1 Contents Acronyms...... 4 Situational Analysis ...... 5 World Situation: ...... 5 Exports: ...... 5 Imports: ...... 7 Philippine Situation: ...... 9 Regional Production: ...... 13 Export Market: ...... 15 Players: ...... 16 Indicative Cost of Production and Income ...... 18 Lakatan ...... 18 Cardaba ...... 21 Cavendish ...... 25 Value Chain ...... 25 Cavendish and Lakatan Fresh Fruit ...... 26 Cardaba Value Chains ...... 27 Cardaba Processed Banana ...... 28 Cardaba Snack Food ...... 29 Banana Issues and Concerns: ...... 30 Existing and Emerging Issues and Concerns...... 30 Stakeholders and Enablers ...... 35 Development Direction ...... 37 Vision/ Mission: ...... 37 Goals and Objectives: ...... 37 Strategic Actions ...... 38 Development Directions and Upscaling Strategies ...... 38 Banana Industry Action Plan...... 39 Monitoring and Evaluation ...... 47 Development Indicators:...... 47 Monitoring Structure: ...... 48 References: ...... 50

2 List of Tables

Table 1. Value of Banana Exports by Country, 2013 – 2017. In USD ‘000 ...... 6 Table 2. Volume of Banana Exports by Country, 2013 - 2017 (in MT) ...... 6 Table 3. List of importing markets for the product exported by in 2017 ...... 7 Table 4. Volume of Production by Year in Metric Tons, 2013 – 2017...... 10 Table 5. Area Planted by Major Variety, 2013-2017...... 11 Table 6, Productivity of Banana by Variety, 2013 - 2017 (MT/Ha.) ...... 12 Table 7. Volume of Production for Banana by Region ...... 14 Table 8. Philippine Banana Export Markets by Country. 2017 ...... 15 Table 9. Fresh Banana Volume and Value of Exports. 2013 - 2017 ...... 16 Table 10. Summary of Issues for Banana ...... 30 Table 11. Banana Industry Stakeholders and Enablers ...... 36 Table 12. Annual Targets for 2019 to 2022 ...... 38 Table 13. Banana Industry Action Plan ...... 39 Table 14. Development Indicators ...... 47

List of Figures

Figure 1. Philippine Banana Export Drop ...... 5 Figure 2. Map of Importing Countries of Philippine Banana ...... 8 Figure 3: Volume of Production by Variety by Year, 2013 – 2017...... 9 Figure 4. Area Planted to Banana by Variety. 2013 - 2017 ...... 10 Figure 5. Productivity of Banana by Variety , 2013 - 2017 (MT/Ha.)...... 11 Figure 6. Banana Production per Region. January – March 2017 ...... 13 Figure 7. Distribution of Banana Production...... 14 Figure 8. Banana Industry Players ...... 17 Figure 9 Banana Fresh Fruit Value Chain ...... 26 Figure 10. Cardaba Fresh Fruit Value Chain ...... 27 Figure 11. Value Chain Map for Processed Banana ...... 28 Figure 12. Value Chain Map for Cardaba Snack Food ...... 29

3 Acronyms

ARMM Autonomous Region for Muslim Mindanao ACPC Agricultural Credit Productivity Council BAFS Bureau of Agriculture and Fisheries Statistics BIDC Banana Industry Development Council BOI Board of Investments BPI Bureau of Plant Industry BRI Banana Research Institute BSP Banko Sentral ng Pilipinas CALABARZON . , , , and City CAR Cordillera Autonomous Region DA Department of Agriculture DAR Department of Agrarian Reform DENR Department of Environment and Natural Resources DepEd Department of Education DND Department of National Defense DOH Department of Health DOST Department of Science and Technology DSWD Department of Social Welfare and Development DTI Department of Trade and Industry FAO Food and Agriculture Organization LBP Land Bank of the Philippines LGU Local Government Unit MBFEA Mindanao Banana Farmers and Exporters Association MIMAROPA Mindoro, , , NCR National Capital Region NNC National Nutrition Council PAH Polycyclic Aromatic Hydrocarbon PBGEA Pilipino Banana Growers and Exporters Association PCIC Philippine Crop Insurance Corporation PhilExport Philippine Export Authority PQS Plant Quarantine Service RPTAS Real Property Tax Assessment System South , , North Cotabato, , , City SUC State Universities and Colleges TADECO Agricultural Development Corporation, Inc.

4 Banana Industry Roadmap 2019-2022

Situational Analysis

Banana is the top traded fruit worldwide and the Philippines is one of the major banana exporters and was ranked no. 2 next only to in the past decades. Typhoon Pablo in 2012 was a turning point that caused a sharp decline in production in the hard-hit areas in Mindanao where the major production areas are located. Recovery has been affected by other factors such as pest and disease, changing weather patterns, and even the government focus on the rise of other crops such as Cacao. In 2017, the Philippines regained the number 2 rank as banana exporter.

The sharp decline in Philippine Figure 1. Philippine Banana Export Drop banana export is starkly PHILIPPINE BANANA EXPORT demonstrated in the fact that 50MM BOXES DROP from a 237 million boxes $300Million LOSS TO MINDANAO exported in 2011, only 187 270,000 million boxes were exported in 237 240,000 2016 or a 21% decline in 210,000 volume in a matter of five -21% 187 180,000 years. At an average price of 150,000 $6 per box, this translates to a $300 million loss to the 120,000 90,000 economy of Mindanao where of[13Kg] Boxes Millions most of the banana growing 60,000 areas are located.(Delorenzo, 30,000 0 2017) 2011 2016

World Situation:

Exports:

Banana exports by country totaled US$12.09 billion in 2017, up by an average 22.3% for all banana shippers over the five-year period starting in 2013 when bananas shipments were valued at $10.1 billion. Year over year, the value of global banana exports appreciated by 14.8% from 2016 to 2017.

