Philippines’ banana industry suffers from unrest

The Philippines are one of the major suppliers of bananas in the world market. However, due to quality issues and the social unrest in the country, foreign importers are turning to other supplier countries. Companies in the Philippines banana industry are worried and are calling for government aid.

The Philippines might be able to recover by the second quarter of 2017, but current relations between the Philippine government and the rebels are shaky at best. “I think the rebels may be trying to test the patience of the government. They probably want to find out if President Duterte is sincere in his crusade to start a long lasting peace agreement,” says executive director Stephen Antig of the Pilipino Banana Growers and Exporters Association (PBGEA).

According to Antig, the current investors’ plans for expansion have been put on hold. “Who would want to invest, with the situation being as it is? This is a huge setback for the Philippines, especially with the investments in the banana sector being quite significant.”

The government of the Philippines was cooperating with a multi-national company based in the Middle East in order to execute a plan to expand acreage to as much as 5,000 –to 10,000 hectares. The current issues have put these plans on hold as well. “You can imagine the number of jobs that could have been created along with this expansion. The expansion was supposed to take place in the Muslim region.”

Other problems currently plaguing the Philippine export of bananas have to do with quality issues. Because of these issues, bananas from Latin American regions have risen in demand. The issues are caused by the changing weather conditions, which have a more pronounced effect on countries like the Philippines in contrast to regions like Ecuador.

In spite of these setbacks, growers and exporters from the Philippines have built up lasting trade relations with customers in markets like China. “We are getting a lot of demand from Chinese importers." In order to properly deal with this rise in demand, the Philippine banana sector needs to expand.

The market has been changing, with new ASEAN countries setting up their own banana sector. Therefore, Antig thinks that the Philippine government needs to step up their support. For instance, the government should hold trade negotiations with other countries in order to ease import tariffs for Philippine products.

According to Antig, the government has already shown an awareness of the importance to the banana industry. “In the past, we hardly got enough attention and support. However, the current support still isn’t enough. We are losing out against some of our neighbouring ASEAN countries. These countries have been able to arrange for trade agreement with markets that traditionally used to be ours, like Japan and South Korea.”

In general, Japan is the most important market for the Philippines, with the Philippines also being Japan’s top supplier for bananas. Export to South Korea has however been reduced by more than 40%. This reduction in export was caused by a long drought in the Philippines which took place between 2015 until 2016.

“If we don’t want our neighboring competition to usurp our export markets for bananas, we really need to shape up. There are a lot of people in the Philippines that depend on our banana industry. We need to find new ways to be able to compete in the world market.”

As the Philippines have become a competitive banana exporter in the world market, internal competition has always been present. However, Antig sees competition as a good thing. “In spite of domestic competition, we’ve become united in dealing with issues, such as the social unrest. We support each other and stand united,” Antig elaborates.

The Philippines also produce other fruit types, such as pineapples, guyabano, mango, coconut and jack fruit. There is a need for producers and exporters to be more aggressive in promoting these types of fruit.

European countries have had their eye on the Philippines and are always looking for import and export opportunities. Antig however is skeptical of the Philippines being properly prepared for this type of trade. “Are we really ready for it,” wonders Antig. The current governmental issues form roadblocks for the industry to properly cope with global competition. “I really hope that real and long lasting change is coming soon."

For more information:

Stephen Antig
PBGEA (Philippines)
Tel: +63 82- 227-7771

Author: Jezrelle Joy A. Rasonabe / Yzza Ibrahim

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