Philippine banana growers and exporters are not upbeat over their business prospects even with the marketing inroads made on the US market. The Philippines is set to have its first banana shipment to the US before end of the year.
Exporters said the US is a small market and competition there is tougher with bananas from Latin American countries already dominating the sphere. High shipping costs from the Philippines will not help any, they added.
The Philippine Department of Agriculture (DA) is eyeing more markets for bananas after China, the country’s leading export destination for the fruit, imposed strict quarantine requirements on Philippine exporters following the discovery of insects on some shipments.
Tight quarantine rules have dramatically reduced banana exports to China. For instance, medium-sized Davao-based banana grower and exporter Philfruit Banana Brothers, Inc used to ship the fruit in at least 15 twenty-foot equivalent units (TEUs) weekly to China. But since the restriction, the company now only ships two to four containers a week, without any guarantee they will be accepted.
Aside from the US, other markets being looked at by DA are Europe and the Middle East.
“The US is relatively a small market for our banana exports,” Hans Tuchel, president of Philfruit Banana Brothers, Inc, told PortCalls.
“Even Atlantic US, which includes Hawaii, Guam and American Samoa, is not an alternative for our banana exports,” said Tuchel, whose company is a member of the Philippine Exporters Confederation (Philexport) in Region XI.
This is contrary to earlier statements of Agriculture Secretary Proceso Alcala that the US market will be bigger than China.
“While our bananas also go to Russia, Japan and some parts of Europe and the Middle East, these are not enough to cover our lost China market,” added Tuchel, who had just attended a conference on bananas before he granted this interview.
He said even if new markets open up to the Philippines, payment terms would not be as favorable (especially in the Middle East) as those in China.
So far, the estimated losses of banana exporters since the start of the strict requirements in March stand at $18 million based on the average $12,000 shipping rate per TEU. This translates to around 1,500 TEUs rejected and destroyed by Chinese port authorities, excluding containers ordered returned to the Philippines.
International shipping lines servicing banana exporters have reportedly posted a 50% decline in their weekly cargo volume ex Davao, the country’s biggest source of banana exports.
One sector benefiting from the situation are the reefer and cold chain operators which have been posting higher volume since the imposition of the stricter requirements.
According to reefer operator Icebox, a member of the Magsaysay Transport and Logistics Group, its reefer service has been full in the last few months.
Icebox said it will not increase capacity since the condition could change at any time.
Green Banana by anankkml
Free image courtesy of FreeDigitalPhotos.net
