• Vietnam a threat to PH banana export industry


    OTHER banana producers in Asia, particularly Vietnam, are threatening to grab the dominant position the Philippines has built as the largest exporter in the region.

    Philippine exporters are seeking help from trade and agriculture officials to negotiate for preferential or zero tariff with importing countries.

    “Banana is still the country’s top fresh fruit export, but local industry players are wary that they will eventually lose their market shares if the government won’t be more aggressive in negotiating for reduced tariffs in countries where we export our bananas,” said Stephen Antig, executive director of the Pilipino Banana Growers & Exporters Association Inc. (PBGEA).

    Observers are wary that the banana industry might be the next agriculture product to lose its dominant position in the world market following the decline of sugar, coffee and coconut oil shipments.

    “There is a need for a thorough review of our free trade agreements (FTAs) and assess our trading partners’ fulfillment of their commitments to ensure that we are at an outstanding edge in the trading game; in our case, the elimination or reduction of tariffs,” Antig said.

    Production costs are increasing each year, making it difficult to maintain volume and quality that some multinationals are already thinking of relocating to other countries which have more investor-friendly policies, according to the group.

    “In fact, some PBGEA members are already getting invitations to expand and develop banana plantations in Vietnam,” Antig said.

    He noted that the Philippine Cavendish is still under the exclusion list of the country’s trading partners.

    “That means our buyers have to pay import duties ranging from 40 to 10 percent of the value of the goods. This poses as a stringent constraint and encourages our importers to get fresh bananas from our comp etitors at lower importation costs,” he said.

    The Philippines is the dominant supplier of fresh bananas to Japan, South Korea, China and New Zealand but Vietnam, Indonesia, Mozambique, Costa Rica are slowly penetrating these markets.

    In 2014, records from its Ministry of Finance showed that Japan imported fresh bananas from 12 countries: the Philippines, Ecuador, Guatemala, Peru, Taiwan, Mexico, Colombia, Thailand, Costa Rica, China, Mozambique and the Dominican Republic.

    In a letter to the offices of Trade Secretary Gregory L. Domingo and Agriculture Secretary Proceso Alcala, PBGEA noted “it is only logical for Japanese importers to source part of their supplies from countries with zero tariffs to minimize business costs, hence reducing their demand for Philippine bananas.”

    Vietnam produces around 30 different varieties in virtually all the regions of the country. Some of the bananas are quite unique from what a typical global consumer sees.

    There has been increasing talk that Vietnam will be forced, one way or another, to industrialize its banana industry, the PBGEA noted. Vietnam will soon scrap some of its traditional banana cultivars and instead grow what the “global market” demands.

    Dr. Nguyen Van Khai, a well-known agricultural consultant, was quoted by Vietnam News that bananas are among 14 kinds of fruits which play an important part in the nation’s export industry. Banana is replacing rice as a crop in 10 percent of the area currently under rice cultivation, adding to the 90,000 hectares already devoted to bananas.

    Vietnam produces roughly 1.4 million metric (MT) of bananas per year and its cultivation area makes up approximately 19 percent of the total fruit farming area.

    China has a daily demand of 20 to 30 MT per day, and Japan for 15 to 20 MT. But Vietnam is short when it comes to banana exporters.

    A number of provinces around Vietnam switched to banana farming and invested heavily in plantations due to increasing world demand. The business has boomed over the past decade as the commodity has turned increasingly profitable to the farmers.

    Short supply
    China, Singapore and the Republic of Korea were noted to have suddenly increased imports of Vietnamese bananas. Vietnam, however, admits that it actually is in short supply of bananas for export.

    Vietnam’s preservation technology has yet to meet international standards, and only a relatively few Vietnamese products have been licensed for distribution in the more lucrative markets including Japan.

    Experts say the situation is manageable and can be rectified if the country pays more and proper attention to investments in technology for processing and post-harvest preservation.

    Vietnam has great potential for fruit and vegetable exports. Its export shipments make up only 10 percent of the total production volume and accounts for only 0.1 percent of global trade.

    The country is expected to gain from regional free-trade agreements (FTAs) which remove barriers and establish favorable environment for trade and investment in the region.

    Vietnamese fruit and vegetable exporters shipped $1.2 billion in 2014, up 15.4 percent from $1.04 billion in 2013.

    In the first quarter of 2015, the value of fruit and vegetable exports reached $215 million a 32.2 percent increase year-on-year.

    The top five importers of Vietnamese fruits and vegetables are China, Japan, the United States, Thailand and Malaysia. Vietnam is among the top five exporters of fruits and vegetables in the world market with China, its biggest market, accounting for about 35 percent of the total export value while Japan is a far second.

    Banana is the most imported fruit in South Korea, accounting for 48.7 percent of total fruit imports in 2013, with the Philippines shipping 98.7 percent of the commodity.


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    1. Can this government afford to lose the billion dollar export earnings that the banana industry has consistently been contributing to the economy? If we do lose our market share, what do this government intend to do to help the over 3 million people in Mindanao dependent on the banana industry? But I think the biggest question is, why do this government so inept in doing their jobs?

    2. If the government don’t move quickly we might just lose our share of the market, and it’s a pretty big one. It only make sense that importers get their supplies elsewhere where tariffs are not that high.