From a continent perspective, Latin American (excluding Mexico) plus the Caribbean accounted for the highest dollar value worth of banana exports in 2017 via shipments amounting to $7.2 billion or 58.5% of international banana sales.

European exporters were responsible for 21% of total exported bananas, followed

5 by Asian shippers at 7.4%. African countries supplied 6.6% of globally exported bananas with North American exporters coming in at 5.6%.

Table 1. Value of Banana Exports by Country, 2013 – 2017. In USD ‘000

% in Country 2013 2014 2015 2016 2017 2017

Ecuador 2,332,207 2,590,205 2,820,053 2,742,005 3,045,158 25% Philippines 963,412 1,137,316 439,902 618,830 1,128,280 9% Belgium 1,418,681 1,335,551 946,780 940,884 1,051,932 9% Costa Rica 780,183 907,683 835,264 996,815 1,044,313 9% Columbia 763,859 835,546 802,628 914,937 918,095 8% 651,954 721,443 763,620 848,079 882,341 7% Netherlands 165,010 249,783 272,548 394,154 487,524 4% United States of America 458,087 470,247 442,695 431,308 445,186 4% Germany 344,037 391,873 344,824 328,038 319,520 3% Panama 95,594 97,901 99,775 91,930 317,606 3%

Rest of the World 2,126,530 2,336,089 2,234,549 2,401,558 2,456,606 20%

World 10,099,554 11,073,637 10,002,638 10,708,538 12,096,561 ( ITC calculations based on UN COMTRADE and ITC statistics, 2018)

Table 2. Volume of Banana Exports by Country, 2013 - 2017 (in MT)

% in Country 2013 2014 2015 2016 2017 2017

Ecuador 5,460,838 5,977,281 6,287,605 6,176,269 6,587,037 27% Philippines 3,267,968 3,982,044 1,409,931 1,521,657 2,919,577 12% Guatemala 2,097,296 2,246,590 2,333,894 2,478,434 2,580,267 10% Costa Rica 1,930,756 2,173,028 1,978,185 2,370,238 2,529,679 10% Columbia 1,643,108 1,799,666 1,684,148 1,960,539 2,002,602 8% Belgium 1,381,200 1,318,975 1,150,981 1,144,132 1,305,905 5% United States of America 563,037 578,015 586,569 592,358 614,311 2% Honduras 895,381 635,956 689,731 659,643 605,750 2% Netherlands 169,913 253,034 315,159 463,692 584,880 2% Mexico 361,823 407,387 440,703 462,367 576,645 2%

Rest of the World 3,468,998 3,872,402 3,869,338 4,113,862 4,404,626 18%

World 21,240,318 23,244,378 20,746,244 21,943,191 24,711,279 ( ITC calculations based on UN COMTRADE and ITC statistics, 2018)

6 The listed 10 countries shipped 80% of all banana exports in 2017 (by value).

Among the above countries, the fastest-growing bananas exporters since 2013 were: Panama (up 861.6%), (up 280.8%), Dominican Republic (up 134.2%), Côte d’Ivoire (up 131.5%) and the Netherlands (up 108.4%).

Five countries posted declines in their exported bananas sales: the Philippines (down -28.7%), Belgium (down -25.9%), Germany (down -7.1%), Honduras (down -6.5%) and the United States (down -2.9%).(Workman, Banana Exports by Country, 2018)

Imports:

Global purchases of imported bananas totaled US$15.3 billion in 2017.

Overall, the value of bananas imports for all importing countries was up by an average 5.1% since 2013 when international purchases of bananas were valued at $14.6 billion. From 2016 to 2017, imported bananas appreciated by 3.8%.

From a continental perspective, European nations accounted for the highest dollar worth of imported bananas during 2017 with purchases valued at $8.8 billion or 57.3% of the global total. In second place were North American importers at 20.7% while 18.1% of worldwide bananas imports were delivered to Asian nations.

A much smaller percentage of imported bananas were bought by Africa (0.9%) and Oceania (0.5%).

Table 3. List of importing markets for the product exported by Philippines in 2017

Value exported Quantity Share in Importers in 2017 (USD exported Philippines's thousand) in 2017 exports (%) World 1,128,280 2,919,577 100.00 Japan 390,227 826,962 34.60 290,234 800,407 25.70 Korea, Republic of 176,554 379,162 15.60 United Arab Emirates 94,821 285,603 8.40 Iran, Islamic Republic of 78,533 322,650 7.00 Saudi Arabia 20,539 77,260 1.80 Iraq 20,186 60,384 1.80 Hong Kong, China 16,856 47,744 1.50 Kuwait 11,900 44,692 1.10 New Zealand 6,573 12,939 0.60 ( ITC calculations based on UN COMTRADE statistics., 2018)

7 Figure 2. Map of Importing Countries of Philippine Banana

(www.trademap.org, 2018)

The listed 10 countries purchased 98% of all bananas imports in 2017.

Among the above countries, the fastest-growing markets for bananas since 2013 were: Netherlands (up 162.7%), China (up 72.5%), South Korea (up 44.2%) and Saudi Arabia (up 31.9%).

Four countries posted declines in their imported bananas purchases namely Belgium (down -12.5%), Germany (down -10%), Italy (down -1.4%) and United Kingdom (down -1.3%).(Workman, Banana Imports by Country, 2018)

8 Philippine Situation:

The Philippines is a major producer of bananas. Aside from the for export, it also produces other varieties of bananas and plantains such as the Lakatan and the Saba/ Cardaba varieties. While Cavendish is mainly produced as an export product, the Lakatan is consumed mostly as fresh fruit in the domestic market while a good portion of the Saba/ Cardaba variety is processed into banana chips and other products for domestic use and export.

