Philippine banana export industry wants review on FTA

September 16, 2015 6:08 am 

By Lilybeth G. Ison

MANILA, Sept. 13 (PNA) — The Philippine banana export industry is urging the government for a review of the country's Free Trade Agreements (FTAs) with its trading partners.

"There is a need for a thorough review of our free trade agreements and assess our trading partners’ fulfillment of their commitments to ensure that we are at an outstanding edge in the trading game; in our case, the elimination or reduction of tariffs," said Stephen Antig, executive director of the Philippine Banana Growers and Exporters Association Inc. (PBGEA).

Banana is still the country’s top fresh fruit export. However, Antig said that industry players are now wary that they will eventually lose its market shares "if the government won’t be more aggressive in negotiating for reduced tariffs in countries where we export our bananas."

He also mentioned that "production costs are increasing every year to maintain volume and quality, so much so that some multinational are already thinking about relocating to other countries which have investor-friendly policies."

In fact, Antig said, some PBGEA members are already getting invitations to expand and develop banana plantations in Vietnam.

Philippine cavendish is still under the exclusion list of the country’s trading partners. "That means our buyers have to pay import duties ranging from 40 to 10 percent of the value of the goods. This poses as a stringent constraint and encourages our importers to get fresh bananas from our competitors at lower importation costs," he noted.

The Philippines remains as the dominant supplier of fresh bananas to Japan, South Korea, china and New Zealand, but Vietnam, Indonesia, Mozambique and Costa Rica are slowly penetrating these markets.

In 2014, records from its Ministry of Finance showed that Japan imported fresh bananas from 12 countries, namely: the Philippines, Ecuador, Guatemala, Peru, Taiwan, Mexico, Colombia, Thailand, Costa Rica, China, Mozambique and the Dominican Republic.

In a letter sent recently to the offices of the Department of Trade and Industry (DTI) and the Department of Agriculture (DA), Antig pointed out that "it is only logical for Japanese importers to source part of their supplies from countries with zero tariffs to minimize business costs hence, reducing their demand for Philippine bananas."

Some banana producers in Asia, particularly Vietnam, are threatening to grab the Philippines’ dominant position as the largest exporter of bananas in this region.

Vietnam produces around 30 different varieties of bananas in virtually all the regions of the country. Some of the bananas are quite unique from what a typical global consumer sees.

There has been increasing talk that Vietnam plans to industrialize its banana industry. Vietnam will soon scrap some of its traditional banana cultivars and instead grow what the "global market" demands.

Dr. Nguyen Van Khai, a well-known agricultural consultant, was quoted by Vietnam News Agency that bananas are among the 14 kinds of fruits which play an important part in the nation's export industry. Banana is replacing rice as a crop on 10 percent of the area currently under rice cultivation, adding to the 90,000 hectares already under banana cultivation.

The Philippines currently produces roughly 1.4 million metric tons (MT) of bananas per year and its cultivation area makes up approximately 19 percent of the total fruit farming area nationwide.

Currently, china needs to purchase around 20-30 MT per day, and Japan asks for 15-20 MT.

As such, a number of provinces around Vietnam have switched to banana farming and invested heavily in banana plantations, due to increasing world demand. The business has bloomed in the area over the past decade as the crop has become increasingly profitable for local farmers.

INCREASED IMPORTS

China, Singapore and the Republic of Korea were also noted to have suddenly increased their imports of Vietnamese bananas.

Vietnam, however, admits it is actually in short supply of bananas for export. Its preservation technology has yet to meet international requirements, and only a relatively few Vietnamese products have been licensed to penetrate the high-end markets, including the Japanese market.

Philippine banana exporters are seeking help from agriculture and trade and industry officials to negotiate for preferential or zero tariff with importing countries.

As of 2013, banana is the most imported fruit in South Korea as it accounted for 48.7 percent of the total fruit imports. The Philippines accounted for 98.7 percent of the imported bananas.

Soon, many export products of Vietnam to South Korea will be tariff-free, as it is already enjoying tariff-free status in Japan.

Observers from the agriculture sector are wary that the banana industry might be the next agricultural product to lose its dominant position in the world market following the export decline of sugar, coffee and coconut oil. All these three products used to be big players in their respective world markets. (PNA)

SCS/LGI

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