LOCAL banana growers and stakeholders are calling on the Duterte administration to intervene on the issue of Agribusiness Ventures Arrangements (AVA) which are currently being reviewed by the Department of Agrarian Reform (DAR).
They are worried that government interference with live contracts will provide a disincentive to local and foreign investors, apart from its being unconstitutional.
“This interference has changed the strategic direction of local corporate farms in relations to their expansion plans,” the groups said in a statement over the weekend.
Stakeholders noted that government policy and consistency play a very vital role in the stability of banana supply and the strategic direction of investors who are contemplating to invest in large-scale banana farming.
AVAs are agreements between private investors in banana plantations and Agrarian Reform Beneficiaries (ARBs) and the DAR is currently reviewing existing AVAs, also known as leasebacks agreements.
Banana plantations in Mindanao cover about 85,000 hectares and are estimated to employ more than 330,000 workers, supporting approximately a total of two million people.
Stakeholders noted that ARBs among these workers are being courted and encouraged by the communists to complain about their AVAs.
They claim the communists are employing a two-pronged approach against the companies operating the plantations by demanding revolutionary taxes which is simply extortion, and playing on the inefficiencies of cooperatives composed of the ARBs.
President Rodrigo Duterte earlier said concerns about law and order are now being addressed and a Banana Industry Development Council (BIDC) will be created.
He also announced that the Chinese authorities lifted their ban on Philippine bananas prior to his scheduled visit later this week.
The President has said he is “open to all other issues that the banana stakeholders would want government to intervene,” because Mindanao will propel the local agriculture industry.
“The greatest challenge of the banana growers in the Philippines is really the law and order…If it’s not taxation of the communists, it’s extortion of the roving bandits in Mindanao,” Duterte has said.
CARP ‘a failure’
The 2014 Fabella report titled Comprehensive Agrarian Reform Program (CARP): Time to Let Go, by the UP School of Economics and NAST provides an independent and a comprehensive analysis of the Agrarian Reform Law. The paper concluded that CARP is a failure because of the 5-hectare ownership limit, which effectively “chased away private capital.”
The five-hectare limit defeats economies of scale farming. The paper also cited that CARP has effectively “sent the agricultural credit market underground.” It has presumed that farmer (beneficiaries) can automatically morph into entrepreneur-businessmen with access to land.”
It further concluded that CARP created a new class of people, the landed poor.
Typhoon Pablo, which hit Mindanao in December of 2012, reportedly destroyed about ten thousand hectares of banana trees, or about 513,000 tons of exportable bananas.
The Mindanao Development Authority said Typhoon Pablo also unwittingly spread the dreaded fusarium wilt TR4 Panama disease from Compostela Valley to Agusan. The agency said that more than 10,000 hectares are already infected with Panama disease.
The El Nino that hit Mindanao early this year has also resulted in a 15 to 20 percent production shortfall.
Exorbitant costs, unfavorable tariffs
Stephen Antig, executive director of the Philippine Banana Growers and Exporters Association (PBGEA), said the exorbitant import costs for the fruit and unfavorable tariff rates have motivated importers to look elsewhere for cheaper alternative sources.
This is because the type of banana the Philippines is cultivating slaps foreign buyers hefty import duties ranging from 10 to 40 percent of the value of goods.
Worldtopexports.com reported that Philippine export earnings from banana dropped precipitously from $1.1 billion in 2014 to $439.9 million in 2015.
The contraction reflects the combined effects of natural calamities, local ordinances that retard industry growth and, at the national level, lack of direction and commitment, PBGEA said.
It was noted that Costa Rica has overtaken the Philippines as the number two largest banana exporting country next to Ecuador. The Philippines is currently ranked number five, according to a report by UNCTAD’s Special Unit on Commodities which was released this year.
“How can the stakeholders of the banana industry sustain partnership when they are threatened with contractual issues, natural calamities and lack of funding?” Antig said.