THOUSANDS of buyers of Cavendish bananas, a top export variety of the fruit, are flocking to Davao del Norte in an attempt to procure the fruit at a cheap price through “spot buying.”
Davao del Norte is the country’s top export banana-producing province.
Small independent banana growers are at the mercy of this low-priced spot buying by banana buyer-exporters. The small producers have been in dire economic straits since January this year in a province hailed as the banana capital of the Philippines.
Spot buying means individual buyers approach small growers who have a small plantation area and access to packing plant, offering to buy the bananas at variable prices and provide them brand cartons.
Spot buyers offer cash advances to finance the growers.
Spot buying is different from “contracted pricing”, where companies have a contract with the growers, specifying costs to deduct and a fixed price the whole year round to buy the bananas.
These banana spot buyers usually export Cavendish bananas to China, but “we have no idea why their buying prices remain very low while they appear to sell our export bananas via the black market,” said small banana grower Domingo Tambien, who has a 1-hectare banana plantation in Santo Tomas town.
He said spot prices for export bananas plunged first to P120 per box in December 2016 and then nosedived to P60 to P80 per box in January 2017, the lowest price he recalled.
“We don’t know the real reason of the price decreases. Spot buyers have varied reasons. They first said they had to give Christmas bonus to their workers that’s why the price sank. Then they said the price sank in China due to the other fruits that competed with our bananas. Then, they told us about the high quarantine fees in China which was already stopped,” Tambien said in an interview.
He, however, added for the past three weeks, the spot prices rose to about P100 per box of “four to six big bananas,” the first-class variety weighing an average of 13.5 kilos per carton.
Tambien said that price could at least tide them over to breakeven levels even as he said a banana-buying company continues to buy bananas at P250 to P290 per box.
Juanito Angco, another small banana grower with only a fourth of a hectare farm in the same town, believes small independent growers with an average of 1 hectare to 2 hectares of a banana plantation have now become the top producers of Cavendish bananas if the aggregate hectarage of banana plantations is considered.
From the 2016 data of Santo Tomas municipal agriculturist office, the town has a total of 10,180.05 hectares of banana plantations, with 7,140.404 hectares, or 70.14 percent, cultivated by 4,973 small independent growers. Meantime, multinational and corporate-banana producers Marsman, Stanfilco, Lapanday and Tadeco have a combined 3,039.596 hectares of banana plantation, or 29.86 percent of the total. That is in one town in Davao del Norte alone.
Angco said small growers have to bear gross expenses per box that average P110, including the usual P12 per packer and P5 for the packing plant fee, all per box.
Given a fairly good price, a hectare of banana plantation could make a gross of 4,000 boxes in a year for a gross income of P1 million and gross expenses of P600,000, thereby giving a net income of P400,000 to the grower.
“That is good enough, but not now under this low spot-buying levels,” he said.
Tambien recalled spot buying had a strong resurgence after typhoon Pablo struck in 2012 as Chinese buyers or canvassers flocked in and procured Cavendish bananas at P600 to P700 per box, resulting to polevaulting of small growers over the contracted price they had with big companies.
This spot-buying strategy started in early-2000, but got a foothold in the province around 2010. Then Pablo struck.
“But now, there is no polevaulting as spot buying sticks to low prices, while contracted pricing remains high. What is there to polevault when the price offered by spot buyers has changed from high to low?” Tambien said.
Before typhoon Pablo, banana consols, short for consolidators, had a heyday. They acted as bulk buyer-shippers of the bananas produced by small growers, buying at high prices, but without much regard to the quality control of bananas. The consols went bankrupt when their bananas arrived ripe in Saudi Arabia.
It was during the administration of President Gloria Macapagal-Arroyo when foreign buyers started to flock to Davao and partnered with the local consols and canvassers, changing the configurations of banana-buying players and threatening the longtime hold of the so-called Big Four in the banana industry: Dole, Unifrutti, Del Monte and Sumifru.
Recent regional data came congruent with this. The PBGEA in 2015 put at around 44,670.29 hectares the total area cultivated by big banana companies, while some 30,000 hectares were tilled by small landowners and agrarian-reform beneficiaries.
These banana plantations are found in the provinces of Davao del Norte, Compostela Valley, Davao Oriental, Davao del Sur, Davao Occidental, North Cotabato, South Cotabato, Sarangani, Sultan Kudarat, Bukidnon, Agusan del Norte, Agusan del Sur, Surigao del Sur, Maguindanao and Lanao del Sur.