THE local wheat industry continues to bear the high cost of wheat grains due to the war between Russia and Ukraine and the “tightness of supply,” among others, the Philippine Association of Flour Millers, Inc. (Pafmil) said on Wednesday.
“We continue to take the high cost of wheat grains due to the Ukraine war, due to the tightness of supply, higher fuel and therefore logistics cost, higher cost of other inputs to farming,” Pafmil Executive Director Ric Pinca told the BusinessMirror.
Pinca said these contribute to the higher cost of the wheat as a raw material. He thinks the conflict between Russia and Ukraine will not change “in the near future,” and the Philippines, like many countries relying on the key exports of the protagonists, will remain at the receiving end of the harsh effects of the war.
“We will have again to deal with this in the future because obviously the situation in Ukraine and Russia will not change in the near future, not until December,” said Pinca.
Moreover, Pinca said Russia’s pulling out of the United Nations-brokered Black Sea grain deal has already affected the whole wheat industry.
According to Oxford Economics, “Russia’s decision to halt its participation in the UN-brokered Black Sea grain deal risks a renewal of global food price pressures and could prove damaging to Ukraine’s agricultural output long term.”
However, on Wednesday, a Reuters report revealed that “Russia said it would resume its participation in a deal to free up vital grain exports from war-torn Ukraine after suspending it over the weekend in a move that had threatened to exacerbate hunger across the world.”
Further, the report noted, “The Russian defense ministry said it had received written guarantees from Kyiv not to use the Black Sea grain corridor for military operations against Russia.”
“The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the ministry statement was quoted in the report.
“The grain deal already loosened up a bit the tightness in the supply, but those supplies really mostly went to Africa and the Mediterranean countries, not to Asia and not to the Philippines in particular,” Pinca told the BusinessMirror.
With this, Pinca said the Philippines is still dependent on the United States, Canada, and Australia “which are our mill suppliers in the first place.”
As local millers keep tabs on their inventory, Pinca said, “we continue to maintain a three-month lead time as far as our supply is concerned. We are assured of our wheat supply three months ahead so we have for November, December and January.”
He added that the time of loading is about 30 days before it arrives in the country.
But, he said that as far as supply is concerned, the country has the supply. However, Pinca said, “there will definitely be a change in the price because prices keep on going up as far as wheat is concerned.”
Freight cost is also a culprit behind the rising prices mainly due to the “oil situation”, he said.
He said, reassuringly, that supply is not the problem. However, he said “we should look at the consequence of price due to the current war situation.”
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