A Supply Chain Assessment of the Philippine Fruits Industry: Towards Sustained Profitability,...

A Supply Chain Assessment of the Philippine Fruits Industry: Towards Sustained

Profitability, Improved Productivity and

Pro-active Response to the Impact of Climate Change1

Lustria, Ulysses Jr., J.2 and Elmer R. Esplana

3

ABSTRACT

The study documents the development of the Philippine Fruits Industry supply chain. The study

used triangulation method (i.e., archival research, key informant interviews, focus group

discussion, benchmarking, competitiveness and profitability analyses). The study indicates that

there have been many improvements in the supply chain of the Philippine fruits industry - from

input supply to consumption. There were also some best practices that can be emulated among

the fruit industry stakeholders. The study also suggests for more investment opportunities for

fruit production, particularly exotic fruits such as guapple/guava, durian, mangosteen, avocado,

and watermelons, given the initially-developed export market for these fruits. Also, it indicates

that Philippine fruits, specifically banana and pineapple, is highly competitive compared with

other countries (e.g.,Thailand, India, Brazil, and China) in terms of price and cost

competitiveness. This signifies a better outlook for the industry, in terms of better prices and

supply, and higher consumption for both the local and export markets in the coming years. The

study results support the goals and objectives of the Department of Agriculture and Agriculture

and Fisheries Modernization Act - food security, poverty alleviation, improved productivity,

increased income and global competitiveness of the high-value commercial crops sector, in

general, and fruits industry, in particular.

Keywords: Supply Chain of Philippine Fruits Industry, Assessment of Investment Opportunities

in the Fruits Industry, Profitability of Fruit Production, and Price and Cost Competitiveness of

Fruits

1 Paper to be presented at the Parallel Panel entitled "AGRICULTURE & NATURAL RESOURCES" for the 47th

Philippine Economic Society (PES) Annual Meeting, Bangko Sentral ng Pilipinas, November 13, 2009. The 47th

PES Annual Meeting has the theme “Survival and Growth: The Philippines 2010 and Beyond”.

2 Project Development Officer IV, DA, and Vice-President (External Affairs), Club of Professional Researchers

(CPR). 3 Agriculturist II and National Secretariat Coordinator, National Task Force on Price and Volume Watch, DA-BAI.

Mr. Esplana received the Grand Prize Winner for the Best National R&D AFMA Paper Awards for Socio-

economics Research Category. 19th National Research Symposium (NRS), Bureau of Agricultural Research,

Department of Agriculture, October 6, 2007. The 2007 NRS had a theme “Agriculture and Fisheries R&D

Toward Agribusiness Development and Agro-Industrialization.” He is the President of CPR.

_____________________________________________________________________________

I. Introduction

The fruits industry in the Philippines is part of the high-value crops sector. Fruits are considered as an

important component of the daily diet. Fresh and processed banana, pineapple, mango and calamansi are

the most common exportable products.

The value of production for major fruits -banana, pineapple, mango, including calamansi - is increasing.

From PhP18.7 billion in 2000, it rose to PhP26.9 billion in 2008, exhibiting a growth rate of 43.48

percent. The share to total agricultural output also rose from 7.76 percent in 1998 to 8.16 percent in

2008.4

Generally, fruit exports (fresh and processed) are increasing and are expected to continually increase.

Fruit exports for banana, pineapple, mango, calamansi, papaya, durian, mangosteen, and pomelo

increased from 2,109,857 MT in 2000 to 2,872,564 MT in 2007 exhibiting an average growth rate of 4.63

percent.5

There are only few studies in the Philippines that have been done on the documentation of the fruits

industry along the different segments of the agribusiness supply chain and relating them to the impact of

climate change. This paper will serve as baseline information on assessing the fruits industry’s

development along the supply chain, considering the adverse impact of climate change to the Philippines

fruits production. The paper will also be useful for the government, private sector and industry

associations especially on strategic issues and concerns of the fruits industry agribusiness chain and its

improvement in the succeeding 30 years.

II. Objectives

The two main objectives of the study are: 1) to document the development of the fruits industry along the

agribusiness supply chain and 2) to assess the fruits industry and the potential opportunities in exotic fruit

trees production for the sustained farmers’ profitability, improved productivity and pro-active response to

the impact of climate change on the domestic and exportable fruits in the Philippines for the succeeding

30 years.