The Philippine production of bananas since 2010 peaked in 2012 with more than 9.2 million metric tons followed by a sharp decline in 2013 as a direct result of the damage wrought by Typhoon Pablo. In terms of area planted, from a high of about 454,000 hectares in 2012, this declined to about 446,000 hectares in 2013 and further down to 443,000 hectares in 2014 and 2015.(Philippine Statistics Authority, 2014 - 2017)

Viewed from a production standpoint, production of Cavendish bananas dominates the national production. Philippine Statistics Authority data for the past 5 years show a slow growth in the volume of production on a year to year picture.

Figure 3: Volume of Production by Variety by Year, 2013 – 2017.

Volume of Production by Year in Metric Tons. 2013 - 2017

P 10,000,000 r o 8,000,000 d u 6,000,000 Lakatan c 4,000,000 Saba t Cavendish i 2,000,000 BANANA o Cavendish 0 n 2013 Lakatan 2014 2015 2016 2017 Year

(Performance of Philippine Agriculture Reports, 2013-2017)

9

Cavendish accounts for about 50 to 60% of the total banana production despite using a smaller aggregate land area compared to the Saba/ Cardaba variety due to its high plant density per hectare and higher productivity.

Table 4. Volume of Production by Year in Metric Tons, 2013 – 2017 % Change 2013 2014 2015 2016 2017 2017/2016

Cavendish 4,230,089 4,448,460 4,566,907 4,638,328 4,836,253 4.27% Lakatan 930,032 954,856 970,496 898,515 910,983 1.39% Cardaba 2,557,109 2,567,495 2,627,129 2,474,199 2,520,011 1.85% BANANA 8,646,417 8,884,857 9,083,929 8,903,684 9,166,334 2.95% (Performance of Philippine Agriculture Reports, 2013-2017)

In terms of area planted in the past 5 years, 2017showed a great improvement towards attaining the 2012 (pre-Typhoon Pablo) level of about 454,000 hectares.

Figure 4. Area Planted to Banana by Variety. 2013 - 2017

Area Planted to Banana by Variety (ha.)

450,000 A 400,000 r 350,000 e 300,000 a 250,000 Cavendish

( 200,000 Lakatan H 150,000 Saba a 100,000 BANANA . 50,000 BANANA ) Saba 0 Lakatan 2013 Cavendish 2014 2015 2016 2017 Year

(Performance of Philippine Agriculture Reports, 2013-2017)

10 Table 5. Area Planted by Major Variety, 2013-2017

% 2013 2014 2015 2016 2017 Change 2017/2016 BANANA 446,017 442,751 443,370 442,865 446,764 0.9 Cavendish 82,903 84,133 85,809 86,668 88,010 1.5 Lakatan 55,908 56,395 56,473 54,675 54,978 0.6 Saba 183,484 182,416 182,001 182,414 185,279 1.6 (Performance of Philippine Agriculture Reports, 2013-2017)

Using the data from the two previous tables, we can find that productivity differs between varieties with Cavendish beating the two other varieties by a large margin owing largely to its more intensive cultivation standard and higher input requirement. Cardaba, being a bigger variety has less plants per hectare, and as expected has the lowest productivity rate with an average of around 14 tons per hectare compared to the average of 50 tons per hectare of Cavendish and the 17 tons per hectare of Lakatan. On the average, productivity of banana hovers around 20 metric tons per hectare across all varieties.

Figure 5. Productivity of Banana by Variety, 2013 - 2017 (MT/Ha.)

Productivity of Banana by Variety 2013 - 2017 (MT/Ha.)

60.00

50.00

40.00 BANANA 30.00 Cardaba 20.00 Lakatan

Productivity (MT/Ha.) Productivity Cavendish 10.00 Cavendish Lakatan - Cardaba 2013 2014 BANANA 2015 2016 2017 Year

Note: Computed from previous tables

11 Table 6, Productivity of Banana by Variety, 2013 - 2017 (MT/Ha.)

Productivity (Metric Tons per hectare) % 2013 2014 2015 2016 2017 Change 2017/2016

Cavendish 51 53 53 54 55 2.68% Lakatan 17 17 17 16 17 0.83% Cardaba 14 14 14 14 14 0.28% BANANA 19 20 20 20 21 2.05% Note: Computed from previous tables

12 Regional Production:

In terms of regional production, Region XI, X, XII, and ARMM, all located in Mindanao are the top producers mainly due to the large plantations of Cavendish which accounts for more than half of the total production followed by Lakatan which is about a quarter of the total produce.

Figure 6. Banana Production per Region. January – March 2017

Source: (Philippine Statistics Authority, 2014 - 2017)

13 Figure 7. Distribution of Banana Production

Source: (Philippine Statistics Authority, 2014 - 2017)

Table 7. Volume of Production for Banana by Region

Source: (Philippine Statistics Authority, 2014 - 2017)

14 Export Market:

The export markets of the Philippines are mainly in the Asian and Middle East countries. Below are the top 15 countries that comprise the highest dollar value worth of bananas exported from the Philippines during 2016:

Table 8. Philippine Banana Export Markets by Country. 2017

Value Unit Share in Quantity exported in value Importers Philippines' exported in 2017 (USD (USD/ Exports (%) 2017 (Tons) thousand) unit)

