The conflict in Eastern Europe is not only making it more difficult for food manufacturers to source raw materials such as wheat, but it is also posing challenges to Philippine banana exporters. As Russia has shuttered its borders following its invasion of Ukraine, sellers of bananas particularly from Latin America have been forced to look for other buyers in the world (See, “War to heat up fight for key banana markets,” in the BusinessMirror, June 9, 2022). This has prompted banana exporters from Latin America to target other markets, including countries where the Philippines used to dominate.
The attack on Ukraine happened amid efforts of the government and our banana exporters to raise the buying price of the fruit in Japan, a major buyer of Philippine bananas. The price increase is warranted given the surge in production costs incurred by local banana growers. Producers belonging to the Pilipino Banana Growers and Exporters Association (PBGEA) noted that they have seen an “unprecedented” increase in key inputs, such as fertilizers, which rose by 100 percent, and maritime freight that surged by more than 100 percent due to the global shortage of containers (See, “As costs rise, PHL exporters eye Japan banana price hike,” in the BusinessMirror, November 16, 2021).
The government of Ecuador, the world’s top banana exporter and a competitor of the Philippines, has earlier pledged to “defend” Ecuadorian producers and exporters. Even before the closure of the Russian market because of the war, Ecuador has offered to help its farmers by offering to buy bananas from small producers in 2020. It made the offer following the collapse in prices in China and Russia, two of Ecuador’s major banana buyers.
While the Philippines remains as the world’s second-largest exporter of bananas, other emerging contenders are nipping at its heels and are threatening to dislodge the country from its current status. Maintaining this status is not just about the bragging rights for the Philippines; it is the struggle to retain its market share amid the challenges facing the sector. The impact of a lower market share would be felt most by local growers who are struggling to earn enough amid the rise in production costs and the acceleration in the prices of basic commodities.
The Philippine government should defend its banana exporters and arm them with the necessary ammunition to fight other contenders eyeing our top markets. These include assistance in defeating Panama disease, which can devastate banana farms and slash output, as well as the provision of subsidies that will allow farmers to cope with the spike in input and transportation costs. A price war is now being waged by exporters that need to sell their produce, even at below-cost prices, instead of allowing the fruits to rot.
The Food and Agriculture Organization’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 the country shipped in 2020. Without timely government assistance to our producers, shipments could decline, threatening the chances of Philippine exporters to retain existing Philippine banana markets.