Banana exporters ask gov’t to improve access to key markets

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Banana exporters ask gov’t to improve access to key markets
A worker for a small banana grower in Sto. Tomas, Davao del Norte washes newly harvested fruits before packing for export. -- LEAN S. DAVAL, JR.

By Maya M. Padillo and Carmencita A. Carillo

DAVAO CITY — Banana exporters said the government must help improve access to key markets in the Asia Pacific, adding that the industry’s survival may depend on it.

“The government should act now and help the industry that has contributed a lot to the Philippine economy, or else we can kiss the banana industry goodbye in two to three years,” Philippine Banana Growers and Exporters Association, Inc. (PBGEA) Executive Director Stephen A. Antig said in an interview.

In a separate interview, PBGEA President Alexander N. Valoria said global oversupply and the ability of other countries to strike advantageous trade deals have been eating into the Philippine market share.

Mr. Valoria said that in 2011, the Philippines exported 237 million boxes, but this has gone down to 187 million in 2016. On the other hand, other Cavendish-exporting countries, particularly Ecuador and Guatemala, have increased their shipments by 139 million boxes.

“The Philippines today has lost significant market share in our own Asian markets such as China, Japan, and South Korea, including the Middle East, where the Philippines is supposed to have proximity advantage,” said Mr. Valoria, the president and chief executive officer of Anflo Management and Investment Corp., the holding firm of Tagum Agricultural Development Company, Inc. (Tadeco), which is considered the country’s biggest banana exporter.

Philippine Statistics Authority (PSA) data show that the value of banana exports, the country’s second biggest agricultural commodity after coconut, has been declining in the past three years from P51 billion in 2014 to P30.4 billion in 2015, and further down to P29.6 billion last year.

The downtrend could not be attributed to a decrease in production as PSA data show that the country’s banana output has increased from 4.45 metric tons (MT) in 2014 to 4.64 MT last year.

The 2016 output level was almost as high as the 2012 level of 4.69 million MT, just before Panama disease and typhoon Pablo (international name: Bopha) took their toll on banana farms, with output dropping to P4.23 MT in 2013.

Dole Asia Holdings Pte. Ltd. head David A. DeLorenzo, in his presentation during the recent Banana Congress held in Davao City, quantified the impact of the export decline in the last four years at about $300 million revenue loss for Mindanao, where Philippine banana exports are grown.

“There is probably a ripple or multiplier effect in the economy, so the real annual loss of economic activity to Mindanao was in the $1 billion range in one year,” Mr. DeLorenzo said.

The two PBGEA officials said what could save the banana industry is lower tariffs and the opening of new markets, which could be achieved through country-to-country trade agreements.

“We pay very high tariffs. We pay 8% to Japan during summer and 18% during winter when it is harvest time for their fruits… exporters also pay 30% tariffs for South Korea,” Mr. Antig said.

The country has a bilateral trade and investment agreement with Japan known as the Japan-Philippines Economic Partnership Agreement (JPEPA), but it does not cover preferential rates for Cavendish banana.

Mr. Antig said the industry has been informed by Agriculture Undersecretary Evelyn G. Laviña that the government is set to address the banana tariff issue during a scheduled meeting in Japan in March 2018.

He added, however, that the industry would appreciate it if the matter were taken up sooner.

In the South Korean market, Mr. DeLorenzo said, “The Central American bloc has reached an agreement with the Korean government to begin reducing their duties to zero over the next three years. If we do nothing then it is inevitable that we will lose completely the Korean market where we are still paying a 30% duty.”

Mr. Valoria, meanwhile, said they are working to open other channels for discussions.

“The PBGEA hopes to launch, together with the appropriate government agencies, trade missions and official government-to-government representations to remove or reduce the import duties on the Philippines bananas in Japan and South Korea, as well as open the market of Australia,” Mr. Valoria said.

Australia, he noted, employs non-tariff barriers to keep Philippines bananas from entering, particularly biosecurity measures.

“But we know that the true driver (of the Australian government) is to protect their local banana growers,” he said.

At this point, Mr. Valoria said the industry, both the big players and the small growers, is surviving on thin margins.

“We have seen the spot market for Cavendish bananas drop to as low as P40 per 13-kilogram box. How can the small growers survive with that?” he said.

He also pointed out that the banana industry provides some 515,000 jobs across Mindanao.