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Aug 9, 2013

Cheaper Mexican flour or Belize ADM flour?

The Customs and Excise Duties Amendment Bill was one of the thirteen bills tabled at the House of Representatives on Wednesday. The bill essentially increases the import duty on flour from twenty-five percent to one hundred percent. Earlier in the year, when bakers were allowed to import freely, they enjoyed a substantial cost reduction on flour from Mexico than from flour produced at ADM Belize Mills. Andre Perez, a Baker from Belmopan, believes that the price of bread and other wheat products could go up since the Mexican product is now more expensive. The baker also says that the government is saving the jobs of thirty Belize ADM employees, which pales in comparison to over a thousand individuals who work at bakeries across the country.

 

Andre Perez, Baker

“The bill that passed is just clearing up that since I think February or March, anybody could import flour…in other words you didn’t need a permit from supplies control to bring in import flour from Mexico or Guatemala. However, the duty on it was somewhere around twenty percent; twenty-four percent plus two percent environmental tax. But what the nation did not notice is that what passed there included also the raising of the duty. It went up to one hundred percent plus two percent environmental tax. So essentially making it no sense to go across the border with the prices that we are getting because it is talking about more expensive flour than what we are getting here in Belize.”

 

Reporter

Andre Perez

“Tell me why it was necessary for you all, the bakers, to go to look for imported flour. What’s the situation with ADM and their local flour?”

 

Andre Perez

“The problem is the price. The price of flour right now is at an all time high—somewhere around eighty-six dollars. We only gone down like five dollars. But it has gone up for the past few years from fifty-six dollars all the way to eighty-one. Our point on this side is that we have been producing the loaf bread, the price controlled loaf bread at a dollar fifty wholesale to retail at one seventy-five. Now you do the maths when producing with a sack of flour, fifty six and now paying at eighty-one. That prompted us to look other ways and if the market was open to import, well that’s what we did because we were bringing in flour at a lot less price than what we are paying here in Belize.”

 

Reporter

“But now you will be forced to go to back ADM?”

 

Andre Perez

“Yes we do.”

 

Reporter

“And what will be the impact of that on the cost of bread?”

 

Andre Perez

“We’ll obviously we have some choices that we are looking at and as I am speaking to you, we have gotten in contact with most of the larger producing bakers and we are trying to take a position on this and we are shortly having a meeting to discuss it. But we have options on the table; however, it is not something that we are hiding and we will come out swinging or something. What we are saying is that all the information, statistics, we have provided not only to the people of the association, but to government. The Bureau of Standards has all the information in terms of prices of wheat, what it costs right now which is at an all time low and continues to go down. And we have shown that to the government already…that the prices that is being sold here in Belize is not fair; it should be lower. And its effect is purchasing flour elsewhere that is cheaper—Mexico and Guatemala. So what we are saying is that we cannot survive. We cannot survive this. Essentially we have no choice, but buy flour at eighty-one dollars. Whether any kind of reductions or rebates, it doesn’t make any sense; we need a substantial decrease in flour and they can to it. And the government has the statistics showing them that yes eighty-one dollars is way too high and we need to get prices lower down. That’s one option we are showing for the government to look at that or else, we as an association cannot survive producing bread at buying one sack of flour at eighty-one and selling for one-fifty. We have to look at an increase in price. And the price control will have to do it because we have to survive.”

 

Reporter

“Has there been any attempt at this discussion with ADM about the prices; maybe looking at lowering the price?”

 

Andre Perez

“We are making attempts right now as I speak to you; we are trying to do something here, but we are looking at all the options. It is not something that we are trying to be radicals or rebels or anything. What we are doing is to try and find a solution to this. And we have done, personally me as a businessman, I have done my best to liaise and negotiate as much as possible with the milling company as well as with government.”

 

Reporter

“If there is no negotiation by ADM, if the price remains the same at eighty-one dollars per sack, if there is no move by government to help to subsidize or something in some way, you will have to look at cutting employees.”

 

Andre Perez

“For sure, looking at options as cutting employees—I’m said to say but it is a reality or if we come to an agreement with bakers, which we are trying to organize it by next week, we have to look at raising prices.”

 

The bakers will hold a meeting very soon to consider their options. One of the main issues is whether or not consumers would see the local flour mill close down and have an exclusive dependency on foreign or imported flour. 

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Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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1 Response for “Cheaper Mexican flour or Belize ADM flour?”

  1. Gary Cunningham says:

    This is just another sad chapter in the Belize Government’s “Culture of Corruption” to protect a monopoly. This is not at all about protecting 30 Belizean jobs and it’s consequences will negatively effect many other jobs, the poor trying to feed their children, and the quality of milled flour products. By protecting the many “Sacred Cow” businesses, the Belizean Government interferes with the process of “Free Enterprise”
    Protectionism is destructive as it eliminates trade, cuts off markets, causes unemployment, fosters poor quality products, and keeps prices artificially higher.
    The sad irony of “State Interference” of private enterprise, control, and regulation is that it does more to destroy the economic life of the country.
    Nothing does more to eliminate mass poverty and unemployment than a government’s zeal to promote and protect the principles of “Free Market Capitalism”.

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