III. Methodology

The study utilized triangulation method in conducting this study. The components of this method include:

archival research, key informant interviews (one-on-one interview, telephone interviews/mobile/email

communications), benchmarking, competitiveness and profitability analysis. Below is the framework of

the study (Please see Figure 1). The sources of data used in the study were taken from the Bureau of

Agricultural Statistics, Food and Agriculture Organization Statistics (FAOSTAT), particularly the country

statistics, National Mango Research and Development Center of the Bureau of Plant Industry, Department

of Agriculture-Regional Field Unit 1, Strategic Agribusiness Development Plan Draft Report, and DA

Strategic Plan for Calamansi. The study used the revised version of the methodology used in the socio-

4 BAS. 2000-2008 data.

5 Ibid.

economics research that won Grand Prize Award in October 2007, during the 19th Department of

Agriculture-Bureau of Agricultural Research National Research Symposium, entitled “Development in

the Supply Chain of the Philippine Goat Industry: An Assessment” made by Esplana, Abao and Vasquez,

as the model.

The study also used the agribusiness systems framework (Please see Figure 2) developed by Dr. Leonardo

Gonzales in 1997 which was also used in the Philippine Agriculture 2020 of the National Academy of

Science and Technology of the Department of Science and Technology in 2008. Key informant

interviews (KII) and focus group discussion (FGD) were conducted with the representatives from the

mango industry, banana industry, mango industry and other stakeholders. To supplement the KII and

FGD, archival research was done in gathering existing literature and material from the printed (published

and unpublished) and online publications to support in the analysis.

One limitation of this study is the reliance on cost structure from secondary data sources only, particularly

BAS data and other sources.

Figure 1. Conceptual Framework for the Philippine Fruits Industry Supply Chain and

Development Assessment

The development in the fruits industry supply chain was discussed and analyzed using the agribusiness

systems approach in different subsystems such as input subsystem, farm production subsystem,

processing subsystem, marketing subsystem and support subsystem (Figure 2). Below is the Agribusiness

Systems Framework.

Support

Subsystem

Input

Subsystem

Farm

Production

Subsystem

m

Processing

Subsystem

Marketing

Subsystem

Figure 2. Agribusiness Systems within the Context of the Socio-economic and Physical

Environment

IV. Results and Discussion

A. Impact of Climate Change in the Philippines

The different observations of increases in global average air and ocean temperatures, widespread melting

of snow and ice, rising global mean sea level which was confirmed by scientific studies, a climate system

is now a foregone conclusion. At the continental, regional and ocean basin scales, numerous long-term

changes in climate have been observed. These include changes in Arctic temperature and ice, wind and

precipitation patterns, ocean salinity, and certain aspects of extreme weather like droughts, heavy

precipitation, heat waves and the intensity of tropical cyclones which affect the agriculture sector,

particularly the fruits industry.

According to Philippine Atmospheric Geophysical and Astronomical Services Administration

(PAGASA), such signals of changing climate are already evident in the Philippines as studies of historical

records would show. PAGASA is the Philippine national institution dedicated to provide flood and

typhoon warnings, public weather forecast and advisories, meteorological astronomical and

climatological, and other specialized information and services primarily for the protection of life and

property and in support of economic, productivity and sustainable development. PAGASA stressed that

from 1960 to 2003, significant increases in the frequency of hot days and warm nights in many areas of

the country have been noted, while cool days and cold nights have been seen to be generally decreasing.

The same trends have been observed in other countries in the Southeast Asia Pacific Region. PAGASA

also noted that, although not statistically significant, changes in the amount and intensity of rainfall, as

well as in the number of rainy days, were observed in some parts of the country. There has been a general

increase in rainfall amounts and number of rainy days during the wettest and driest years per decade.

The most recently noticeable impact of climate change in the country were the heavy flooding, the

intensity of tropical cyclones/super typhoons, and frequency of heavy rains which affected the fruits,

vegetables, hogs, chicken and crops and other agricultural products in selected regions.

