Big bakers seeking price hike in Pinoy Pandesal, Tasty

Published August 15, 2022, 3:34 PM

by Bernie Cahiles-Magkilat

After holding off for two months price hikes for Pinoy Tasty and Pinoy Pandesal, big bakers said they will ask again the Department of Trade and Industry (DTI) to implement price increase on Pinoy Tasty and Pinoy Pandesal by end this month on higher cost of raw materials and to ensure sustainable pricing.

“We will propose price increase to DTI effective Aug. 30. We decided to hold off for two months in order to help consumers cope with food inflation and in support of new DTI Secretary Fred Pascual,” said Johnlu Koa, president of the Philippine Baking Industry Group (PhilBaking).

It could be recalled that in early June this year, PhilBaking had asked then DTI Secretary Ramon M. Lopez to raise the Suggested Retail Price of Pinoy Tasty and Pinoy Pandesal by P4 due to rising cost components in bread production, particularly flour, and ensure sustainable pricing. But the suggested price increase did not materialize. Even in the recent SRP Bulletin on basic necessities and prime commodities, prices of Pinoy Tasty and Pinoy Pandesal remained unchanged. The DTI said that PhilBaking has agreed not to raise their prices yet.

Based on their earlier price hike petition, PhilBaking suggested that DTI raise the price on a staggered basis, initially by P2 and another P2 at a later appropriate time. This means that the current Pinoy Tasty (loaf/450 grams) would increase from P38.50 to P42.50 and Pinoy Pandesal (250 grams/10 piece per pack) from P23.50 to P27.50.

At that time, Koa 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.”
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, strictly on very limited credit term period, he said.

Koa further 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 specially formulated products are still 20-25 percent cheaper compared to other similar but branded products.

Because these two products are subsidized, the small bakers’ consumers feel that their community bakers have been overpricing their products. “We are inadvertently hurting the small bakers because the market is using our price as benchmark and this benchmark is hurting them because they are perceived overpriced 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. This situation, Koa explained, could lead to more small bakers closing their operation, unless those small bakers further reduce the weight of their bread.

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.