Race for survival 

PHL Cavendish banana export faces the odds amid a devastating plant disease, growing competition

THE Philippine Cavendish banana has been keeping its head barely above water, despite growing stiff competition from Latin American growers and a still creeping and devastating Panama disease at home.

It’s still holding its market though, government regulators and private growers would say, although the percentage share of what was once a dominant market control keeps slipping past, as countries like Japan and South Korea impose higher tariff on Philippine banana than on newcomers from countries like the No. 1 grower, Ecuador.

A higher tariff means exporters from the Philippines would have to charge higher retail prices to offset the tax in the foreign market, but this simple economic reality would not be palatable to the ordinary Japanese or South Korean consumer, who have other choices from cheaper competing brands.

And so Philippine exporters have to bring down their retail price at the level of their competitors to stay afloat, at the risk of trimming down further the profit margin, while costs of growing the banana at home are getting more expensive.

Small success

A HIGH-LEVEL banana lobby with the Japanese government led lately to a new and higher retail price of the Cavendish banana in Japanese stores, the first price movement to happen in the last five years in favor of Filipino exporters, the Pilipino Banana Growers and Exporters Association (PBGEA) said.

It could be a breakthrough for Filipino exporters seeing the price movement in the retail market, from ¥248 per kilo to ¥278, a difference of ¥30, said Alberto Paterno Bacani, president of Unifrutti and PBGEA chairman.

This means a little increase in the buying price of the second most exported Filipino agricultural product.

He said the price of the Cavendish banana grown in Mindanao has plateaued during the last five to six years, while prices of farm inputs in growing the banana have either doubled or tripled in the aftermath of the Ukraine-Russia conflict since February this year.

However, the impact of the small price movement in the retail of the Cavendish banana was wiped out after the yen devalued by 30 percent, or “more than the retail price increase.”

PBGEA took it still as a big achievement.

Bacani credited it to the work of the public-relations campaign put up by PBGEA and the Department of Agriculture, “For the purpose of bringing to the attention of the Japanese consumers and the Japanese government, as well as other groups like the retail supermarket organizations in Japan, about the plight of the Philippine banana industry.”

“Since last year, a lot of the farm inputs required for banana growing really went up like all the basic macronutrient fertilizers like urea and potassium, almost doubled,” he said.

“We have also the big inflationary cost involved in packaging materials, particularly paper that you need to produce boxes, which went up by about 30 percent, followed by the increase in fuel and bunker almost doubled. And the container rate, for some markets, has tripled,” Bacani added.

He said, “There was really a need to bring to the attention of the Japanese consumers that they have to support the banana industry, which supplies about 75 percent of the banana consumed in Japan.”

The PBGEA official said the PR team they hired has deep connections to some members of the Japanese Diet, the lawmaking body of Japan.

“It’s a big supply of banana in Japan, and to make it sustainable, there has to be some support, particularly from the retail players in Japan, to increase the price of banana, because if you look at the last five to six years on a per kilo basis, banana price has not increased, [it’s] almost flat,” Bacani explained.

Compared to the other fruits in Japan on the retail shelf, prices have gone up on the average by 15 percent.

Bacani added: “That is really the plea, the whole purpose of having this PR campaign,” he said. He acknowledged the help of DA and the ambassador of the Philippines to Japan, the former Ambassador Jose C. Laurel V. “There was a press conference in June, and there was a direct plea.”

Trade decision

THE bigger goal, which may be more sustainable for exporters, was to lobby for lower tariff.

Stephen A. Antig, PBGEA executive director, said the issue would not be a simple case of persuading Japanese authorities and Japan’s association of fruit retailers to increase prices on their store shelves.

It happened with South Korea, which brought tariff down after the Philippines agreed to some trade concessions on Seoul’s exports to Manila.

Bacani said Japan, the country’s main and lucrative market, has already slashed tariff to zero for Mexico and Peru. It did the same with Cambodia and Laos.

