Uncertain future
The country’s banana export industry is facing an uncertain future.
Earlier media reports quoted an official of the National Economic and Development Authority (NEDA) as saying that while Cavendish banana remains the top export commodity of the Davao Region, the challenges faced by two of the biggest banana exporters may have a significant impact on exports.
According to NEDA Davao regional director Ma. Lourdes Lim, they expect a dent in the region’s banana exports due to problems being faced by Lapanday Foods Corp. (LFC) and Tagum Agricultural Development Co. (Tadeco).
Lim revealed that LFC suffered around P2 billion in losses while hundreds of employees have been displaced after communist rebels attacked three of its facilities in Davao City middle of last year.
The same media reports quoted LFC as saying that the reconstruction of the burned box and plastic plants, among the firm’s biggest investments in the city, would require around P2 billion and could take two to three years
LFC chief financial officer Manolito Dagatan has said that they are reviewing their options and re-evaluating the future whether to go back or put up again this big investment. The company is also facing contractual problems involving agrarian reform beneficiary cooperatives for a farm in Tagum City, Davao del Norte, the report disclosed.
Meanwhile, another major banana exporter, Tadeco, is facing the possibility of having its agreement with the Bureau of Corrections for the use of the latter’s more than 5,000 hectares at the Davao Penal Colony invalidated.
In September last year, the Office of the Ombudsman, acting on a complaint filed by House Speaker Pantaleon Alvarez, ruled that there was sufficient evidence showing that Davao del Norte Rep. Antonio “Tonyboy” Floirendo probably violated the Anti-Graft and Corrupt Practices Act.
The Ombudsman said Floirendo committed graft, since he owned P7.5 million worth of shares in Tadeco at the time the company renewed in 2003 its joint venture agreement for another 25 years with BuCor for the lease of the property inside Davao Penal Colony, which Tadeco converted into a banana plantation.
Meanwhile, according to reports, the Ombudsman has denied the motion filed by Floirendo.
Ombudsman Conchita Carpio-Morales, in a resolution dated last Jan. 15, affirmed its Sept. 4 decision which found probable cause to charge Floirendo with violation of the anti-graft law.
According to the complainant, Floirendo ran afoul with the constitutional prohibition against members of Congress having anything to do with government contracts.
At the time of the signing of the JVA extension in 2003, Floirendo was not only a congressman but was also a member of the board of directors of Tadeco and another Floirendo company, Anflo Management and Investment Corp.
The next step is for the Ombudsman to file charges against Floirendo before the Sandiganbayan.
Aside from possible conflict of interest, Speaker Alvarez has said that the government got a bad deal, getting only P26.5 million per year as its share in whatever annual profit the banana plantation makes, with an increase of only 10 percent every five years.
How these developments involving two of the biggest banana exporters will affect the industry remains to be seen. But even without these problems facing Tadeco and Lapanday, the banana industry is already suffering from a declining share of the world banana market.
In a report from SunStar Davao published in October of last year, Pilipino Banana Growers and Exporters Association (PBGEA) executive director Stephen Antig warned that the banana industry would perish in two to three years if threats to its existence remain unsolved.
He said the Philippines was already losing its major markets to Ecuador and other exporting countries.
Among these threats are the tariffs on banana products for export, disease and pestilence, climate change, speed and interconnectivity of markets, inconsistences in government policies, among others.
Presently, the Philippine banana industry ranks sixth globally, from second place in 2014 behind Ecuador. From exports of 237 million boxes in 2011, this has gone down to 187 million boxes in 2016.
Industry players have also called on the Department of Trade and Industry to negotiate for a reduction in tariffs on exports to Japan and Korea. They said that while Japan imposes a 13.2 percent duty and Korea, 30 percent, on Philippine banana exports, other exporting countries like Vietnam and Indonesia do not pay duties.
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