Development Options in Enhancing the Performance of the Philippine Cavendish Banana Chain

The dramatic changes in the agri-food system, including the banana industry, have cast doubts on the survival of the vulnerable yet numerous small-scale producers of Cavendish banana in the Philippines if they fail to innovate.

The need for said farmers to innovate was discussed by Dr. Larry N. Digal, Professor and Research Director at the University of the Philippines Mindanao, in a lecture titled Development Options in Enhancing the Performance of the Philippine Cavendish Banana Chain delivered on 24 May 2011 at SEARCA’s Agriculture and Development Seminar Series (ADSS).

He said changes and trends in the agri-food system include the expanding high-value markets (e.g., export and modern retail, fast food chains); food processing becoming concentrated, vertically integrated and into contractual agreements; fragmenting farms in developing countries; and weakening institutions (e.g., governance, infrastructure, labor).

The country’s main producer of Cavendish banana is Southern Mindanao (Region XI), Davao in particular, where the industry employs numerous poor locals and has contributed much to the region’s gross domestic product (GDP). However, recently there was a rise in the region’s poverty incidence that has been attributed to the decline in Cavendish banana production because of land fragmentation and the ban on aerial spraying, among many other factors. Moreover, the small-scale producers lack the capacity to meet the high standards required by the market.

Dr. Digal discussed four options to address the situation: 1) improve the price of bananas, 2) improve productivity, 3) reduce cost of production and marketing, and 4) address policy issues and institutional issues.

The price of bananas will be improved if farmers aim for higher quality produce (e.g., organically grown bananas) to increase its market value.

To improve production, individual farming system is for higher income. Cooperative fees that farmers need to pay diminish their income per hectare in a cooperative farming system.

Reducing the cost of production and marketing would naturally yield greater profit. However, this may also mean lowering labor cost, whose implications on poverty incidence in Southern Mindanao are yet to be explored. There is also a need to address policy issues, particularly some provisions of the Comprehensive Agrarian Reform Program.

Dr. Digal emphasized that the key to competitiveness of the Cavendish banana is innovation. Such competitiveness would be more likely achieved by making the participation of the small-scale producers profitable and equitable through an integrated package covering the four options presented. He stressed the importance of the private sector as a prime mover in integrated development interventions to give the country’s Cavendish banana industry a greater edge in the global market.

Dr. Digal delivered his lecture as a holder of the SEARCA Professorial Chair, a recognition awarded by SEARCA to selected academic staff of the UP System in disciplines under the broad themes of natural resource management and agricultural competitiveness.