FILIPINO banana exporters are proposing that the government initiate talks with Japanese retailers to increase their prices to offset rising production costs and keep profit margins of local growers healthy.
In a letter to Philippine Agricultural Attache to Japan Jose I. C. Laquian, the Pilipino Banana Growers and Exporters Association (PBGEA) sought the government’s support in requesting for higher prices for Philippine bananas sold in the Japanese market.
The move, the PBGEA argued, would help the local banana industry cope with many challenges it faces today, including disease outbreaks and rising production costs, among others.
“To be able to continue to offer a product with high-quality standards that is compliant [with] market requirements, the Philippine banana industry is therefore seeking the support of the Philippine Government through the embassy in requesting the markets of Philippine banana in Japan to adopt a higher pricing policy in retail stores and supermarkets to offset the spiraling inflationary costs,” the group said in its letter, a copy of which was obtained by the BusinessMirror.
“This will greatly help to ensure the future subsistence of this vital industry for the Philippines,” the group added.
Citing Japan’s Ministry of Internal Affairs & Communications data, the PBGEA noted that the purchasing price of bananas in the East Asian country for the past seven years has remained flat at about $2.36 per kilogram while production costs have constantly risen in recent years.
“Production costs have increased substantially over the last seven years with this year being the most substantial, but market prices have not,” the group told the BusinessMirror.
Aside from disease outbreaks, the group said it is now facing Covid-19 pandemic-related problems such as rising freight costs and stiffer competition from Latin American as well as Southeast Asian banana producers in key Philippine banana markets.
The PBGEA said it has seen an “unprecedented” increase in key inputs such as fertilizers by 100 percent; kraft paper, used for boxes, by 53 percent; plastics by 65 percent; and maritime freight by more than 100 percent due to the global shortage of containers.
Some of the initiatives proposed by the PBGEA include the possibility of a government-to-government talks about the matter and discussions with relevant industry associations, which include Japan Retailers Association, Japan Chain Stores Association, Japan Supermarkets Association and National Supermarket Associations.
“Please be informed that our Latin America competitors have already taken the same initiatives to ensure the sustainability of the banana industry in their countries,” it said.
Latin American banana producers have been urging retailers in Europe, US and the United Kingdom to increase their prices as a way to offset rising production costs. In the UK, Latin American banana producers said they are now suffering from a “price war” among supermarkets as retailers try to sell bananas at the cheapest possible price, according to a recent The Guardian report.
Philippine Statistics Authority (PSA) data showed the country’s banana exports to Japan from January to August declined by 40.3 percent to $309.470 million from $518.062 million in the same period of last year.
Volume wise, banana shipments to the East Asian country declined by 42 percent to 599,929.947 metric tons from 1.034 million metric tons recorded in the eight-month period of last year, based on PSA data.