The Philippines is a major producer of Cavendish bananas, which it exports to a number of countries including Japan and China. Aside from Cavendish, the country also produces Lakatan and saba/Cardaba. The latter is processed into banana chips and other products for the domestic and export markets. The fruit is mostly grown in the Davao region, Northern Mindanao, SOCCSKSARGEN, and the Autonomous Region in Muslim Mindanao.
While the country remains as the world’s second largest exporter of bananas, other banana-exporting countries are currently nipping at the heels of the Philippines. The country’s exports of bananas plunged by 31 percent to a five-year low of $1.123 billion in 2021 (See, “PHL banana exports down 31%, a 5-year low,” in the BusinessMirror, January 31, 2022).
Data from the Philippine Statistics Authority showed that the total volume of bananas exported by the Philippines last year reached 2.419 million metric tons, which was 36.46 percent lower than the 3.808 MMT recorded in 2020. Historical PSA data indicated the volume of banana shipments last year was the lowest in the past five years. Aside from logistical problems, local exporters also had to contend with the stiff competition posed by other banana-producing nations like Vietnam and Cambodia.
Maintaining their market share is increasingly becoming a tall order for local banana exporters given the steady rise in their production cost, particularly in the last two years. Citing data from the Pilipino Banana Growers and Exporters Association, the Banana Industry Roadmap 2019-2022 prepared by the Department of Agriculture in 2018 indicated that exporters earned a pre-tax income of P41,524 for every 4,000 boxes of Cavendish bananas they export. PBGEA’s computation showed that producers incurred expenses amounting to more than P1.124 million per hectare.
Logistical problems, which have been hounding producers not only in the Philippines but also in other countries, have eaten into the profits of exporters. PBGEA Chairman Alberto F. Bacani told this newspaper in April 2021 that shipping costs jumped by 15 to 20 percent from the 2020 quotations (See, “Costs, delays cut PHL banana exporters’ profit,” in the BusinessMirror, April 5, 2021). This has practically given Vietnam and Cambodia an edge over the Philippines given their proximity to the top banana markets in Asia.
Rising oil prices are also putting pressure on the cost of fuel and inputs, and this would further cut into the earnings of banana exporters. As the Philippines is an oil-importing country, oil price hikes would mean more expensive fuel for businesses and consumers. Increasing oil prices would further burden producers as a big percentage of bananas are transported by traders using small- to medium-sized vehicles that can enter the narrow roads leading to the farms, which would jack up transportation cost.
While the logical consequence of all these developments is an increase in their selling price, local banana producers are being held back by the possibility that this could result in the loss of their market share. Their current selling price is no longer realistic and maintaining it would cause them to incur losses, which would affect Mindanao farmers who rely on bananas for their livelihood.