According to the key findings of the report of about the Global Climate Change Impacts in the United

States in June 2009 this year, although there are some agricultural products which are adaptable to climate

change, the increased heat, pests, water stress, diseases, and weather extremes will pose adaptation

challenges for crop, including fruits, and livestock production (italic words were authors’ analysis). This

observation was also applicable in the Philippines. Also, the report key findings in United States stressed

that the amount and rate of future climate change depend primarily on current and future human-caused

emissions of heat-trapping gases and airborne particles. Responses involve reducing emissions to limit

future warming, and adapting to the changes that are unavoidable.

B. Input Supply Subsystem

Many fruit seedlings are provided from BPI crop station, with subsidized price to ordinary farmers.

Accredited nurseries are also suppliers of seedlings to the farmers. On the other hand, multinational

companies produce seedlings by themselves through modernized laboratories without contamination of

virus or disease. Planting materials account to 20 percent6 and 38 percent

7 of production cost for

pineapple and cardaba banana, respectively. This means that planting materials is one of the major cost

drivers in the production of fruits.

Fertilizers and pesticides, which manifest an increasing trend on their prices partly due to oil price

increases and increasing costs of raw material components, are also considered as one of the major cost

drivers. For banana, about 55 percent of total production cost was spent on fertilizer and chemicals.8

Specifically for cardaba banana production, organic and inorganic fertilizers constitute 19 percent and 15

percent of its production cost, respectively.9

For pineapple, inorganic fertilizer is the biggest cost driver with about 26 percent. Pesticides and fertilizer

are also the major cost drivers for mango sharing 16 percent and 15 percent, respectively. For calamansi,

inorganic fertilizer contributes 13%.10

6 BAS. 2007 data.

7 Banana Cardava Production. (2005). First Bukidnon banana congress: Banana cardava production-an alternative crop.

Powerpoint Presentation. November 3-4, 2005. Retrieved on October 2008 from

<http://www.hvcc.da.gov.ph/pdf/cardaba2.pdf>

8 Calderon, R. P. and Rola, A. C. (2003). Assessing benefits and costs of commercial banana production in the Philippines.

Working paper no. 04-03. ISPPS, CPAF, UPLB. 9 Banana Cardava Production. (2005). First Bukidnon banana congress: Banana cardava production-

an alternative crop. Powerpoint Presentation. November 3-4, 2005. Retrieved on October 2008 from

<http://www.hvcc.da.gov.ph/pdf/cardaba2.pdf> 10

BAS. 2007 data.

In non-plantation farms, agricultural machinery and equipment are not major cost items since simple tools

like plow and harrow and harvesting implements are utilized. On the other hand, multinational companies

have fully integrated operations, implementing cost-reduction and productivity-enhancement programs.

They invest in new technology and equipment for mechanization in order to maintain their leadership

position in the industry.11

Labor is employed from planting to harvesting, as such; it is considered a major cost driver: 23% of

production costs for cardaba banana12

and also significant for other fruits: 14% for pineapple, 15% for

mango, and 45% for calamansi.13

C. Production Subsystem

Generally, fruit production is gradually increasing in terms of volume and area in response to increasing

demand of consumers. The top fruits produced are banana, pineapple and mango. The volume of

production for banana, pineapple, mango, calamansi, papaya, durian, mangosteen, and pomelo increased

from 7,716,309 MT in 2000 to 12,252,505 MT in 2008, exhibiting an average growth rate of 6 percent per

year. Yearly cultivated area also increased from 600,143 ha in 2000 to 739,636 ha in 2008 exhibiting an

average annual growth rate of 2.65 percent.

Table 1. Volume of Production and Area, 2000 and 2008, In MT and In Ha.

2000 2008

Volume of production (MT) 7,716,309 12,252,505

Area (ha) 600,143 739,636 (Source: BAS)

Two production systems are utilized for fruits–the plantation and the small-to-medium-scale farms.

Below are specific production information on top three fruits in the Philippines such as: banana, pineapple

and mango.

Banana. Table 3 shows that the Philippines is the 3rd

largest banana producer in the world contributing 8

percent (7.4 million MT) of world production. In 2000, it was only 5th, but it became the 3

rd biggest

producer in 2007.