Vietnam’s tariff is now at 8 percent and will slide to zero by 2028.

In contrast, “The Philippines is still at 8-13 percent,” Bacani said.

He said Chinese money funded the plantations in Laos and Cambodia, and the technology came from the Philippines, from Filipinos who were pirated. “Laos was not a banana country before, but in only four years, it has begun exporting now. These Asian countries have logistical advantage. They would be a threat to the Philippines,” he added.

Four years ago, 80 percent of the banana in China came from the Philippines. With the entry of Cambodia and Vietnam just along its border, the Philippine share was cut down to 36 percent, and 61 percent was accounted for by Cambodia and Vietnam. China is the Philippines’s second big market for banana, Bacani said.

One bright spot in tariff was South Korea, which decided to bring down tariff to zero percent in five years from the current 30 percent. This happened after the Philippines signed a free-trade agreement with South Korea.

The share of the Gulf region in the Middle East, in the last six years, went down by 50 percent, “Because our banana is seen as expensive than the Latin American banana although the Latin American export was the banana that were not sold in Europe.”

He said PBGEA already wrote President Ferdinand Marcos Jr., “And I hope it would get to his attention to negotiate it when he visits Japan.”

“It would be a complicated bilateral agreement, a give and take. If we want Japan to reduce or eliminate banana import tariff, it might as well ask us to reduce also the tariff on cars or auto parts, or TV. It would require a long talk,” he said.

Dim outlook

THESE efforts to bring down tariff and raise retail price should help buoy up, or, in a best-case scenario, ensure the survival of an industry still plagued by the crawling devastation of the Fusarium Wilt, popularly known as Panama disease. This is a soil-borne disease that wilts affected banana. The virus could stay in the soil for as long as the next 50 years.

Ten years ago, or before Typhoon Pablo wrought havoc on Eastern Mindanao, the banana sector had as much as 85,000 hectares. With the Panama disease aided by Pablo’s floodwaters in its spread across the region, the industry lost 30,000 hectares in the last 10 years, with half of this hectarage lost in the Davao Region.

The Cavendish banana was first widely grown in Davao del Norte and Compostela Valley (now renamed Davao de Oro). With the ravages caused mainly by the Panama disease, Bacani said, “It now looks depressing in Davao del Norte, with many abandoned farms.”

Bacani said some multinational companies like Sumifru and local big growers like Lapanday have “already left the industry to invest elsewhere, like Sumifru, which bought 2,000 hectares in Ecuador.”

He said projections indicated that this year’s export volume would go down to 140 million 13.5-kilogram boxes, from 160 million in 2020-2021, due mainly to the Panama disease.

“Whatever new areas opened are not expansion but replacing lost hectarage. The industry would not even venture into the Visayas and Luzon because these are within the typhoon belt,” he said.

Abel James Monteagudo, director for regional office of the Department of Agriculture, said the bright spot in the industry “is that we still have the big market share in Japan, our main outlet for banana, and the work here is to maintain that market, manage the Fusarium Wilt and help the industry stay afloat.”

Jose Laquian, the agriculture attaché of the Philippine Embassy in Japan, said some 500,000 families depend on and have been surviving because of the banana industry.

Despite the dim situation, Bacani said the industry remained on second spot as the most exported agricultural crop after coconut. “On a freight-on-board basis, banana fetches around $8 to $9 per 13.5-kilogram box.”

Antig expressed hope that President Marcos would notice the dire straits of the industry and rush to its succor with the needed government support. He said Rep. Raymund Democrito C. Mendoza of the Trade Union Congress of the Philippines (TUCP) has filed a bill establishing a banana research institute with an allocation of P300 million.

Antig said this would be a good start again. “This bill has been pushed over and over again the past years and did not get past the first reading.” He surmised this may be because “people in Manila” do not attach much importance to  the industry.

Still and all, “We just have to get going, be positive and let the industry survive,” he said.

Image credits: Apichart Teapakdee | Dreamstime.com


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