Banana exporters push gov’t to set cap on exit prices

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Pilipino Banana Growers and Exporters Association officials (from left) Executive Director Stephen A. Antig, Chairman Alberto F. Bacani, and President Victor S. Mercado Jr. hold a news conference on the industry’s challenges on Jan. 31 in Davao City. -- BW/CQFRANCISCO

DAVAO CITY — The banana export industry wants the government to set a cap on the exit price of the commodity to help smooth out seasonal swings in demand and fluctuations in the harvest.

Alberto F. Bacani, chair of the Pilipino Banana Growers and Exporters Association, Inc. (PBGEA), said setting an exit price cap, or the price imposed on the crop before it is shipped to its destination, is practiced in Ecuador, one of the world’s biggest exporters.

“What I would ask the government to do is to follow the model of Ecuador… the (Ecuador) government heavily intervenes in terms of pricing,” Mr. Bacani said in a news conference Friday.

“We should not (become) an expensive banana,” he said, adding that the open pricing system makes it difficult for the industry to develop sustainability plans given altering demand as well as the continued threat from Panama disease and emerging competitor countries.

PBGEA President Victor S. Mercado said independent growers, such as some agrarian reform beneficiaries, that do not have contracts with buyers face the biggest risks.

2019 N-COV
The 2019 novel coronavirus (n2019-nCoV) has become an added threat to the banana industry with China being its biggest market, overtaking Japan in the last two years.

“What is scary is we have become dependent on the China market,” said Mr. Bacani.

Mr. Mercado said some Chinese buyers have already indicated a likely drop in orders due to the 2019-nCoV outbreak.

As of November, the value of exported Cavendish banana rose to $1.8 billion from $1.38 billion in all of 2018, according to the Philippine Statistics Authority.

Mr. Mercado, however, said while the value was higher, PBGEA data shows production actually fell to 195 million metric tons (MT) last year from 207 million MT in 2018 due mainly to a mild drought, which is expected to continue this year.

“But the biggest threat that has really caused the reduction (in the size of the farms) is Panama disease,” he said.

PBGEA estimates about 30,000 hectares have been affected by the soil-borne infestation.

“It is where government assistance is needed,” he said, citing both technical and financial support for affected farmers.

Mr. Mercado, president of the Marsman-Drysdale Agribusiness Group, also said that the exodus of local experts is continuing as other Asian countries seek them out to develop their own banana industries.

“Their biggest (advantage) is that they are closer to China,” he said, referring to Vietnam.

Mr. Bacani, president of Unifrutti Tropical Philippines Inc., said a team that recently visited Cambodia also saw progress in its banana industry development given the availability of farm areas.

“It’s scary,” he said, but added that the more than 50-year old local industry maintains a major advantage in terms of skilled labor. The labor force in Cambodia, he said, “is still hard to manage.”

“It will take a while before (other countries in Asia) can catch up with the Filipino way of growing bananas,” Mr. Bacani said, but added that government intervention is needed to ensure the industry’s long-term global competitiveness. — Carmelito Q. Francisco