Table 2. Top Five Banana Producing Countries, 2000 and 2007, In '000 MT. COUNTRY 2000 RANK 2007 RANK

India 14,140 1 21,766 1

Brazil 5,663 2 7,098 4

China 5,143 3 8,039 2

Ecuador 6,477 4 6,002 5

Philippines 4,930 5 7,484 3

WORLD 64,062 85,856

(Source: FAOSTAT)

11

Digal, L.N. (2005). Benefit diffusion and linkage development in the Philippine tropical fruits sector. Retrieved on October

2008 from <http://siteresources.worldbank.org/ INTPHILIPPINES/ Resources/Digal-word.pdf 12 Banana Cardava Production. (2005). op. cit. 13

BAS. op. cit.

Cavendish is grown in plantation scale in Mindanao. Lakatan and Latundan are grown commercially

intended for the Luzon and Visayas markets. Cardaba is grown mainly for the banana chips industry.

Balangon or bongolan is grown organically in Tupi, South Cotabato. Organic Cavendish is being grown

by the multinational corporations (MNCs).14

Banana is still the leading fruit crop in terms of area, volume, and value of production with 2,273,834

farms.15

There are 5.9 million farm households depending on banana as their source of income. The

national average yield is 9.4 MT per hectare while corporate plantations produce 40 MT per hectare. It is

a widely grown fruit in the country, planted as a component of farming system or as a main crop in large plantations in Mindanao. It is an important source of income for small farmers that constitute 80

percent of the banana growers.16

In 2008, the top five major producers are Davao del Norte (1,350,151 MT), Compostela Valley

(1,324,618 MT), Bukidnon (1,133,255 MT), North Cotabato (608,397 MT), and Davao del Sur (564,374

MT).17

The key producers include: Tagum Agricultural Development Corporation (TADECO), Lapanday

Holdings, Davao Fruits Corporation, Marsman Estate Plantation, and Stanfilco Division of Dole Phils.,

Inc. Some of these companies have contract-growing schemes with small- and medium-sized farms.

The key buyers are Dole Asia and Del Monte Fresh Produce. For banana chips, the players are mostly

located in Davao and Butuan. These are Pacific Fruits, Archmen, Natural Fruits Corporation, Basic Fruits,

and Philexson International, Inc.18

Pineapple. Based on FAO 2007 data, the Philippines is the third major producer of pineapple

contributing 10 percent (1.9 million metric tons) of world production.

Table 3. Top Five Pineapple Producing Countries, 2000 and 2007, In Thousand Metric

Tons

COUNTRY 2000 RANK 2007 RANK

Thailand 2,248 1 2,320 2

Brazil 2,004 2 2,666 1

Philippines 1,560 3 1,900 3

China 1,217 4 1,440 4

India 1,020 5 1,308 5

WORLD 15,141

18,874

(Source: FAOSTAT)

14 Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture Commodity

profiles. Retrieved on October 2008 from <http://www.hvcc.da.gov.ph> 15

National Statistics Office. (2002). Census of Agriculture and Fisheries. 16

Rivera, R.A. (2004). Philippine banana production and marketing. Retrieved on August 2008 from

<http://www.hvcc.da.gov.ph/pdf/banana_phil_prodn_market.pdf> 17

BAS. 2008 data. 18

Philippine Council for Agriculture, Forestry and Natural Resources Research and Development, Department of

Science and Technology. (2003). Banana and mango. R & D Status (2000 and Beyond).

http://www.hvcc.da.gov.ph/

http://www.hvcc.da.gov.ph/pdf/banana_phil_prodn_market.pdf

The number of farms in the country accounts to 124,940.19

In 2008, the top five major producing

provinces are Bukidnon (1,000,895 MT), South Cotabato (740,349 MT), Sarangani (172,716 MT),

Camarines Norte (106,555 MT), and Cavite (72,808 MT).20

Hawaiian variety is grown in plantation scale in Mindanao. The Queen or Formosa variety in Camarines

Norte is mainly grown under coconut trees and in isolated cases, the open field.

There are three major producers and processors of pineapple. Their large production area requires

contract arrangements with landowners or farmers to sustain the large fresh pineapple requirements.