World 1,128,280 100 2,919,577 386 Japan 390,227 35 826,962 472 China 290,234 26 800,407 363 Korea, Republic of 176,554 16 379,162 466 United Arab Emirates 94,821 8 285,603 332 Iran, Islamic Republic of 78,533 7 322,650 243 Saudi Arabia 20,539 2 77,260 266 Iraq 20,186 2 60,384 334 Hong Kong, China 16,856 2 47,744 353 Kuwait 11,900 1 44,692 266 New Zealand 6,573 1 12,939 508 Malaysia 5,179 1 15,727 329 Singapore 5,155 1 13,213 390 Qatar 4,284 0 11,673 367 Russian Federation 1,651 0 3,558 464 Bahrain 1,375 0 6,908 199 Others 4,213 0 10,695 (www.trademap.org, 2018)

The listed 15 countries absorbed 99.7% of bananas exports from the Philippines in 2017 while other minor markets consumed the 0.3% remaining volume. Among the above countries, the fastest-growing bananas markets between 2016 to 2017 in term of growth in exported value in USD were: Canada (up 6,533%), Bahrain (up 2,889%), USA (up 588%) and Iraq (up 560%).

Those countries that posted declines in their Filipino bananas purchases were led by: United Kingdom (down -98%), Mongolia (down -47%), Kuwait (down -41%), Brunei Darussalam (down -36%) and North Korea (down -35%). (www.trademap.org, 2018)

15

Cavendish accounts for the bulk of the volume of fresh bananas exported to other countries. Banana accounts for around 17.2% of the total Agricultural export of the country in 2017.

Table 9. Fresh Banana Volume and Value of Exports. 2013 - 2017

YEAR Quantity Value Percentage (In MT) (US $, ‘000) Share to Total Agri Exports 2013 3,266,547.6 962,575.3 15.04 2014 3,630,976.3 1,129,890.9 17.27 2015 1,795,219.2 657,870.1 12.82 2016 1,733,836.3 730,363.5 13.83 2017 2,850,847.0 1,128,580.0 17.2

(Highlights of Philippine Export and Import Statistics, 2017)

Players:

The top players in the Banana Export industry are: Unifrutti, Dole, Sumifru, Lapanday, TADECO, and Del Monte. The map shows the location of these players in Mindanao where the bulk of bananas for export are produced. There are other smaller independent exporters such as MBFEA. Mega, among others.

Other value chain players include processors under the Organization of Banana Chips Exporters and other independent processors.

16 Figure 8. Mindanao Banana Industry Players

17 Indicative Cost of Production and Income

The figures shown below for Lakatan and Cardaba are lifted directly from the “Banana Production Guide” (Herradura, 2015) published by the Bureau of Plant Industry of the Department of Agriculture Pages 24-27. Cavendish Banana figures are from the Philippine Banana Growers and Exporters Association.

Lakatan

18

19

20 Cardaba

21 22

23

24 Cavendish

Value Chain

In viewing Agriculture as an Industry, one of the common tools used if the Value Chain Analysis. The Value Chain shows the evolution of the product from production of the raw product to the eventual form in the marketplace. It also shows the Value Chain Players who handle, transform, or otherwise add value to the product in its transformation and journey to the marketplace.

For banana, there is a general flow of products for Fresh Fruits which is applicable to table bananas like the Cavendish, the Lakatan, and even the Cardaba Varieties.

25 Cavendish and Lakatan Fresh Fruit

Figure 9. Banana Fresh Fruit Value Chain

(Department of Agriculture - Mindanao Cluster, 2014)

In general, the value chain for Fresh Fruit Banana goes into five (5) stages as follows:

1. Pre-production or Input Provision which includes the planting materials, agricultural chemicals, and other inputs. 2. Production which includes plant care and maintenance, application of agri- chemicals, and other production inputs and practices 3. Post-Harvest Consolidation and Packing which includes cleaning, selection, grading, and labeling. 4. Trading and Distribution which includes storage, transport, and distribution to the wholesale markets 5. Final or Retail Sales where the product is sold to the eventual consumers for consumption as fresh fruit or further processing into manufactured products.

26 Cardaba Value Chains

Figure 10. Cardaba Fresh Fruit Value Chain

(Department of Agriculture - Mindanao Cluster, 2014)

Among the three major varieties, Cardaba is not usually consumed as fresh fruit due to its high starch content, although there are some sub-varieties suitable for fresh fruit consumption when adequately ripe. The Value Chain for Cardaba fresh fruit is mostly for the local market where household level buyers or consumers purchase the fresh fruit for their own consumption or for home cooking as snack food. The value chain is very similar to the General Value Chain in terms of stage, except for the absence of the large Multinational Companies in the players.

27 Cardaba Processed Banana

Figure 11. Value Chain Map for Processed Banana

(Department of Agriculture - Mindanao Cluster, 2014)

One major product of Cardaba is the Processed Banana which is basically the Banana Chips which is mostly for the export market and on a limited scale for the local or domestic market. The first three stages are generally the same as the Fresh Fruit value chain. However, instead of being distributed to the fresh fruit market, the product is sold to processors who convert it into semi-processed products (first fry chips which are used as raw materials for processed banana chips by manufacturers or processors who have their own proprietary finishing and flavoring), and processed products (final fried chips with the desired flavoring and packaging ready for distribution to the consumer market. First Fry Banana Chips are usually packaged and sold in bulk form while Final Fry Banana Chips are usually packaged and sold in consumable and retail sized packs.

28 Cardaba Snack Food

Figure 12. Value Chain Map for Cardaba Snack Food

(Department of Agriculture - Mindanao Cluster, 2014)

The third product form for Cardaba is the Snack Food where the first three stages are basically the same as the Processed Banana. The big difference is that Snack food is usually processed and consumed within the same day, and the processor and eventual retailer is usually the same person. Most of the processor/ retailers in this product form are micro-enterprises who sell the snack food along the streets to the general public. There are some Small enterprises who sell the snack food as part of the menu in restaurants or cafes catering to their customers.

