Prices of Pinoy Tasty and Pandesal are expected to increase initially by P2 as bread manufacturers are hard pressed with the soaring prices of wheat flour, which accounts for 40 percent of cost in bread production.

Johnlu Koa, president of the Philippine Baking Industry Group (Philbaking), said they have submitted their formal request with the Department of Trade and Industry for a P4.00 price increase for Pinoy Tasty (loaf/450 grams) from P38.50 to P42.50 and Pinoy Pandesal (250 grams/10 piece per pack) from P23.50 to P27.50. Koa expects a new Suggested Retail Price bulletin on bread and canned goods to be issued possibly by next week.

But Koa said that Trade and Industry Secretary Ramon M. Lopez is expected to deny a one time P4 price hike although the outgoing trade secretary was amenable to the idea of staggered increase at P2 initially.

Secretary Lopez was amenable to the staggered price hike but might allow only half or P2 of the requested increase and would let the incoming DTI Secretary Alfredo Pascual handle the remaining P2 price hike.

“Understanding the situation, DTI may grant half and let the next administration decide the other half so it will not be too abrupt,” said Koa, adding that Filipinos are also used to the “gives” or installment system.

Koa also emphasized the urgency of the situation stressing that DTI should “decide and bite the bullet soon because we could lose employment if we will not help the bakers and it is very difficult to halt and restart.”

Current wheat flour prices range from P960 to P1,050.00 per 25 kilogram bag depending on regions, volume and brand.

But small bakers are getting higher rate at P1,050.00 while big bakers get their volume supply at under P1,000 per bag, but strictly at very limited credit term period, he said.

Koa shared that small bakers in the countryside are having issues because their consumers are using the Pinoy Tasty and Pinoy Pandesal as benchmark prices when it should not. He explained that Pinoy Tasty and Pinoy Pandesal are sold at cheaper prices because these two staples are actually subsidized by the big bakers or Philbaking because it is the group’s corporate social responsibility program.

Based on PhilBaking’s calculation, the two products of special formulation making it 20-25 percent cheaper compared to other similar but branded products. Also, supermarkets and groceries are charging only 10 percent as against the usual 25-30 percent fee.

Because these two products are subsidized, the small bakers’ market feel their community bakers’ price are overpriced. “We are inadvertently hurting the small bakers because the market is using our price as benchmark and this benchmark is hurting them because they feel overprice in the community.”

If prices of the Pinoy Pandesal and Tasty which are sold in supermarkets and groceries, are not adjusted, it would continue to cannibalize the community bakers’ market, if not close their operation, unless those small bakers further reduce the weight of their bread, he added.

To address the situation, Philbaking has urged DTI to come up with a sustainable price that would ensure community bakers to thrive.

Meantime, Koa also emphasized that DTI is not controlling the price but is trying its best to balance the situation by coming up with a sustainable pricing.

For the last 12 years, PhilBaking adjusted prices for these two products where for every P40 increase or decrease in flour price means a P1 increase or reduction.

For other branded bread, they can adjust their prices and compete in the market.

He also also pointed that there is no shortage in the supply of flour, so there is no truth or there is no need to hoard. “There is enough stock as our flour millers are still buying even at higher prices and pass it on to us, so we are assured of supply as long as the price is right,” he added.