These are Del Monte, Dole, and Tiboli Agricultural Development Corporation (TADI). Moreover,

cooperatives engaged in contractual arrangements account for over 82 percent of the total area utilized for

pineapple production. The Del Monte Employees and Agrarian Reform Beneficiaries Cooperatives covers

46 percent or 14,000 ha, the Dole Agrarian Reform Beneficiaries Cooperatives accounts for 29 percent or

8,937 ha, and the partner cooperative of the Tiboli Agricultural Development Inc. utilizes 16 percent or

5,000 ha. Only 3,000 ha are planted through contract growing with independent growers.21

Mango. The Philippines is the seventh major producers of mango in 2005 but contributing only 3 percent

(.9 MMT) of world production. The other top producers are India (10.8 MMT), China (3.6 MMT),

Thailand (1.8 MMT), Pakistan (1.6 MMT), Mexico (1.5 MMT), and Indonesia (1.4 MMT).22

As reported by GMA-HVCC, about 73 percent of the total area planted to mango is owned by small

farmers while 24 percent operate farm sizes between 3 to 9.99 ha. Those operating 10 ha and above

constitute only about three percent. Mango industry supports about 2.5 million farmers with 1,327,312

farms.23

In 2008, the top five major producing provinces are Pangasinan (333,392 MT), Isabela (49,546 MT),

Cebu (36,775 MT), Ilocos Norte (31,649 MT), and Batangas (26,732 MT).24

Majority of the mango processors are small and medium enterprises. However, there is a big (actually the

biggest in the country) mango processor in Cebu: the Profoods International Corporation has mango

drying facilities which can process 100 – 150 tons/day. One facility can process 200 – 300 tons/day.

Further, Profoods has other plants in Luzon and Mindanao.25

19

National Statistics Office. (2002). Census of Agriculture and Fisheries. 20

BAS. 2008 data. 21


2008 from <http://siteresources.worldbank.org/INTPHILIPPINES/ Resources/Digal-word.pdf> 22

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture. Mango

Industry Strat Plan and Updates. November 2006.

23

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture Commodity


BAS. 2008 data. 25

Based on key informant interview and field visit in Cebu conducted in 2009.

http://www.hvcc.da.gov.ph/

Banana Pineapple

2000 832,555 626,622

2001 864,663 644,493

2002 897,460 642,630

2003 884,898 661,478

2004 949,564 684,601

2005 1,068,476 694,084

2006 1,120,756 691,581

2007 1,316,583 765,627

Total (00-07) 7,934,955 5,411,115

D. Processing Subsystem

Food processed products served as an important source of the country’s export earnings. As illustrated in

Table 4, the volume of processed fruits for banana and pineapple (BAS has no available data on other

fruits) is increasing at a growth rate of 7 percent and 3 percent per year, respectively.

Table 4. Volume of Fruits for Processing 2000-2007, In Metric Tons

(Source: BAS)

Table 5 shows that from 2000-2007, export of processed fruits has been increasing by an average of 2

percent. While pineapple is the biggest contributor in terms of volume, mango is the fastest growing

sector. However, mango’s growth is fluctuating which may imply problems in production brought about

by the impact of climate change based on interviews with producers in some provinces such as Guimaras,

Ilocos, Pangasinan, Cebu, etc. Table 5. Volume of Processed Fruits Exported 2000-2007, In Metric Tons and In ‘000 US$

Quantity F.O.B. Value Quantity F.O.B. Value Quantity F.O.B. Value Quantity F.O.B. Value Quantity F.O.B. Value

Total (00-07) 250,232 246,237 2,479,185 1,171,001 96,331 155,944 11,330 12,100 2,837,079 1,585,282

% of Total 9% 16% 87% 74% 3% 10% 0% 1% 100% 100%

Growth Rate 8% 12% 1% 6% 43% 36% 29% 26% 2% 8%

Banana Pineapple Mango Others Total

(Source: NSO)

Fruit production is mainly centered in the rural areas but the fruit processing plants are located in urban

centers such as Metro Manila, Cebu, and Davao. Mango processing is concentrated in Cebu, with small

operations in Davao, Iloilo, and Pangasinan. Banana chips production is concentrated in Mindanao and

Visayas. There are about 380 exporters of processed fruits and vegetables in 2000 and majority or 80

percent are based in Metro Manila, in Region 6 (6%) and in Region 4 (5%). However, the pineapple

processors-Dole Philippines and Del Monte Philippines, which dominate the fruit processing industry, are

based in Region 10 or Northern Mindanao and have the largest impact on regional investments and

employment. Thousands of farmers and their families depend on the fruit processing industry/export for

livelihood.26

Processed fruits are exported through the international ports and regional ports. The main input of the

processed industry is fresh fruits. Other inputs include sugar and packaging materials which are locally

26

Arnold, J. (2002). Philippine Logistics Study.

available. However, the cost of these fruits and other inputs has increased due to postharvest losses and

transport costs. Packaging materials are locally produced but sourcing it from the domestic market is

more expensive than through importation.27

Below are specific information on the processing of pineapple, mango and banana.

