the threat of turkish flour in asean

7/23/2019 The Threat of Turkish Flour in ASEAN

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The threat of

Turkish Flour on the

ASEAN Flour Milling

Industry

RICARDO M. PINCAExecutive Director

Philippine Association of Flour Millers, Inc.

2013 IAOM Conference, Vietnam


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TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA

2007

-

2012

Source: Global Trade Information Service (Calendar Year)

82.1%

96.7% 4.1%

(13.5%)

(14.9%)


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TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA IN 2012



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TURKISH FLOUR EXPORTS TO SOUTHEAST ASIA


(44.3)%

54.9%

27.1%

(12.3)%

68.6%

3,356.3%


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TURKISH FLOUR EXPORTS


53.1%

78.1% 4.3%

(18.6)%

(44.3)%


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5,966.9%

238.5% (3.3%) 5.3%

68.6%


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748.3%

62.2%

23.6%4.0%

27.1%


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318.3%

235.0%

10.0%

(13.0%)

(12.3%)


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270.8%

290.8%8.1%

(32.8%)

54.9%


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3,356.3%

100.8%

(80.1%)


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TURKISH FLOUR ISSUE

TURKISH FLOUR EXPORT PRICES TO ASEAN

FOB US$/MT

ASEAN 2007 2008 2009 2010 %Discount 2011 %Discount 2012 %Discount 2013 July %Discount

Indonesia $291 $478 $279 $284 52.7% $366 38.9% $351 25.2% $371 27.6%

Philippines $235 $428 $290 $276 54.0% $388 35.3% $349 25.7% $377 26.4%

Thailand $248 $494 $331 $317 47.2% $421 29.9% $400 14.8% $426 16.7%

Malaysia $275 $461 $297 $250 58.3% $369 38.4% $367 21.9% $437 14.7%

Singapore $316 $445 $289 $277 53.8% $401 33.1% $407 13.3% $439 14.2%Vietnam $0 $0 $304 $280 53.3% $318 47.0% $337 28.3% $457 10.8%

Iraq $328 $521 $355 $357 40.5% $469 21.8% $452 3.8% $507 0.9%

Turkish Domestic

Flour Prices/MT $600 $600 $470 $512


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As of 2012-2013, Turkey is the worlds biggestexporter of wheat flour at 2.5 MMT exportsovertaking Kasakhstans 2.3 MMT.

The average flour export FOB price in 2012 wasUS$470.00/MT. To the Philippines it was $349/MT

TURKISH FLOUR ISSUE


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Turkeys biggest export market is Iraq with 45%

of their total export volume in 2011 andmaintained in 2012.

Turkeys second biggest export market is

Indonesia with 25% share in 2011 but reduced to10.5% of their total export volume in 2012 dueto 20% safeguard duty imposed by Indonesia.

However, Turkey diverted their export forIndonesia to Philippines. Philippines ranked thirdwith 6% share of their total export in 2011 butnow increased to 9% in 2012.

TURKISH FLOUR ISSUE


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Wheat flour exports to Turkey is imposed a tariffduty of 102.6%.

While Turkey invokes trade liberalization in flour

exports, Turkey also prevents flour imports intheir country by imposing a tariff wall.

ASEAN tariff for Most Favored Nation (MFN) is

only 7% duty rate.

TURKISH FLOUR ISSUE


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THE PHILIPPINE EXPERIENCE


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Philippine flour milling industry filed an anti-

dumping petition against Turkish flour. ThePhilippine government thru the Department ofAgriculture had formally accepted the petition onMay 29, 2013 and found a probable cause for the

initiation of a preliminary investigation.

Why dumping and not safeguard duty? Becausethe disparity between Turkish domestic flourprices and the flour export FOB prices is asubstantial evidence which shows dumping.

We believe that in the case of Philippines wehave a very strong anti-dumping case.

THE PHILIPPINE EXPERIENCE


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HISTORICAL VOLUME GROWTH per Bags of FLOUR

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 5-

yrs while local industry marketshare shrunk from 96% to 89%

Total ('000 Bags) 57,561 61,473 65,105 66,247 71,075


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projection

PROJECTED VOLUME & MARKET SHAREAssumption: based on 5-yr CAGR


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PROJECTED LOCAL MILLERS PLANT UTILIZATIONAssumption: based on 2012 growth


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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 wealthand 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.


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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 toinjure domestic industry.

It is a form of price discrimination between two national

markets.


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Conclusions and Recommendation:

The viability of the Turkish milling industry is based on importingwheat to produce usable flour while creating an exportable supply

of flour that is dumped in Southeast Asian markets at landedprices below FOB wheat prices in the US and below domesticTurkish feed wheat prices.

Turkish flour imports are jeopardizing the stability of the ASEANflour milling industry.

The Turkish flour industry states that it intends to increaseexports as a result of the current system.

The surging entry of Turkish flour to the ASEAN market creates afood security issue. Even as it endangers the viability of flourmilling industry in ASEAN countries Turkish flour imports remain

as an unstable and undependable supply as it is also dependent onthe availability of grains from foreign sources that usuallyembargo food exports to protect domestic supply.

There is a need for a united ASEAN action to expose andultimately stop the unfair export of Turkish flour to ASEAN byfiling either Anti-Dumping or Safeguard petition versus subsidy

and dumped price.


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THANK YOU

the threat of turkish flour in asean

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