According to IDEA’s latest copy of Industry Trends, a regular publication of the Institute for Development and Econometric Analysis, Inc. (IDEA), trapped in the middle of diplomatic and political affairs between the Philippines and China, the banana industry seems to exhibit a weakened business climate. Apart from the conflict over the much coveted Scarborough Shoal, the industry is also faced with uncontrollable weather disturbances, thus, a few of domestic growers still face huge losses. Despite efforts to control for the effects of the latter impediment, imminent outbreaks of crop diseases also post huge threats to the industry’s production. Fortunately, commercial treatments are now available for some of these destructive and endemic diseases.
Domestically, the industry currently confronts acreage capping issues after such restrictions are advocated by a local group. Although the decision ultimately lies in the government, the passing of such resolution will serve as a limiting factor to industry growth especially since most banana growers operate in vast tracts of land. Aside from the capping issue, government assistance is highly needed in the industry especially among small local producers who hardly keep up their operations at par with the industry’s quality standards. This is in particular true to the different phases of banana exports which are under strict quality guidelines. A major focus for this is the packing process which, according to government officials, exposes the industry to embroilments among foreign markets.
Per IDEA, recognizing the country’s market concentration in China and the trade difficulties the industry is faced with, Presidential spokesman Lacierda said that the government is willing to extend assistance to the local industry in particular with expanding its foreign market. That plan, which is viewed in a long-term horizon, is in conjunction with the short-term government plan of providing technical support to the industry. One of those is the establishment of quality assurance standards for its packaging warehouses in part of addressing the concerns of the Chinese and Australian markets. In fact, the government through the Department of Agriculture is allotting Php50 million for a packing facility in Mindanao aimed mostly for small banana growers.
With majority of the product lines in the industry focused on exports and processing segments, which encompasses raw produce exports and ready-to-eat products, the industry holds a lot of potential for extending its product lines into the manufacture of feeds and waste. The endeavour will not only help diversify the industry’s product line, which may mean more profitable opportunities, but also enables the utilization of poor quality produce. It will potentially address the industry’s problem on waste management especially that most of the rejected packages are directly disposed of incurring unnecessary losses for banana growers.
Likewise per same published report, creating a major impediment for the industry’s major plantations in Mindanao, the possible lifting of the Executive Order 807 issued under the Arroyo administration poses a significant economic threat to the industry. The order, which repeals the Letter of Instruction 790 under the Marcos administration, has removed the previously implemented acreage caps for banana growers, extending their plantation coverage to more than 25,000 hectares.
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