More Indonesian Flour Imports Seen By LEE C. CHIPONGIAN November 20, 2011, 11:43pm Makassar, Indonesia Philippine baker groups and flour importers are expected to source higher volume of Indonesian-made wheat flour next year in the hope of bringing down prices of bread. The country's largest flour importer, Malabon Long Life, currently ships 50 containers of flour from the Australian-controlled PT Eastern Pearl Flour Mills (EPFM) of Makassar, Indonesia, the fifth biggest flour miller in the world, producing 552,000 metric tons of flour per year and turnover sales average of $270 million annually. Malabon Long Life President Ernesto N. Chua said due to rising demand for cheaper and what he is convinced of as better quality high-protein flour, expects shipment of flour from Indonesia to increase by 300 percent or from 50 to 200 containers by mid-2012. He led a group of bakers to Makassar and Jakarta to visit the facilities of EPFM, a member of Interflour and owned by CBH Group of Australia in partnership with the Salim Group of Indonesia. Chua said the domestic consumption of flour is small compared to the rest of the region or only two million metric tons per year. About 10 percent of this supply is imported flour, the rest are produced by the 12 biggest local millers. This is not enough volume to influence any drop in bread prices, which he and most big bakers in the Philippines believe have much room for a reduction. Since Chua started importing EPFM's "Kompas" brand in 2010, the feedback from bakers has been encouragingly positive. "The quality of Indonesian flour is very good and we see increasing demand," he said. The 50 containers that are imported or about 50,000 25-kilo bags of flour a month is worth $600,000 or P26 million. His company sells Kompas flour for P840 per bag compared to local millers' P920. His trading firm used to import flour from China until it was restricted by the Chinese government, then later he also shipped Turkish flour but he had to stop orders because of issues brought on by the Philippine Association of Flour Millers alleging that Turkish flour is not only low-grade but have high toxic contents. Philippine Baking Industry Group (PhilBaking) President Simplicio P. Umali Jr. in a dialogue with EPFM President Jason Craig, said about 80 percent of the group's members use high-protein and low-ash flour to produce white bread that Filipinos prefer. He said most big bakers are interested in importing bulk volumes but problems in registering new products with the Food and Drug Administration is a hindering factor. "But that is something we want to do in the future, which is to bring in our own flour and source this from big millers such as EPFM," said Umali. Representatives from the Filipino-Chinese Bakers Association and Philippine Federation of Bakeries Associations, who joined the group in Makassar, agreed. Umali said buying cheaper flour overseas is the only viable option right now after failed attempts to convince local millers to bring down prices. "We're not getting the cooperation of local millers so we're trying to go outside to source our flour. Part of our objective is not only to bring bread prices down, but to convince Filipinos that bread is more nutritious than rice." In the same discussion, Chua proposed that EPFM produce a high-protein flour as a second brand specifically for the Philippine market to enable them to reduce current prices. So far, importing flour, including freight costs and tax and duty incidentals, is still P80 per bag lower versus local ex-mill price which could go up to P940 per bag. Two of the biggest bread makers, Umali's company, and PhilBaking immediate past president Walter Co.'s own firm, have led efforts to introduce cheaper bread to Filipinos called Pinoy Pandesal and the loaf bread Pinoy Tasty, but even the prices of these products are still on the high side, they said. "If low-priced flour will be used more (in this case imported flour) then that's easily a P2 per loaf price reduction," said Umali. "But then bakeries can't just use Kompas flour, they have to use different flours for each bread." "White bread using high-protein flour is highly favored in the Philippines and we're trying to get a cheaper source of flour so we could initiate shift to bread," said Co, who explained that white bread is the most expensive to make. "While we're losing money subsidizing Pinoy Tasty, it is part of our advocacy to help Filipinos to appreciate bread more because it is healthier." Pinoy Tasty is sold for P38 versus branded loaf of P65, while Pinoy Pandesal is sold for P25 per 250 grams compared to branded pandesal of up to P40 per pack. Craig, for his part, said proposals to produce a lower-priced but still high-protein flour for the Philippine market is "doable." "We just have to discuss the specifics," he said. He called this second brand a "fighting brand" to bring prices of Pinoy bread lower. He also said that a 200-container of flour a month orders from the Philippines is only equivalent to 6 to 8 percent of their total production capacity and could be comfortably supplied without interruptions. Craig said in the next three years, EPFM is investing another $15 million to improve the quality of their milled flour. 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