West Philippine Sea tension, production woes shrink banana exports to China

MANILA, Philippines —  Rising geopolitical tensions in the West Philippine Sea is impacting Filipino banana growers as China has cut back its purchases of the country’s prized commodity, worsening the erosion of the Philippines’ foothold in key Asian markets.

China’s imports of bananas from the Philippines plunged by 49 percent year-on-year as of end-July to 255,636.069 metric tons, based on International Trade Centre (ITC) data.

Thus, the Philippines’ share in China’s banana market fell to 24.53 percent compared to 37.49 percent during the same seven-month period last year.

With the substantial loss of market share, Vietnam has, for the first time, overtaken the Philippines as the top banana supplier to China.

Vietnam’s banana exports to China expanded by 19 percent year-on-year to 438,573 MT, effectively cornering 42 percent of the market.

During the January to July period last year, Vietnam accounted for only 33 percent of the Chinese banana market share.

The Pilipino Banana Growers and Exporters Association (PBGEA) confirmed to The STAR that geopolitical tension between the country and China impacted banana shipments to Asia’s largest economy.

“Geopolitical policies definitely play a very important role in economic statecraft. Based on past experiences, the industry always suffers collateral damage whenever there is tension in the West Philippine Sea,” PBGEA executive director Stephen Antig said.

The geopolitical issues compound the persisting and worsening production woes that the local banana industry is facing, particularly with the continued spread of Fusarium Wilt, commonly known as Panama disease.

Antig noted that the “volatile” spot pricing mechanism of China’s market also discouraged growers from exporting to the Asian market as most producers prefer long-term contracts to have more secured profits.

Marie Annette Dacul, executive director of University of Asia and the Pacific Center for Food and Agri Business, shared the same view that geopolitics is at play with the country’s banana trade with China.

“Political relations also impact trade relations,” Dacul told The STAR. “Anything that causes one to lose market share is a cause for concern.”

The local banana industry has been facing a myriad of challenges that are not limited to the following: high production costs, pests and diseases, logistical problems and weather disturbances.

Aside from these, the country also faces stiff competition abroad in terms of costs, geographic proximity, government support and private sector investments, analysts said.

In recent years, the country saw mounting competition against its neighbors, particularly, Vietnam, Cambodia and now even Lao PDR.

“These countries have ramped up their production capabilities and have been able to offer lower prices which had made their bananas more attractive in key markets like China and Japan,” Agriculture Undersecretary Cheryl Marie Natividad-Caballero told The STAR.

Antig pointed out that Vietnam’s banana industry has been booming because of its larger planted area as well as its additional supplies coming from Cambodia where it “invested a lot.”

The reduction in the country’s banana market share in China comes at an unfortunate time as the Philippines is also losing substantial market share in South Korea, another prized market for Filipino producers.

The Philippines’ market share in South Korea shrank to 60 percent from January to August compared to the 70 percent recorded share in the same period of last year, based on ITC data.