The Philippines billion-dollar banana industry is said to be losing its competitive edge as it slips in rank among the largest banana exporting countries globally. According to stakeholders, rebel attacks and a lack of government support is damaging the industry.
The Pilipino Banana Growers and Exporters Association (PBGEA) said the comparative advantage and competitiveness of the Philippines in banana production are slowly eroding.
Based on a recent United Nations Conference on Trade and Development report, Costa Rica has overtaken the Philippines as the number two largest banana exporting country.
The Philippines used to be the second largest producer of bananas worldwide, next to Ecuador, which supplies 95 percent of the total banana demand in the Asian market.
Reports showed that the country’s export earnings from bananas plummeted to $440 million last year from the $1.1 billion recorded in 2014.
PBGEA said the decline is due to the combined effects of natural calamities, local ordinances that retards industry growth as well as lack of direction and commitment at the national level.
The recently ended El Niño phenomenon that hit Mindanao has also resulted in an approximately 20 percent decline in production.
“The exorbitant import costs for the fruit and unfavorable tariff rates have motivated importers to look elsewhere for cheaper alternative sources. The reason is that the type of banana the Philippines is cultivating slaps foreign buyers with hefty import duties of the value of goods,” PBGEA executive director Stephen Antig.
Furthermore, banana stakeholders have called on the government for its intervention on agribusiness ventures arrangements (AVAs) which may hamper the expansion of banana plantations.
AVAs are agreements between private investors in banana plantations and agrarian reform beneficiaries (ARBs).
“The Department of Agrarian Reform is reviewing existing AVAs, also known as leaseback agreements. They (stakeholders) are worried government interference with live contracts provides disincentives to local and foreign investors, let alone that it is unconstitutional. This interference has changed the strategic direction of local corporate farms in relation to their expansion plans,” Antig said.
He added, other competing Asian countries are offering more attractive returns on investment, tariff cuts, income tax holidays, and other incentives.
“Big corporate farms are currently scoping for plantations in Vietnam, Cambodia, Laos and as far away as Latin America, where investment policies are often friendlier than in the Philippines,” he said.