29 Banana Issues and Concerns:

Consultations with Industry Stakeholders and studies on the Banana Industry have surfaced common existing and emerging issues and concerns. These issues are usually interlinked with the various aspects of the banana industry and usually not isolated incidents or specific to certain areas or sectors. Many of the issues adversely affect the production and value chains of the different varieties of banana. Below are the issues with a short description, as well as identification of the affected sector of the industry.

Existing and Emerging Issues and Concerns

LEGEND (Banana Industry Sub-Sectors):

Cavendish Cardaba Lakatan Processors

Table 10. Summary of Issues for Banana

Issue Description Market  “Fly-by-night” traders who These are traders who buy bananas from farms encourage Pole vaulting under contract with companies (exporters or processors) or other traders who have financed or extended credit for the production of the bananas. This affects the production quota of the exporters and processors who have programmed the production of the farms into their volume requirement.  Unserved Markets There are markets that are asking for more fruits but unfortunately, due to poor productivity, they remain unserved.  Unstable Price – Domestic and Prices of bananas are dependent on a variety of Export factors such as supply and demand, world price, dollar exchange rate, and other factors. This affects the farmers who take the risks and costs of production without a guaranty that the selling price will be sufficient to offset their production cost.  Lack of Entrepreneurial Skill of Since a large percentage of the bananas are Farmers produced by small producers, most of these producers have little or no skills in entrepreneurship to manage and negotiate with their markets.

30 Issue Description  Poor and expensive transport Transport of the produce from the farms to the system market is relatively expensive since most of the small farms are located in hard to reach areas with inadequate road network and transport facilities. A big percentage of the produce is transported by traders using small to medium sized vehicles that can enter the narrow roads leading to the farms, resulting in a high cost per volume transport cost.  Shipping Shut-out (Mindanao to Trading of bananas in the domestic market is ) affected by shipping shut-out when the bananas are consolidated for shipping from Mindanao to Luzon and are not loaded on the ship because the capacity of the ship is already allocated to other products or shippers. This causes undue delay in the shipping which may result to losses due to ripening, particularly since the product is not usually shipped in refrigerated vans for domestic markets.  Inadequate cold chain facilities This affects the trading of bananas in the domestic market. To reduce post-harvest losses, the field heat has to be removed from the bananas as soon as possible to delay or prevent ripening until it reaches the target market. There is inadequate cold storage and refrigerated van facilities to cater to this segment of the industry.  Inadequate Marketing For the local or domestic marketing of bananas, infrastructure there is inadequate marketing facilities such as consolidation points, auction markets, and bulk marketing facilities. Local and domestic trading is usually done by small traders running small volume operations which are inefficient and hard to regulate in terms of quality and price.  Lack of Marketing promotions to The Banana Export market is dominated and other countries controlled by the large multinational companies selling Philippine bananas under their own brand names. As such, promotion is based on the brand rather than as Philippine Bananas, to the detriment of the small exporters who find it hard to market the bananas as there is no market recognition. More emphasis on promotion of Philippine Bananas need to be done to open up new markets and assist small independent exporters.

31 Issue Description

 Competitiveness of Latin In recent years, Philippine production dropped American bananas due to the effect of Typhoon Pablo which damaged a large portion of the banana plantations in Mindanao. While the Philippines was recovering, South American bananas were able to increase their market share in the traditional markets of the Philippines in Asia and the Middle East. The Philippines needs to recover these markets and expand to new markets in order to regain its position in the world market which has dropped from being number 2 to being number 6 in recent years.  Market price softening Technical  Planting Materials Quality planting materials are vital to production of quality bananas. While big companies are able to supply the needs of their contracted farmers, many small holders do not have access to the quality planting materials. There is a need for more tissue culture laboratories and nurseries to produce uniform quality planting materials from certified mother plants to ensure variety and seedling vigor.  Proliferation and use of illegal There are agricultural chemicals that are highly chemicals toxic and has long residual effect on the environment that are banned in the Philippines and in the countries where bananas are sold. These chemicals are considered illegal and not recommended for use. However, there are still some farmers who use these chemicals to control pests and diseases for convenience sake.  Pest and Disease Pest and disease are a normal occurrence in any crop but more pronounced in a monocropping system where the spread and impact of the pest or disease is faster and easily apparent. For bananas, the primary concern is the Panama disease which is a soil borne disease. Other diseases like the Sigatoka, bunchy top, among others are hard to control and contain. These diseases cause lower production and higher production cost or requires plantations to install more stringent and

32 Issue Description costlier sanitary and quarantine measures to control and contain.  Poor cultural management by Smallholder farmers usually lack technology farmers and resources to practice the recommended cultural management for their small operations. In addition, for smallholders, bananas are sometimes not the main crop, thus do not receive the care and maintenance required. This leads to poor production.  Inadequate post-harvest Post-harvest practices vary among the infrastructure varieties. However, in general, there are inadequate post-harvest facilities such as washing tanks, packing plants, and even transport from the farm to the market, thus resulting in post-harvest losses.  Lack of quality standards for While fresh fruit for export market have exacting Fresh Fruits standards, those for the domestic and local market do not have uniform standards. The lack of standards is also a factor for the instable pricing as the farmer cannot be assured of pricing based on the quality of his produce.  High Use The proliferation of pests and diseases has brought about the need to use more and agricultural chemicals in order to produce visually good bananas. This is particularly true with plantation bananas where the monocropping system makes it susceptible to pests and diseases.  Very Labor Intensive Unlike plantation grown bananas where the labor to area ratio is set, smallholders usually have to work on their own farms due to the high cost of hiring labor and the relatively lower yield and value of produce per hectare. Smallholder production also does not lend itself well to mechanization and it is usually not cost effective to acquire and operate mechanized systems for small production operations.  Priority for irrigation water Irrigation facilities are designed and focused on paddy rice production, thus, in times of water shortage, priority for the use of irrigation water is given to rice over other crops. Organizational  Weak or no producers/ sectoral There are very few organizations of small organization banana producers, especially for the Cardaba and Lakatan bananas. Since the market is