Pineapple. From 2000-2007, 39 percent of gross supply is processed.28

The Philippines is 2nd

to

Thailand in terms of processing, wherein 85 percent of processing belongs to multinational companies

like Del Monte and Dole. At present, there are 28 pineapple processing plants in the Philippines. Dole, for

example markets 20 percent of total production as fresh fruits and the rest are processed.29

Pineapple is processed into puree, dried, juice concentrates, canned products, and fruit cocktail in syrup

that is intended for export. Native Philippine Red or Spanish Red, when processed, is an excellent source

of piña fiber.30

Mango. From 2000-2007, the volume of processed exports is increasing by an average of 43 percent.

31

As mentioned earlier, data on processed mango for domestic market are not available and would require

survey. Majority of the processors in the industry are small to medium in size. Production is not generally

driven by demand but more by the availability of fresh mangoes for processing. Product preparation is

primarily manual. The basic processing equipment includes dryers, depulpers, mixing vats, conveyor

belts, and sealing machines.32

Banana. From 2000-2007, 17 percent of gross supply is processed.33

This indicates that there is a very

big export market potential. Banana processing is dominated by the banana chips industry. In fact, the

country is number 1 in banana chips export (.03 MMT valued at US$39 M in 2007).34

A study of Argañosa et al. (2006) on the Analysis of Banana Processing Businesses and their Support

Environment in the Philippines gave a detailed picture of banana processing. The saba variety is often

used for processing especially for banana chips. In Mindanao alone, there are 26 processing plants for

banana chips with daily production of 242 MT, which is far short from the estimated 600 MT daily

requirements for banana chips.35

There are also many small banana chips producers, but they use simple technology for processing and, are

constrained by prices of inputs such as cooking oil.36

27

Arnold, J. (2002). Philippine Logistics Study. 28

BAS. 2000-2007 data. 29

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture Commodity


Ibid. 31

BAS. op. cit. 32

Pearl2 Project. (2004). State of the sector report on Philippine processed mango. 33

BAS. op. cit. 34

National Statistics Office. (1994-2007). Quantity and value of exports and imports. 35

Argañosa et al. (2006) Analysis of banana processing businesses and their support environment in the

Philippines. 36

United States Agency International Development and Strategic Development Asia. (2007). Banana agrichain

competitiveness enhancement. Implementation Plan – Year 1.

The banana chips industry is a growing sector. Thirty percent of the total banana production is bought by

exporters as banana chips processed products.

E. Marketing Subsystem The marketing of fruits from non-plantation farms is complicated because it is characterized by several

layers of middlemen. Multinational companies engaged in contracts with farmer-growers, serving as

supplier of inputs and the recipients of the produce.

Banana. The banana industry is composed of growers, traders, middlemen, transporters,

buyers/exporters, and processors. The key producers include: Tagum Agricultural Development

Corporation (TADECO), Lapanday Holdings, Davao Fruits Corporation, Marsman Estate Plantation, and

Stanfilco Division of Dole Phils., Inc. Some of these companies have contract-growing schemes with

small- and medium-sized farms. The key buyers are Dole Asia and Del Monte Fresh Produce. For banana

chips, the players are mostly located in Davao and Butuan. These are Pacific Fruits, Archmen, Natural

Fruits Corporation, Basic Fruits, and Philexson International, Inc.37

Pineapple. Output of large plantations in Mindanao is mainly exported, either fresh or processed, while

those in Luzon and Visayas are consumed locally.38

Several intermediaries are involved in the marketing

of pineapple. From the growers, the fruits are either sold to wholesalers, wholesalers-retailers, viajeros or

travelers, and retailers, or directly sold to processors before they reach the consumers. Contract growers,

however, sell directly to big company processors. Pineapple is sold in fruit stalls and supermarkets in

many different forms: dried, processed in chunks, tidbits, juice, and the like.39

Mango. The supply chain for mango has been characterized by production-marketing arrangements

between growers and sprayers-contractors who also act as traders. Mangoes are sold to wholesale

markets, processors, wet retail markets, supermarkets, and exporters. The major cities such as Manila,

Cebu, and Davao City are the key trading centers for mangoes that are sold in the local market.40

To better appreciate the marketing system for fruits, below is an example of geographic flows and market

channel of mango from Camarines Norte. Please note that geographic flows and market channel are

dynamic and may change over time.

