Bananas and Food Security - Bioversity International

Asie/Pacifique - Asia/Pacific : J.M. Yorobe
delivery (Librero and Tidon 1996). There is also a stereotyped view that middlemen
through monopoly pricing and usury exploit peasants (Hayami 1993). Definitive evidence
on the existence of such conditions would render banana marketing difficult and costly
and may impede the growth of the industry.
This paper aims to provide an overview of the current banana market in the
Philippines and to critically evaluate how efficiently the domestic and export marketing
system works. Empirical findings are put together to critically assess the efficiency with
which bananas are moved from the farm to end-users.
Export marketing
Since 1969, the Philippine banana export market has maintained its position as a major
contributor to foreign exchange earnings, as a source of employment and as one of the
world’s major suppliers of bananas, particularly in the Asian market. In 1996, banana
exports generated about $258 million and have directly employed some 20,000 people. By
introducing efficiency measures, it has one of the highest revenues per hectare
(PHP350,000, equivalent to 8750 US$ at current exchange rates) and labour intensities
(Dy 1998). Table 1 shows the volume and value of Philippine banana and banana
products exports for 1968-96. Fresh banana exports accounted for more than 90% of the
total banana export earnings in the country. An emerging market in the export sector is
for banana chips, with a high average growth rate of 36%.
Bananas for export are mainly grown in Mindanao because of its favourable climate
(uniform distribution of rainfall and position outside the typhoon belt), well maintained
roads and ports and other infrastructure necessary for export marketing. The channels of
distribution are now well established and efficiency with which the bananas are moved
to various markets in the world has been satisfactory. Because most of the exported
bananas are handled by major international marketing companies, namely Dole,
Del Monte, Sumitomo and Oribanex, the sophistication and high level of efficiency in
production and marketing are strictly exacted from the local growers. While such a level
of sophistication has already been achieved, there are impending issues that currently
influence the performance of the export market. This paper analyses the effects of the
changes in production structure and impact of government policies, export performance,
and the market prospects in banana export.
Changing production structure
The unusually large initial shipment of export Cavendish bananas started in 1969 with
the opening of the Japanese market. Considering its potential and the high level of
excess demand, investments in banana production increased in Mindanao. The amount
exported rose dramatically from 23,387 tons in 1969 to 422,421 tons in 1972. To protect
the growth of the industry, the government intervened by limiting the area planted to
Cavendish to 21,000 ha by a Letter of Instruction (LOI) 58 in 1973, mainly for reasons
based on the “infant industry argument”. But, due to burgeoning global demand and
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