33 Issue Description fragmented and served by individual small traders, there is no effort to organize the farmers in order to gather volume and regulate production practices. This has resulted in the weak and fragmented representation of banana producers in government and business councils. Financing  High interest rates Agriculture is considered by the banking industry as a high-risk portfolio, thus requires a higher interest rate, collateral requirement, and market assurance over other portfolios. Another factor in raising interest rates for agriculture is the gestation period of the crops which needs a grace period where the financial institution is not able to collect and roll over the loan capital.  Increasing production and Production and business costs are steadily business costs rising due to inflation and other factors such as the exchange rate, availability of inputs, and increasing need for commercial inputs such as fertilizer and pesticides. Environment  Climate change Recent years have shown extreme weather or climate changes leading to widespread damage or affecting the productivity of the banana industry. Typhoon Pablo affected about 25% of the commercial banana plantations which caused a downturn in production for the next two years while the plantations were recovering. Periodic El Nino and La Nina occurrences also affect the production and eventually the markets of bananas.  Prone to advocacy issues by Plantations are easy targets for environmental NGOs advocacy groups who decry the loss of biodiversity, use of chemicals, and other environmental effects of the production operations. Policy  Land Use conversion to other Farming is an industry affected by trends and crops fads in the market. Thus, farmers sometimes convert to other crops that are more attractive or have high potential market at a given time or season. Bananas are not exempt from this even as it is also the cause of land conversion of riceland to banana. Other factors that cause

34 Issue Description conversion to other crops is the presence of soil borne diseases which makes the land unfit for growing bananas. All in all, conversion to other crops affect the production targets and ultimately, the income of the farmer.  Unresolved Agrarian Reform Plantation bananas have been affected by the Issues/ Land disputes affecting Comprehensive Agrarian Reform Program and productivity and investments has forced the producers to shift their management practices from Corporate farms to individual growership contracts. There are some cases where the land distribution has resulted to disputes among beneficiary groups which have remained unresolved, thus affecting the production and investment into these areas.  Security Issues (NPA) Recent years have shown several instances of security threats from armed groups (rebel and terrorist) which have caused losses not only of facilities and equipment but also jobs and even lives of workers. Recent instances include the burning of packing plants, plastic plants, and even the strafing of a spray plane which caused the death of the pilot.  Trade barriers imposed by some There are still some countries that impose countries unrealistic requirements which prevent the importation of Philippine bananas, thus limiting the market. Despite the existing Free Trade agreements, some countries still impose tariff and non-tariff restrictions which need to be negotiated and lifted for Philippine bananas to make inroads into the market.

Banana Industry Stakeholders and Enablers

The Banana Industry has many stakeholders and enablers. Foremost among the stakeholders are the Farmers and Small Growers who are the main drivers and players in the industry. Other major stakeholders are the individual Cooperatives, Consolidators, Traders, Processors, Financiers, and Exporters which range from small scale companies to large multinational corporations. Aside from these direct stakeholders, there are other stakeholders and enablers, both from the government and private sectors. Below is a listing of the institutions that are providing programs, functions or services to the banana industry.

35 Table 11. Banana Industry Stakeholders and Enablers

Agency/ Institution Function/ Programs/ Projects National Government Agencies  Department of Agriculture  BPI – Accreditation of Plant Nurseries and Tissue Culture Laboratories  BPI – Production of Certified Planting Materials  AMAD – Marketing linkages  ATI – Technology Training and Extension  PQS – Quarantine Clearance  ACPC – Production Loan Easy Access  Department of Agrarian Reform  Production technology and marketing assistance to ARBs  Department of Environment and  Natural Resources  Department of Trade and Industry  Product development and Entrepreneurial Development  Department of Science and  Innovative/new product production, Technology standards protocol  Philippine Crop Insurance  Crop Insurance Corporation  Department of Education  Promotion of the Banana Feeding Program to Schools  Department of Social Welfare and  Promotion of the Banana Feeding Development Program to Day Care Centers  Department of Public Works and  Farm to Market Roads Highways  Department of Finance  BOC – Export Processing Facilitation  Land Bank of the Philippines  Agricultural Loans  National Nutrition Council  Support to the Banana Feeding Program

Special Projects  Philippine Rural Development  Farm to Market Roads Program

State Colleges and Universities  University of the Philippines  Research (system)  Mindanao State University  Research (system)  University of Southeastern  Research Philippines (system)  Central Mindanao University  Research

36 Agency/ Institution Function/ Programs/ Projects  University of Southern Mindanao  Research

Private Sector  PBGEA  Advocacy, Policy, Networking  MBFEA  Advocacy, Policy, Networking  OBEX  Advocacy, Policy, Networking  PhilExport  Advocacy, Policy, Networking  MEGA  Advocacy, Policy, Networking

Development Direction

Vision/ Mission:

Philippine Bananas and Banana-related products to consistently meet world quality standards with good productivity, sustainable production practices, thus ensuring economic viability for its stakeholders.