37

Philippine Council for Agriculture, Forestry and Natural Resources Research and Development, Department of

Science and Technology. (2003). Banana and mango. R & D Status (2000 and Beyond). 38

Digal, L.N. (2007). Agricultural contracts in Mindanao: The case of banana and pineapple. Discussion Paper Series No,

2007-24. Philippine Institute for Development Studies. Philippines. 39


2008 from <http://siteresources.worldbank.org/ INTPHILIPPINES/ Resources/Digal-word.pdf> 40

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture. Commodity

profiles. Retrieved on October 2008 from <http://www.hvcc.da.gov.ph>

Figure 3. Pineapple, Queen: Geographic Flow and Marketing Channels in Camarines

Norte, 1994 (Source: Lustria, 1994)

Below are comparative price analyses of selected fruits.

Prices of Banana

Among the four major banana variety in the Philippines, Latundan Banana (green) had the highest

average increase in yearly price at 9.38 percent, followed by Lakatan, by 8.70 percent; Saba, by 8.60

percent and Bungulan by 6.05 percent (Table 6). In the case of wholesale price, the highest increase per

year was recorded by 7.15 percent for ripe Saba, then, followed by ripe Lakatan, 6.19 percent, ripe

Latundan, 5.02 percent. The lowest increase was posted by ripe Bungulan variety at 3.87 percent per year.

Retail price of ripe Saba had the highest increase per year at 8.13 percent; ripe Lakatan by 5.31 percent

and ripe Latundan by 4.74 percent.

Table 6. Average Growth Rate of Farmgate, Wholesale and Retail Prices of Banana, Mango,

Pineapple, and Calamansi in the Philippines from 2000 to 2007, (In P/Kg)

Price Indicators for Banana 2006 2007% Change

(2007/2006) GR (00-07)

Farmgate Price Banana Bungulan, green 4.58 4.71 2.84 6.05 Banana Lakatan, green 8.83 9.41 6.57 8.70 Banana Latundan, green 6.93 7.26 4.76 9.38 Banana Saba, green 4.52 5.31 17.48 8.60 Wholesale Price

Banana Bungulan, ripe* 0.89 0.88 (1.12) 3.87 Banana Lakatan, ripe* 1.71 1.88 9.94 6.19 Banana Latundan, ripe* 1.21 1.24 2.48 5.02 Banana Saba, ripe* 0.98 1.13 15.31 7.15 Retail Price

Banana Lakatan, ripe* 2.4 2.69 12.08 5.31 Banana Latundan, ripe* 1.59 1.74 9.43 4.74 Banana Saba, ripe* 1.35 1.66 22.96 8.13

Price Indicators for Mango 2006 2007% Change

(2007/2006) GR (00-07)

Farmgate Price Mango Carabao, green 24.75 25.22 1.90 5.17 Mango Indian, green 6.02 5.34 (11.30) (11.19) Mango Piko, green 16.39 14.99 (8.54) 2.68 Wholesale Price

Mango Carabao, green 33.34 30.51 (8.49) 0.69 Mango Carabao, ripe 38.27 36.5 (4.63) 1.73 Retail Price

Mango Carabao, ripe 50.88 50.42 (0.90) 1.95 Mango Piko, ripe 39.31 35.59 (9.46) (0.12)

Price Indicators for Pineapple 2006 2007% Change

(2007/2006) GR (00-07)

Farmgate Price Pineapple Formosa 5.15 5.25 1.94 6.54 Pineapple Hawaiian 4.3 4.89 13.72 (2.82) Pineapple Native 5.72 6.24 9.09 (2.74) Wholesale Price

Pineapple Hawaiian* 16.07 17.01 5.85 (1.94) Retail Price

Pineapple Hawaiian* 27.7 29.3 5.78 3.23

Price Indicators for Calamansi 2006 2007% Change

(2007/2006) GR (00-07)

Farmgate Price 15.23 11.71 (23.11) 6.30 Wholesale Price 21.15 20.06 (5.15) (0.03) Retail Price 33.29 31.57 (5.17) 1.45

(Source of Basic Data: BAS) * ripe

Prices of Mango

The farmgate prices of green carabao increased by 5.17 percent per year from 2000 to 2007 (Table 6). On

the other hand, green Piko mango variety increased only by 2.68 percent while green Indian Mango

decreased by 11.19 percent during the same period (Table 6).

