November 01, 2014 / Week N° 44

‘Crises won’t last forever’, says Philippine banana chief

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November 20th, 2012

With fruit either left on trees, rotting in ports, flooding some markets, biding time in refrigeration or simply going unpaid for, the Philippine banana industry has had to regroup in the wake of a quarantine restrictions from Chinese authorities this year. Earlier this month, interested parties vowed to form a Banana Industry Development Council for advocacy and strategic purposes; how private or governmental it will be is yet to be seen. At www.freshfruitportal.com we speak with Pilipino Banana Growers and Exporters Association (PBGEA) executive director Stephen Antig about the slow recovery underway.

Scepticism abounded in May when Chinese restrictions on Philippine banana imports coincided with a territorial flare-up between the two nations over the Scarborough Shoal, known in China as Huangyan Island.

Antig says the Philippines responded by sending quarantine experts to the China to test the claims their bananas had mealybug infestations.

“After this it was found there was some truth in the complaints from China’s quarantine authorities, so we immediately instituted a lot of sanitary and phytosanitary improvements, not only in the cultural practices of banana growing, but even in the packinghouses,” he says.

“The cultural practices mean not just double washing but the triple washing of fruit before they are finally placed in vacuum bags and in the boxes.

“In the case of the packinghouses, the floor of the packinghouses should be cemented, although this will only apply for the small growers because the corporate growers have class A packinghouses.”

He says it was more the small farmers exporting to China who were most affected by the measures as most of the bananas with pests came from them, but even large companies like Sumifru, Dole and Padeco have had their share of problems.

Antig points out the government has provided assistance for improving the lot of 2,000-3,000 independent small growers, while other small farmers have received assistance from ‘big brother’ large corporations.

“So far the export level has actually started to increase but the volume is still not the same as last year; the bottom line is the export situation in China has not really normalized yet, but the volume is increasing compared to May or June.

Scouting out alternatives

Antig says the Philippines has been shipping bananas from Davao to the Russian port of Vladivostok for the last five or six years in a journey that takes 10-11 days, but volume has been increasing since the difficulties with China.

“We have discovered that the Russian importers were actually buying from some Chinese traders, so a large portion of the bananas being shipped to China actually are re-exported to Russia; now that we’re having problems with China we expect volumes to Vladivostok will increase.

Close by, Japan is also an important market and Antig believes it can absorb a higher volume of Philippine bananas if tariffs are reduced. Across the Korea Strait, Antig doesn’t believe South Korea can take many more bananas even if tariffs are cut there.

“The new markets are mostly in Europe, although the United States of America has already signified their approval to accept bananas coming from the Philippines.

“In fact, we have been working on the protocol and hopefully we should be able to export the first few containers before the end of this year.”

Antig emphasizes that the U.S. shipments are only aiming at the country’s island territories and states for now.

“We’re not actually shipping to the mainland U.S.A. That’s the second phase.

“What we’re looking at now is the continental U.S.A., mainly Guam, the Northern Mariana Islands, and the furthest should be Hawaii. We can reach bananas to these places in 7-12 days.”

He says even if markets are available in Europe, the question then is whether the Philippines can compete with Latin American shippers.

“We’re actually looking at the freight costs, as well as the number of days it will take for our bananas to reach for example Germany, Italy, Belgium and maybe even as far as Slovenia.

“Ordinarily, I was informed that it will take something like 18 to 22 days for bananas coming from Ecuador or South America to reach these countries, but from the Philippines I was able to gather that it would take us from 28 to 32 days.”

He says conversations with European importers did show the best signs for what this difference in freight time would mean.

“The mindset of the European consumers is entirely different to the mindset of the Asians.

“As far as the Europeans are concerned, they prefer to buy bananas coming from Ecuador and other South American countries because of the proximity.

“As far as they’re concerned, quality is much better if they are being shipped from a nearer country than from the Philippines, where it will take more than 28 days, even though that’s not true.”

He adds the economic sanctions placed on Iran have led to cutbacks in Philippine banana shipments to the Middle East.

“The problem is in the remittances by Iranian importers, and I guess the problem with remittances is a product of the U.S. sanction on Iran, so much so that the Iranian importers are having problems getting their hands on U.S. dollars.”

He says that in the face of these challenges, exporters are holding large volumes of bananas in cold storage as long as they can be fresh and preserved.

“But for those that are already mature and cannot be kept any longer, they have to be disposed of, whatever the market is willing to pay.

“However, with the excess volume, they cannot just dump it in traditional markets otherwise it will bring down prices, and they will be encountering more problems.”

Looking ahead

He says PBGEA supports the creation of the Banana Industry Development Council, so long as the objectives don’t run counter to its own.

“We just had an initial meeting and we agreed to meet again before the end of the year to finalize the identification of objectives; what kind of structure should the organization adapt, and how many members of the board there should be, and who should be running this banana industry council?

“Should it be purely a private undertaking or should we include the government in this particular organization; a lot of things are yet to be ironed out before this council can get off the ground.

“One of the more important things is funding and the budget this council will have – will it purely be from the private sector or will it be funded by the government?”

He says one of the council’s most important contributions could be in the area of advocacy.

“It will be able to present the issues affecting the banana industry and hopefully it will be presented by a bona fide legal banana council; then the chances are it will reach the ears of the concerned people and hopefully, resolutions will be faster.”

Regardless of how the council turns out to be, Antig is optimistic for the future.

“I don’t think the crises in China and even the Middle East will last forever, because as we all know the banana is the cheapest fruit in the market, and we believe that all these are temporary in nature.

“We’re hoping that come January we will have a lot of improvement, especially with the open communication that we maintain with the Chinese government, and hopefully with a change in the leadership something good will come up.”

Photo: PBGEA

www.freshfruitportal.com

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