Goals and Objectives:

1. Increase farmer productivity by: 4% per year for Cavendish, 2% per year for Lakatan and Cardaba 2. Increase production area by at least 3% per year for Cavendish, 2% per year for Lakatan and Cardaba 3. Increase Market share by 3% in both Fresh Fruit and Value-added Products. 4. Attain 100% standard product quality 5. Support Stakeholders in moving up in the Value Chain 6. Identify Resources and Financing windows for the Banana Value Chain players 7. Improve infrastructure and facilities in the Banana value chain 8. Establish Banana research and development structures and systems 9. Strengthen the Banana Industry Governance

37 Table 12: Annual Targets for 2019-2022

Baseline Yearly Target 2019 2020 2021 2022 PRODUCTIVITY (Tonnes per Hectare) Cavendish 53.20 55.33 57.54 59.84 62.24 Cardaba 14.00 14.28 14.57 14.86 15.15 Lakatan 16.80 17.14 17.48 17.83 18.18 AREA PLANTED (Hectares) Cavendish 85,505 88,070 90,712 93,433 96,236 Cardaba 55,686 56,800 57,936 59,094 60,276 Lakatan 183,119 186,781 190,517 194,327 198,214 PRODUCTION (Metric Tonnes) Cavendish 4,548,866 4,872,737 5,219,670 5,591,289 5,989,389 Cardaba 779,604 811,104 843,873 877,954 913,426 Lakatan 3,076,399 3,200,679 3,329,993 3,464,519 3,604,494

Strategic Actions

Development Directions and Upscaling Strategies

i. Improvement of Productivity ii. Increasing Quality and Sustainability Level iii. Expansion of Production Areas iv. Moving up in the Value Chain v. Ensuring Market Awareness vi. Resource Generation and Financing vii. Infrastructure (roads, irrigation, Post-harvest, etc.) viii. Research and Development ix. Industry Cluster Organizational Development and Human Resource Development

38 Banana Industry Action Plan

LEGEND (Banana Industry Sub-Sectors):

Cavendish Cardaba Lakatan Processors

These plans and programs were developed by the stakeholders, to be implemented and monitored by the appropriate Government agencies and in tandem with the BIDC and other stakeholders.

Table 12. Banana Industry Action Plan

Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 Improvement of Productivity Level - Subsidy on fertilizers, and DA, DAR, etc. pesticides and farm machineries and equipment

- Establish Crop Insurance PCIC for Banana Small Growers

39 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 - Establishment of a facility DA, DOST for manufacturing of organic (Benchmark Sto. fertilizer Tomas, Del Sur) - Fusarium Wilt DA 500,000,000 500,000,000 500,000,000 500,000,000 Management Support Intervention

- Package of Technology DA 200,000,000 200,000,000 200,000,000 200,000,000 (POT) for other pests and diseases

- Package of Technology DA, DTI (POT) for Postharvest Quality

- Package of Technology DA (POT) for GAP -

- Water recycling program DA, DENR, DOST (packinghouse)

40 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 - Waste water treatment in DA, DENR, DOST pesticides mixing facilities

Microbial Antagonist and Meristem DA 2,000,000 2,000,000 2,000,000 Production

Yearly Soil Analysis DA 30,000,000 30,000,000 30,000,000

POT for Natural Disease Control DA 240,000,000 240,000,000 240,000,000

Expansion of Production Areas - Develop program for DA adverse conditions like El Nino, La Nina, Earthquake, tropical storm

- Use of Drone Technology DA, DENR, DOST

41 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 - Provide/ Ensure access BPI to quality (inspected/ verified) Planting Materials for Rehabilitation purposes

- Accreditation of Tissue BPI Culture Laboratories/ Nurseries/ planting material producers

Moving up in the Value Chain - Quality standardization DA, DTI (packing houses, operations)

- Certification and branding DA, DTI for all varieties

Ensuring Market Awareness - Harmonization of MRL in DA, NPAL-BPI all markets

42 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 - Open other markets DTI (, Russia and Europe).

Aggressive renegotiation of Tariff DA, DTI, DOF, DFA Rates

International and Domestic DTI, DA, BPI, BAFS 8,000,000 8,000,000 8,000,000 8,000,000 Consumer awareness campaign

- Participation in DA, DTI, PhilExport 8,000,000 8,000,000 8,000,000 8,000,000 International Fruit and Vegetable Congress/Trade Fairs/ Congresses.

- Banana Feeding DSWD, DepED, DOH, 30,000,000 30,000,000 30,000,000 30,000,000 Program/ Banana Waste DND, NNC, etc. Utilization

- Banana Congress DA, PhilExport, DTI 1,500,000 1,500,000 1,500,000 1,500,000 (Annual - October) / Island Group 5,000,000 5,000,000 5,000,000 5,000,000

43 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 Infrastructure and FMR DA, DPWH

Resource generation and Financing Strategies - Include Banana as a DA Priority crop in the PLEA Program and other Government Financing Programs

Research and Development - Establishment of a DA, DOST 250,000,000 50,000,000 50,000,000 50,000,000 Banana Research Institute (BRI) in 2019.

- Polycyclic Aromatic 3,000,000 Hydrocarbon Laboratory Equipment

- Expand Tissue Culture DA, BPI 50,000,000 Laboratory Facilities

44 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022 - Establish a Varietal SUCs, BPI, PAGRO 50,000,000 30,000,000 30,000,000 30,000,000 Selection/ Clonal Garden/ Seed Bank Center

- Field Trials for Pest and BPI, DA, Academe 20,000,000 20,000,000 20,000,000 20,000,000 Disease

- Conduct Benchmarking DA, International 24,000,000 24,000,000 24,000,000 24,000,000 activities (Local and Partners, International) - Establish/ Accredit DA, Academe, Private 12,000,000 12,000,000 12,000,000 12,000,000 Model Farms for each growers (Local and variety (private, International) academic or government) Industry Cluster Organizational Development and Human Resource Development - Creation/ Operation of a Industry Stakeholders, 25,000,000 25,000,000 25,000,000 25,000,000 non-regulatory banana DA, DTI council

