THE Philippines’s share in key Asian banana markets may be eroded by Latin American banana producers, who have been forced to look for alternative buyers due to the disruption caused by the Ukraine-Russia war.
Pilipino Banana Growers and Exporters Association (PBGEA) said it is wary of the possibility that Latin American banana exporters, such as Ecuador, will dump their produce in Asian markets like Japan and China where the Philippines is already facing stiff competition.
PBGEA Executive Director Stephen A. Antig told the BusinessMirror that the closure of the Russian market, due to its war against Ukraine, may force Ecuador and other Latin American producers to find alternative markets for their bananas with Asia as their top priority.
Antig said the possibility of this happening is not far-fetched since Latin American banana exporters did the same in 2008 and 2009, especially if the Ukraine-Russia war drags on. Dumping, he said, would pull down the prices of Philippine banana exports.
“They will opt to dump their excess bananas in our Asian markets, even if it means selling at a lower price and losing some profit in the process. So, rather than losing everything, they would bite the bullet and lose about say P1 to P2,” he said.
“That is a situation that could happen. It happened before and if it happens again, we might not be able to demand the kind of prices that they are offering because they [Latin American producers] would be cheaper than us.”
Antig said cheaper bananas from Latin American producers would make it more difficult for the Philippines to maintain its dominance in key Asian markets, such as Japan, South Korea and China.
The Philippines, the world’s second largest export of bananas, has been struggling to maintain its position as the top supplier of bananas to Asian markets due to tough competition from Latin America and neighboring Asian producers, such as Vietnam. (Related story: https://businessmirror.com.ph/2021/05/04/phl-bananas-losing-out-in-asia-to-latin-america-asean-producers/)
“We hope it does not happen at all. If it does, we hope the situation will not be that bad,” Antig said.
Foreign news agencies have reported that Ecuador’s shipments of bananas to Russia, the Latin American nation’s top market, have been halted due to logistical and trade sanctions. Prices in Ecuador plunged and bananas were left to rot due to a collapse in demand.
Ecuador exports about 1.5 million metric tons (MMT) of bananas to Russia annually and about 170,000 MT to Ukraine. Russia and Ukraine’s top banana suppliers are Ecuador, Colombia, Guatemala, Costa Rica, and Honduras—all from Latin America.
Ecuador, Mexico and Guatemala trail behind the Philippines in terms of banana exports to Japan. Ecuador is a distant second in the Asian country with 136,390 metric tons (MT) compared to the Philippines’s 844,307 MT.
However, shipments of Latin American producers to Japan have been consistently increasing in the past five years as the Philippines grapples with falling domestic production and deterioration in quality due to diseases.
For instance, Mexico is now exporting at least 70,000 MT of bananas to Japan in the past two years, a far cry from an average of 20,000 MT it used to export to the Asian country. Guatemala’s shipments to Japan also rose to 25,000 MT last year, from just 10,000 MT.
In South Korea, the Philippines remains as the top banana supplier, but the country’s annual export volume has been constantly declining in the past 8 years. In contrast, Latin American banana exporters have been capitalizing on their competitive advantages, particularly low tariffs, to eat into the Philippines’s market share in South Korea.
Ecuador is now exporting some 27,000 MT of bananas annually to South Korea from a mere 18 MT in 2017 while Colombia is steadily exporting above 250,000 MT.
The threat of dumping from Latin American banana producers comes at a time when the Philippines is trying to negotiate for higher buying prices from Japanese importers and retailers. (Related story: https://businessmirror.com.ph/2022/02/21/manila-pbgea-to-launch-campaign-to-promote-phl-bananas-in-japan/)
The Philippines remained as the world’s second-largest exporter of bananas for the fourth consecutive year in 2021 despite stiff competition from Latin American producers, according to the United Nations Food and Agriculture Organization. (Related story: https://businessmirror.com.ph/2022/05/30/phl-still-second-largest-banana-exporter-fao/)
The international agency’s preliminary report titled “International Trade Banana” showed that Philippine banana exports last year reached 2.529 MMT, 33.58 percent lower than the 3.808 MMT it shipped in 2020.