Cement in Cordillera, Ilocos overpriced

Cement in Cordillera, Ilocos overpriced
30 May 2006

A bag of cement sold in Bagio City, Philippines, and in some provinces in the Cordillera and the Ilocos reach consumers at a 100 per cent price mark up by retailers, an investigation conducted by the city council showed. Councilor Daniel Fariñas, chair of the council committee on market, trade and commerce, said from the plant, a bag of cement would only cost around P75, but when it reaches the market, the price would increase to between P175 and P200.

But Fariñas said consumers should not entirely blame retailers for the problem. “Outlets should not be blamed. The small hardware owners are also victims. We are also here to protect them,” Fariñas said in a forum here on Friday. Aside from consumers, project contractors have also been hit by the steep prices of cement. William Go, owner of Goldrich Construction, said the Department of Trade and Industry should closely monitor big business plants instead of retailers.

A price monitoring submitted by Carmelita Usman, DTI director in Benguet, to Fariñas showed that the prevailing price of a bag of cement from Holcim Philippines Inc., a multinational company, is P170.

The breakdown of the cost production includes the plant price of P151; freight, P13; handling, P1; and a mark up of P5 per bag for retailers. In a letter to DTI-Benguet, Joselito Cruz, acting regional head of the Holcim, said the price increase is “fair and reasonable. Cement manufacturing is a very capital-intensive business,” he said.

Fariñas said the price increase is understandable due to freight cost. But he said the rest of the production cost, especially on the use of raw materials, should not contribute too much to the increase since raw materials are available in the country.

“Now, what we really wanted to [find out] is why the actual price of cement [has doubled] when the actual production cost is only P70 per bag,” he said. He said if the problem on overpricing is not addressed, a monopoly run by cement plants might dictate and control the prices of cement.

Fariñas said the price increase would impact on the implementation of social housing projects. “How can a common government employee afford a housing [unit] if he or she cannot afford the high prices of cement?” Fariñas asked. “No one will be able to afford to build houses anymore. A construction company will use up thousands of bags of cement for a single project,” he said.
Published under Cement News