A better deal for our bananas, soon?

Published June 11, 2018, 10:00 PM

by Mario Casayuran and Vanne Elaine Terrazola

John Tria
John Tria

By John Tria

 

Along with coconuts, the banana industry has been among the few bright spots in our agriculture.

Set against a backdrop of declining agriculture since the mid 1990s until 2016, only the banana and coconut sectors have seen steady performance.

Banana production and export has been particularly robust owing to the ability to quickly export high-quality fresh produce to nearby countries such as Korea, Japan, China, and the Middle east, where bananas are considered a popular health food.

Mindanao lies in the worlds banana belt, where the crop is produced competitively owing to climate and other considerations. Bananas bring lots of livelihood and income to the island.

Declines due to high tarrifs

However, Philippine Statistics Authority (PSA) data shows that the value of banana exports has been declining from P51 billion in 2014 down to P29.6 billion in 2016.

While part of the blame may be the then compromised relations with China during the Aquino years, the reality is that our banana exports to East Asian countries have gone down, replaced by imports from Latin America.

This, according to industry insiders, is because of the preferential tarriffs they enjoy with countries like Korea and Japan, that we do not have.

South Korea in particular, imposes a 30 percent tarriff on bananas from the Philippines.

In contrast, banana exports of Peru to Korea already enjoy zero tariff. Guatemala, Costa Rica, Ecuador, Honduras get zero tariff beginning in 2022.

Korean visit is hopeful

Thus, President Duterte’s recent official visit to South Korea is a good opportunity to push negotiations with South Korean ministry officials on this issue.

The outcome of the bilateral meetings between Korea and the Philippines was the renewal of the Joint Commission for Trade and Economic Cooperation where tariff concerns can be discussed and addressed.

This can lead to improved market access for our agricultural products such as bananas, pineapples, and mangoes. Hopefully, we can get good deals for our cacao and coffee products, even meat and poultry, which are grown in our rural areas.

Better agri exports are good for all

Improved markets for Philippine agricultural products in nearby markets such as China, Korea, and Japan, and even Australia will spur production and improve rural incomes, as local producers can be competitive in these places when compared to countries in Europe, since export costs are lower.

In turn, the higher volumes we generate to meet export demand will force higher over-all production, allowing local production to rise as well, spurring local employment in the rural areas, and keeping food prices stable for our city folk.

These developments with Korea are therefore a positive development for all agri producers, many of which are from Mindanao. For a long time, these sectors were all but ignored.

Thankfully, agriculture as a whole now enjoys better attention. Little wonder why it is starting to grow when compared to steady declines until 2016. We expect it to grow further as Mindanao obtains more attention in the radar of investors.

Officials of the Pilipino banana Growers and Exporters Association (PBGEA), the Banana industry’s main trade group, joined the President’s business delegation to Seoul. As they probably hope, these developments will help reduce in tariffs on our banana exports and help grow production.

Can we negotiate lower tarrifs? Now is the chance.

Nonetheless, my question to Secretary Ramon Lopez is this: Can we at least get our tariff rates on these agricultural goods down to the 5 percent we impose on our imports from Korea?

Moreover, have we started pushing similar negotiations with Japan? These can help level out our trade relations with both countries, lopsided in their favor.

As South Korea pushes a new “southward” policy of deepening ties with Southeast Asian economies, unification with its northern brother more real than ever, we expect its economy to grow. Its demand for bananas and other food items will definitely rise.

This is going to be the same for Japan and China. As winter rolls in, they will need food sources to augment their own production. We can help supply what they need.

As relations with these Asian neighbors continues to improve, the opportunity to push for better treatment for our bananas and other agricultural exports with them is here.

With these recent positive developments, our hopes remain high. We will be monitoring developments.

 

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