Washington-based export market development organization US Wheat Associates (USWA) has hit Turkish government policies, which “encourage” flour dumping in the Philippines.
Joseph Sowers, USWA assistant regional director for South Asia, said that the Turkish government employs a complex, inward processing scheme that creates disruptive incentives to its milling industry to export flour regardless of price.
“Public price information from the Polati grain exchange shows that flour prices in Turkey are significantly more expensive than their export prices,” Sowers said in statement relayed through the Philippine Association of Flour Millers (Pafmil).
In fact, he said that export prices for Turkish flour are even less than the market price its millers must pay to buy wheat to make its flour, in part because the Turkish government sets artificially high support prices for its wheat farmers while currently imposing a 130-percent duty on imported wheat.
“These facts offer strong justification for the Philippine government to protect the Philippines’ flour milling industry from such unfair competition,” Sowers said.
“The proposed 20-percent antidumping duty being considered is clearly fair when another fact is considered: any country that wants to sell flour to Turkey currently must pay a 103-percent duty to the Turkish government,” he added.
Also, in spite of its obligations as a member of the World Trade Organization (WTO), the USWA official said that the Turkish government does not make specific information available about its subsidy support and programs.
“In fact, Turkey is more than a decade behind in publicly reporting its agricultural subsidies, effectively ignoring this WTO requirement,” he said.
US Wheat Associates expressed belief that it is in the best interest of the baking industry in the Philippines to maintain a strong milling industry, adding that it would be shortsighted to rely on unfairly subsidized foreign industry to provide the primary supply of such a critical commodity as flour.
Sowers added that the domestic milling industry provides jobs to the Filipino people, and allows the true added value of producing flour to stay in country.
USWA has been a partner to the Philippine flour milling and baking industries for more than 50 years. The USWA, however, clarified that they have no incentive to restrain trade of the commodity.
“That is why, given the unfairness and questionable legality of the Turkish flour trade, we support the Philippine government following the example of fellow Asean [Association of Southeast Asia] member Indonesia in imposing a reasonable antidumping duty on Turkish flour imports,” USWA said.
Defending Turkish flour
Meanwhile, the Turkish Flour, Yeast and Ingredients (TFYI) Promotion Group, an organization of Turkey-based exporters whose mandate is to promote their country’s products overseas, has denied allegations of unfair trade made by local flour millers against wheat flour from Turkey.
Turgay Unlu, TFYI Promotion Group chairman, said that they are saddened by the local millers’ antidumping petition, and the subsequent possibility of the Philippine government’s imposition of higher tariff on Turkish flour.
“We value our relationship with our trade associates as well as with the Philippine government and the Filipino people. This is reflected on our fair trade practices specifically in relation to the wheat flour that we export to the Philippines, and our commitment to continue providing Filipinos with affordable ingredients for their well-loved pan de sal and noodles,” Unlu said.
A 25-kilogram sack of Turkish flour—a main ingredient of bread, cookies and noodles—costs approximately P200 less than locally milled flour, Unlu said.
Ernesto Chua, Philippine Turkish Business Council chairman, said that the availability of affordable Turkish flour enables small entrepreneurs and businesses—from polvoron makers and neighborhood bakeries to small biscuit and noodle factories—to survive increasing business costs.
Hakan Esen, chairman of the Turkey-Philippines Business Council and the biggest group of wheat flour producers in Turkey, the Central Anatolian Union, said that there are a number of factors that enable Turkish exporters to price their products competitively in the world market.
“One of these, is the readily available raw material, wheat, for Turkey’s flour mills,” Esen said.
While countries like the Philippines import wheat from limited suppliers of high-priced wheat for its flour production plants, Esen said that Turkey is the world’s ninth largest producer of wheat and has access to wheat suppliers like Russia, Ukraine, Kazakhstan and other wheat producers within the Black Sea region.
Esen also said that Turkey also gains competitive advantage from economies of scale, noting that it has the largest and most advanced wheat mills globally numbering approximately 1,200 with a combined rated production capacity of around 30 million MT.