Philippine banana export industry under threat

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Exports of Cavendish bananas has breached the $1-billion mark as it grew 18.06 percent from $962.58 million in 2013 to $1.136 million in 2014, statistics from the Philippine Statistics Authority (PSA) show.

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But natural and man-made calamities threaten the industry’s sustained growth.

The industry is slowly recovering from disasters that almost simultaneously hit the banana plantations in Mindanao almost three years ago.

Export earnings were badly affected by the decrease in production volume brought about by several natural and man-made calamities.

“The industry was caught in a quagmire as a result of the market crises in China and Iran, intermittent weather conditions, the onslaught of Typhoon ‘Pablo’ in December 2012, and now the series of flooding that intensified the risk of the spread of plant diseases including ‘Fusarium’ wilt, popularly known as ‘Panama Disease’,” said Stephen Antig, executive director of the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA).

“Right now, we are also experiencing drought brought about by El Niño,” he said.

Banana is one of the country’s best agricultural products, second only to coconut oil. The Philippines is the second largest banana exporter in the world, making the banana industry a consistent top dollar earner.

It remained the second most important export commodity having shared 15-18 percent of the total top 10 agricultural exports revenue, the PSA said.

The top major export destinations for fresh Cavendish bananas are China, Japan, Korea, the Middle East and New Zealand.

Antig, however, said there were now more dangerous calamities threatening the industry.

“While we can’t prevent the natural calamities, these man-made threats to the banana export industry can be solved or eliminated if properly explained by the industry leaders. At the local level, some ordinances tend to prevent the industry to grow and prosper while at the national level, a House Bill (HB 5161) waiting for deliberations might even kill the industry,” he said.

HB 5161 is a proposed act to regulate the establishment and implementation of agribusiness ventures arrangements (AVAs) in land reform areas.

In 2014, the total land area planted with different varieties of bananas all over the Philippines reached 441,951 hectares. Majority of the country’s banana production is located in Mindanao, which is produced from 243,450 hectares. Cavendish for export accounts for 34 percent or 83,843 hectares of the total area.

Antig said an investment of at least Php1.5 million/hectare is required for development, technology, logistics and marketing. A whooping Php126 billion have already been invested in the production of Cavendish.

The Cavendish banana export industry employs 503,058 people receiving an estimated Php44 billion in annual wages.

Together with the workers’ families and relatives, more than three million individuals are dependent on the banana export industry for their basic needs and self-esteem. The industry also helps mold the future of two million children in Mindanao.

But how can they sustain it now that the industry is facing with difficulties and threats?

On March 6, 2015, a position paper was submitted by PBGEA to Ifugao Rep. Teddy Baguilat, author of HB 5161.

Antig said major problems from a policy standpoint were seen and raised.

He stressed that HB 5161 “virtually shields an agrarian reform beneficiary (ARB) as a landowner and entrepreneur from investment and other risks and shifts these burdens to the private investor.”

“The bill also negates the autonomy of contracts by providing mandatory provisions that will deter investors from entering into a contract with ARBs,” he added.

Antig said the proposed measure “will ultimately work to the detriment of the ARBs and the agricultural industry.”

“With its restrictive regulatory requirements, HB 5161 removes the incentive for private investors to transact with ARBs and, thus, deny ARBs access to the private sector’s expertise and resources that the government cannot provide. With the limitation of land contracts, it will constrict agricultural production and exports to the prejudice of the national economy,” he said.

PBGEA also cited that HB 5161 alters a lot of contract principles and rules as it undermines the obligatory force and mutuality of contracts.

Under the bill, an ARB can unilaterally opt out of the contract upon change of economic conditions.

The Philippine banana export industry is an essential leader in the agriculture sector and constantly plays a prominent role in the economy by providing top dollar income and builds long term prosperity.

It is consistently contributing a lot not only to the Mindanao region but the entire country as well. The taxes and fees paid to the government in 2014 amounted to Php6.5 billion.

Each year, more than hundreds of millions of pesos are shelled-out for Corporate Social Responsibility (CSR) projects/activities that endeavors to uplift and empower the local community.

The industry’s community development interventions are focused on the improvement of the quality of lives of all banana stakeholders and the general public through the following programs: health-related activities, medical/dental interventions including supplemental feeding programs and provision of potable water supply systems; environmental interventions; scholarship grants for dependents of workers; skills training and livelihood opportunities to augment household incomes; disaster prevention, relief and rehabilitation support service and assistance in times of calamities; and various infrastructure projects.

PNA

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8 Comments

  1. It’s a hard to understand why and how a congressman from Luzon, an Ifugao, can come up with a bill on a subject that he knows too little about.

  2. Dina dela Cuesta on

    “The Philippine banana export industry is an essential leader in the agriculture sector and constantly plays a prominent role in the economy by providing top dollar income and builds long term prosperity.

    It is consistently contributing a lot not only to the Mindanao region but the entire country as well. The taxes and fees paid to the government in 2014 amounted to Php6.5 billion.”

    This will all go to waste if this bill is passed. It will deter investors from going into agreements with the ARBs. We all lose if this bill is passed.

  3. Benedict Cordero on

    So this bill will essenntially render contracts pointless. What would drive the private investors to enter into business with the ARBs, then? Congress should find a means to provide support services to the ARBs that do not take away the private comanies’ incentive to invest, otherwise the banana export industry will surely come crashing down.

  4. Mer Pacheco on

    As if the El Niño and the other calamaties aren’t enough of a challenge for the banana export industry, this congressman decides to butt in and propose this bill that will negatively affect an industry he has no knowledge of. Let’s hope it does not get passed.

  5. The Philippines as the second largest banana exporter in the world is flourishing and consistently provides top dollar income in the national economy. So why proposed a bill that is unnecessary for its growth. The Congress instead should provide support
    services to these Agrarian Reform Beneficiaries.

  6. Carter Gumabay on

    Why is the government trying to change something that is obviously working wonders for the Philippine economy? The banana export business has brought in top dollar to the country. This industry will not continue to thrive should this bill be passed. I appreciate the attempt to protect the farmers, but this should be done in a different way, without taking away the incentive for private companies to continue to invest in the industry.

  7. This industry has employed thousands of people already and it is one of our country’s biggest exports, generating billions in income. Once this bill gets passed, the industry will surely take a downfall, it might even kill it. It’s obvious that the person who wrote this bill doesn’t really know a lot about the industry because if he did he would have known that there are plenty of other ways to protect the interest of the agrarian reform beneficiaries.

  8. Tetchie Te on

    An Ifugao Representative from Luzon wanting to OVER regulate a thriving Mindanao industry to what could potentially kill it? What’s wrong with this picture?