By Carmelito Q. Francisco, Correspondent

Banana growers bracing for ASEAN competition

Posted on December 30, 2015

DAVAO CITY -- Banana growers and exporters in the Philippines, currently the second biggest such industry in the world, are bracing for competition from fellow members of the Association of Southeast Asian Nations (ASEAN), which have started to develop banana plantations.

Among the ASEAN countries that are venturing into banana export are Vietnam, Indonesia, Myanmar, Cambodia and Laos. Sri Lanka is also ramping up production.

“We are going to lose (our existing markets), especially if our neighbors will be able to fully develop their own banana industries,” said Stephen A. Antig, executive director of the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA).

The Philippines’ key banana markets are China, Japan, South Korea, New Zealand and parts of the Middle East.

“The ASEAN is a big market, but we are not exporting here. And they will eventually be able to export,” Mr. Antig pointed out.

He added that some of the multinational companies based in Mindanao have started exploring the possibility of developing banana plantations in ASEAN, where the overall production costs could be lower.

“Some of the multinationals have started exploring in Sri Lanka, Myanmar, other ASEAN countries. The cost of production will be much lower if they relocate there, not to mention the support from the government (s),” Mr. Antig said.

Further, Filipino experts could be easily enticed to move and work in these new locations given the establishment of the ASEAN Economic Community (AEC), which formally started this month, would mean easier worker movement.

“There will be an exchange of knowledge, skills in this integration. It’s possible that some of our skills, our scientists will be lured by these other countries because they can pay better than us, and if that happens, definitely there will be a brain-drain, if the multinationals move there,” the PBGEA official said.

The industry is now looking at new markets to soften the impact of growing competition.

“More and more countries are producing bananas and what’s bad is, it’s all for the same market,” Mr. Antig said.

The industry is also hopeful that the Philippine government will be able to negotiate zero, or at least lower tariff rates, during the discussions in next year’s review of the Japan-Philippines Economic Partnership Agreement (JPEPA).

“I believe there is another round of negotiation next year for JPEPA, we are hoping that maybe this time, our government will be able to negotiate zero tariff for bananas. That will perk up the banana industry,” Mr. Antig said.

Philippine bananas are currently subject to 8% to 18% tariff in Japan, depending on the season.

At the same time, banana growers are preparing for the impact of the dry spell brought about by the prevailing El Niño that is expected to last until mid-2016.