
Whatever is the price adjustments next month, Koa said it will not be enough for them to earn profit.
“Globally, economies are stockpiling on grains and because of that prices had skyrocketed and continued to be going up so there seems no let up,” he added.
Aside from stockpiling by governments for food security, Koa said another trigger for the price hike in wheat is the weather disruption in the US, the Philippines major source of wheat. Another factor is disruption in global value chain during the pandemic.
Koa further pointed out that prices of Pinoy Tasty and Pandesal were adjusted four to five years ago. The basic bread project was launched in 2010 with a price of P32 for Pinoy Tasty. Since then the price was adjusted by P3 only or less than one percent as against the backdrop of increases in all production components from fuel, sugar, and other ingredients.
He said that Pinoy Tasty and Pandesal prices have been controlled because PAFMIL committed to produce Harinang Pinoy, specially formulated for basic bread. Supermarkets also accommodated the breads free of charge in their shelves, while PhilBaking subsidized their production.
During the meeting with the DTI, PAFMIL was requested to ramp up production for Harinang Pinoy.
So far, Pinoy Tasty and Pinoy Pandesal account for 16-20 percent share in the bread market. With this growing preference for basic bread, Koa said they cannot just hike prices for fear of a consumer backlash.
As a CSR (corporate social responsibility) of the PhilBaking group, the supermarkets and the flour millers, Koa said, the goal is to provide affordable and nutritious basic bread to consumers.
In terms of sales, Koa said there was a shift in priorities during the pandemic from food and essential commodities but in the last 3 months, sales of food are softening as consumers are no longer stocking up. “There is no more report of stockout, no hoarding, no panic buying, but last year sales went up though marginally because many community bakers closed shop so consumers source their supply from supermarkets and grocery stores,” he added.