The threat of

Turkish Flour on the

ASEAN Flour Milling
Industry

RICARDO M. PINCA
Executive Director
Philippine Association of Flour Millers, Inc.
2013 IAOM Conference, Vietnam

TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA

2007-2012
96.7%

4.1%
(13.5%)
(14.9%)

82.1%

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA IN 2012

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA

(44.3)%
68.6%

27.1%
(12.3)%

Source: Global Trade Information Service (Calendar Year)

54.9%

3,356.3%

TURKISH FLOUR EXPORTS

78.1%

4.3%
(18.6)%

53.1%
(44.3)%

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR EXPORTS

68.6%

238.5%

(3.3%)

5,966.9%

Source: Global Trade Information Service (Calendar Year)

5.3%

TURKISH FLOUR EXPORTS

27.1%

23.6%
62.2%

748.3%

Source: Global Trade Information Service (Calendar Year)

4.0%

TURKISH FLOUR EXPORTS

10.0%
235.0%

(13.0%)
(12.3%)

318.3%

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR EXPORTS

54.9%

8.1%
290.8%

(32.8%)

270.8%

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR EXPORTS

3,356.3%

100.8%
(80.1%)

Source: Global Trade Information Service (Calendar Year)

TURKISH FLOUR ISSUE

TURKISH FLOUR EXPORT PRICES TO ASEAN
FOB US$/MT
ASEAN
Indonesia
Philippines
Thailand
Malaysia
Singapore
Vietnam

2007
$291
$235
$248
$275
$316
$0

2008
$478
$428
$494
$461
$445
$0

2009
$279
$290
$331
$297
$289
$304

2010 %Discount
$284
52.7%
$276
54.0%
$317
47.2%
$250
58.3%
$277
53.8%
$280
53.3%

2011 %Discount
$366
38.9%
$388
35.3%
$421
29.9%
$369
38.4%
$401
33.1%
$318
47.0%

2012 %Discount 2013 July %Discount

$351
25.2%
$371
27.6%
$349
25.7%
$377
26.4%
$400
14.8%
$426
16.7%
$367
21.9%
$437
14.7%
$407
13.3%
$439
14.2%
$337
28.3%
$457
10.8%

Iraq

$328

$521

$355

$357

$469

$452

Turkish Domestic
Flour Prices/MT

$600

40.5%

$600

21.8%

$470

3.8%

$507

$512

0.9%

TURKISH FLOUR ISSUE

As of 2012-2013, Turkey is the worlds biggest

exporter of wheat flour at 2.5 MMT exports
overtaking Kasakhstans 2.3 MMT.
The average flour export FOB price in 2012 was
US$470.00/MT. To the Philippines it was $349/MT

TURKISH FLOUR ISSUE

Turkeys biggest export market is Iraq with 45%
of their total export volume in 2011 and
maintained in 2012.
Turkeys second biggest export market is
Indonesia with 25% share in 2011 but reduced to
10.5% of their total export volume in 2012 due
to 20% safeguard duty imposed by Indonesia.
However, Turkey diverted their export for
Indonesia to Philippines. Philippines ranked third
with 6% share of their total export in 2011 but
now increased to 9% in 2012.

TURKISH FLOUR ISSUE

Wheat flour exports to Turkey is imposed a tariff

duty of 102.6%.
While Turkey invokes trade liberalization in flour
exports, Turkey also prevents flour imports in
their country by imposing a tariff wall.
ASEAN tariff for Most Favored Nation (MFN) is
only 7% duty rate.

THE PHILIPPINE EXPERIENCE

THE PHILIPPINE EXPERIENCE

Philippine flour milling industry filed an antidumping petition against Turkish flour. The
Philippine government thru the Department of
Agriculture had formally accepted the petition on
May 29, 2013 and found a probable cause for the
initiation of a preliminary investigation.
Why dumping and not safeguard duty? Because
the disparity between Turkish domestic flour
prices and the flour export FOB prices is a
substantial evidence which shows dumping.
We believe that in the case of Philippines we
have a very strong anti-dumping case.

HISTORICAL VOLUME GROWTH per Bags of FLOUR

Total ('000 Bags)

57,561

61,473

65,105

66,247

71,075

Historical growth of imported flour

at 38% driven by Turkish flour at
75%, while 2012 growth alone at
84%

Industry growth at 5% does not

convert to local industry growth

Market share of imported flour

grew from 4% to 11% in the last 5yrs while local industry market
share shrunk from 96% to 89%

PROJECTED VOLUME & MARKET SHARE

Assumption: based on 5-yr CAGR
projection

PROJECTED VOLUME & MARKET SHARE

Assumption: based on 2012 growth
projection

PROJECTED LOCAL MILLERS PLANT UTILIZATION

Assumption: based on 2012 growth

NEGATIVE IMPACT OF INCREASING FLOUR IMPORTS

It has a negative impact to GDP growth. Domestic
production substituted by imported goods.
Continuous substitution will erode domestic company
competitiveness resulting to significant transfers of wealth
and loss of capital.
Business closure for the local industries contributing to a
higher unemployment rate.
While we believe in a free-market economy and unhindered
competition is beneficial to consumers, the case of the
imported Turkish Flour is not allowing us a competitive level
playing field, due to their subsidy system.

NEGATIVE IMPACT OF INCREASING FLOUR IMPORTS

Turkish Flour Millers sell or export their products to an
importer in the domestic market at prices lower than our
own national markets, or at prices below cost of production,
the sale or importation of which injures or threatens to
injure domestic industry.
It is a form of price discrimination between two national
markets.

Conclusions and Recommendation:

The viability of the Turkish milling industry is based on importing

wheat to produce usable flour while creating an exportable supply
of flour that is dumped in Southeast Asian markets at landed
prices below FOB wheat prices in the US and below domestic
Turkish feed wheat prices.

Turkish flour imports are jeopardizing the stability of the ASEAN

flour milling industry.

The Turkish flour industry states that it intends to increase

exports as a result of the current system.

The surging entry of Turkish flour to the ASEAN market creates a

food security issue. Even as it endangers the viability of flour
milling industry in ASEAN countries Turkish flour imports remain
as an unstable and undependable supply as it is also dependent on
the availability of grains from foreign sources that usually
embargo food exports to protect domestic supply.

There is a need for a united ASEAN action to expose and

ultimately stop the unfair export of Turkish flour to ASEAN by
filing either Anti-Dumping or Safeguard petition versus subsidy
and dumped price.

THANK YOU!!!