- Continuing education on DA, DTI, DENR, 20,000,000 20,000,000 20,000,000 20,000,000 technical updates in the DOST banana industry

45 Responsible Budgetary Requirement Strategy/ Activities Stakeholders 2019 2020 2021 2022

- Establishing a Banana Industry Stakeholders, 25,000,000 10,000,000 10,000,000 10,000,000 Database DA, DTI

- Inventory of bills filed/enacted in Congress in relation to the Banana industry for review and refilling

Totals 1,231,500,000 1,215,500,000 1,215,500,000 1,215,500,000

Legend: - Does not require Funding - Requires Funding

Priority Projects:

1. Organization of the Banana Industry Development Council 2. Establishment of the Banana Research Institute 3. Conduct of the Banana Congress 4. Development of the Banana Database 5. Acquisition of Tissue Culture Laboratory/ Clonal Garden 6. Acquisition of the Polycyclic Aromatic Hydrocarbon Laboratory Equipment 7. Best practice benchmarking

46 Monitoring and Evaluation

Monitoring and Evaluation are important cogs in any development system for to be able to know success is to be able to measure it. Defining and quantifying success indicators is critical as it not only provides direction for the implementers, but it also focuses the investments and resources poured into the development process. As important as having clear and quantifiable indicators is having a monitoring structure and system that gathers, consolidates, analyzes, and evaluates the results for use in improving and elevating subsequent implementation cycles. Such structure and system must be able to monitor and evaluate objectively and be supported by all stakeholders in order to be effective, reliable, and credible.

Development Indicators:

Table 13. Development Indicators

Goal/ Objective Indicator Means of Verification Regain and expand the Maintain or improve on FAO Statistics leading position in the #2 world ranking on Domestic and Global exports. Market Increase farmer # of Tons/ Ha. Industry reports productivity, quality, and # of Boxes/ Ha. PQS Reports, PSA, LGU sustainability # of Tons/ year reports Increase production # of Hectares Industry reports area # of Hills Planted LGU RPTAS Reports # of Productive Hills DA Monitoring reports Support Stakeholders in # of Stakeholders/ DA, DTI Reports moving up in the Value groups assisted Chain # of projects implemented Amount of projects implemented

Increase Market share % increase in Fresh Fruit Export Statistics in both Fresh Fruit and Market share PhilExport Reports Value-added Products. % increase in Value- PQS Reports added Products market share

Identify Resources and # of stakeholders able to DA ACPC Reports Financing windows for access financing LBP Reports

47 Goal/ Objective Indicator Means of Verification the Banana Value Chain Total Amount of BOI Reports players financing accessed Establish Banana Presence of a Banana News reports research and Research Institute Annual Report of BRI development structures and systems Strengthen the Banana Presence of a Banana News Reports Industry Governance Industry Development Documentation Report of Council BIDC Organization  National Level Copy of the Articles of  Regional Level Incorporation and  Local Level Certificate of Registration

Monitoring Structure:

The existing monitoring structure is a mix of government and private institutions/ agencies mostly operating independently of each other. Not all the data is openly shared thus, sometimes the statistics do not tally from one agency to the other, and sometimes even within the same agency.

It is proposed that a single central monitoring and evaluation institution or system be established for the banana industry. All the industry players and government agencies with concerns in the banana industry will be coordinated and monitored by this central monitoring and evaluation institution through a system of data sharing under a Memorandum of Agreement signed by each stakeholder and government agency with the said institution.

This institution shall coordinate, cooperate, and network with the existing data generation systems to gather, organize, analyze and evaluate the information on a regular (quarterly) basis. It shall also feed back into the system the consolidated results of the periodic evaluation to ensure that everyone gets the opportunity to utilize the information and also to streamline the standard industry information. To make the process more efficient and effective, a set of industry performance indicators shall be set from which the data sets shall be derived for the various agencies and associations to gather and submit to the central monitoring and evaluation institution. Options for the institution are as follows:

1. The Banana Industry Development Council – as a repository and clearinghouse of all the data and information gathered by the different government agencies and private industry associations pursuant to its mandate of developing and

48 advocating policies to govern the banana industry. The BIDC shall be composed of Private and Government sector representatives and shall be jointly supported by all stakeholders for its operation.

2. The Banana Research Institute – as a consolidator of data gathered by the different government and private stakeholders in line with its mandate for research and development of the banana industry and technology. The Banana Research Institute shall conduct research in both macro and micro aspects of the industry including production, processing, marketing, and other critical aspects for the continued development and sustainability of the industry. It shall be supported mainly by the Government but may be assisted by the private stakeholders for specific purposes in line with their interests, such as specific researches and technology development efforts.

49 References:

(2018). ITC calculations based on UN COMTRADE and ITC statistics.

(2018). ITC calculations based on UN COMTRADE statistics.

Delorenzo, D. (2017). Speech .

Department of Agriculture - Mindanao Cluster. (2014). Value Chain Analysis and Competitiveness Strategy: Cardaba Banana.

Herradura, L. E. (2015). Banana Production Guide. Davao City: Bureau of Plant Industry - Davao National Crop and Research Development Center.

(2017). Highlights of Philippine Export and Import Statistics. Philippine Statistics Authority.

(2013-2017). Performance of Philippine Agriculture Reports. Philippine Statistics Authority.

Philippine Statistics Authority. (2014 - 2017). Major Fruit Crops Quarterly Bulletin. philippinesaroundtheworld.com. (2017). Philippines Bananas Exports by Country.

Workman, D. (2018). Banana Exports by Country.

Workman, D. (2018). Banana Imports by Country. www.trademap.org. (2018). Retrieved September 24, 2018

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