Yesterday at the House of Representatives, there were 13 bills tabled – and none of them made the news. That's because the majority were legislative housekeeping matters, and one of them looked like a non-descript revenue measure, but one baker says, it could force up the price of your pack bread!
It's called the Customs and Excise Duties Amendment Bill – and it imposes a hundred percent duty tariff on imported flour – up from 25%.
The background to the bill is that in February all restrictions on imported flour were lifted – and merchants started bringing in flour from Mexico. So bakers started buying that flour at 69 dollars a sack, twelve dollars cheaper per sack than it is sold locally.
That was good for them, but it drove down ADM's sales, and so yesterday, the House Passed a revenue measure to impose a heavy tariff on imported flour – which will make it much more expensive than the locally produced flour.
As the Prime Minister explained when he tabled it for a second reading, the bill is to protect ADM Belize Mills, which produces Belize's Flour:
Hon. Dean Barrow - Prime Minister of Belize
"We've taken imported flour off the restricted list and so there's no longer a need for permit to import for but we are taking up the duty, in order to protect the local flour industry. Now, there are some who might say - perhaps the local flour industry ought not to be protected any longer, then we're looking at the questions of jobs, investment- vis-Ã -vis the fact that if you do decide you're not going to worry about the local flour manufacturing you can then bring in the imported flour more cheaper. There's always a question of the consumer versus the employment and the company, as of this juncture we feel that it is better to preserve the local flour manufacturing - so this is by way of giving them the sort of protection that would mean that the imported flour would not drive them out of business."
And while that was passed by the House yesterday – today one baker told us it will have far reaching effects on his industry – which comes right down to that pack of bread you bought for one dollars and 75 cents this evening.
Abner Perez, who has bakeries in Belmopan and San Pedro says that protecting ADM means punishing Belize's Bakers:
Abner Perez - Owner, Casa Pan Dulce Bakery
"Right now we've been getting a special flour from Mexico that is almost at $69.00 a bag to produce the 16 oz loaf bread which is price controlled from way back at a $1.50 per loaf of bread to retail at $1.75. That was way back when the sack of flour was selling at $56.00 - and today it is at $81.00. So do the math, if we are consuming so many bags of flour at $69.00 and we are subjected to buying $81.00 - that's a big blow for us, to the baking industry. I have consulted with several of the people that have been in the industry, especially those that are producing the loaf breads at 16oz and one of those bakers suggested to me today that they are seriously considering quitting making loaf breads and just making other breads but they will be cutting their staff to almost half. According to a statistics in the bakery industry - the last time we did a spot check, combining all the bakers - directly employed about 1000 people. I have over 60 employees and I'm not the largest baker in this country, it's not looking for me and it's not looking good for the baking industry."
Jules Vasquez
"However, the bottom line is that you all want to buy imported flour when we have good, high quality flour produced at ADM in Belize."
Abner Perez
"Personally from my view, I am committed to buying Belizean and if I have to somewhere cheaper because of hard times then I will do so but I want to roll out another fact that the price for wheat right now is selling on the current market at an all time low and it is going down lower and yet they are going to tell me that we're going to get tied down to buy flour from the Mills at $81.00. The mills must come down drastically with that prices of flour - I'm not talking about $5.00, I'm talking nothing less than $10.00. Believe you, me the mills will still be making money."
The manager of ADM Belize Mills could not comment – but the CEO in the Ministry of Trade Mike Singh told us that the 25% tariff on flour imported Mexico was a violation of CARICOM regulations because items imported from outside CARICOM should be in a higher tariff bracket. He says had government not acted, cheap Mexican imports would have put ADM out of business.
As for the world wheat prices trending down, Singh said that ADM Belize Mills contracts to buy months in advance – so that they can lock into a price for stability. So, currently, the local price would not reflect immediate changes.
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