In the case of wholesale price, ripe Carabao mango increased by only 1.73 percent while wholesale green

Carabao Mango by only 0.69 percent.

The retail price of ripe Carabao mango variety increased by 1.95 percent while the ripe Piko variety

decreased by 0.12 percent per year.

Prices of Pineapple

The pineapple Formosa variety increased by 6.54 percent per year from 2000 to 2007 (Table 6).

Hawaiian and Native pineapple variety decreased by 2.82 and 2.74 percent per year, during the same

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

World 591,014,582 609,107,336 636,604,140 661,834,696 659,821,491 691,985,932 706,328,069 705,567,820 738,376,630 753,532,954

Philippines 12,970,009 12,900,975 15,178,526 14,619,898 13,398,027 15,258,080 14,912,942 14,523,702 16,343,316 16,561,469

Average (1994-2003)

Canada 241.1

US 225.6

Philippines 194.5

Thailand 180.2

Australia 177.3

South Korea 125.9

World 108.6

Malaysia 106.1

Japan 99.5

Viet Nam 96.3

China 75.6

Indonesia 73.9

period. In the case of wholesale price of Hawaiian pineapple, it also decreased by 1.94 percent from 2000

to 2007, while at the retail level increased by 3.23 percent.

Prices of Calamansi

The average farmgate price of calamansi from 2000 to 2007 increased by 6.30 percent per year. On the

other hand, wholesale price decreased by 0.03 percent, while retail price increased by 1.45 percent per

year during the same period (Table 6).

Prices of Guapple

Currently, guapple is just one of the emerging fruits in the country with the big potential for both local

and export market. As of 2009, guapple has a farmgate price of P30-35/kilo and a retail price of P40-

70/kilo.41

The Bureau of Agricultural Statistics has no price monitoring that is regularly being done for

guapple fruit.

F. Consumption

Available FAO data shows that fruit consumption is increasing over the years (see Table 7.) Both world

and Philippine consumption is increasing at 3 percent. This implies that people are more health conscious

which bodes well for the fruit industry.

Table 7. Fruit Consumption Quantity, 1994-2003, In Tonnes

(Source: FAOSTAT)

Per capita consumption in the Philippines is high based on Table 8. In fact, the Philippines has a higher

per capita consumption than the world average, other Asian and even first world countries.

Table 8. Fruit consumption Quantity, Philippines vs. Selected Countries, 1994-2003, in kg/cap/yr.

(Source: FAOSTAT)

41

Based on key informant interview in Region 1 conducted in 2009.

Type of Fruits Export Products and Major Exporting Country, Fresh Fruits and Total

Export Quantity and FOB Value, 2007

Table 9. Fruits Export Products and Major Exporting Country, Fresh Fruits and Total

Export Quantity and FOB Value, 2007

Type of Fruits Type of Products Major Export Market Country of

destination

Fresh Fruits (In

Mt)

FOB Value (In

$'000)

Total Export

Quantity (In

MT)

Total FOB

Value (In $

'000)

Banana

banana fresh, banana dried, banana

chips/cracker, flour, meal and powder of

banana, banana catsup, banana leaves

Japan, Iran, South Korea, China,

Singapore, New Zealand, UAE,

Taiwan, Hongkong, Saudi Arabia,

Russian Federation

2,199,321.02 396,279.32 2,235,609 439,125

Pineapple

pineapple fresh, pineapple dried, nata de

piña, pineapple juice, pineapple vinegar,

pineapple fiber

Japan, Iran, South Korea, China,

Singapore, New Zealand, UAE,

Taiwan, United States, Hongkong

274,935.06 57,344.84 587,819 247,436

Mango, guavas and

mangosteens

fresh mango, dried mango, puree, mango in

brine sulphur water, mango cooked

uncooked, mango juices, mangosteen fresh

and dried

Japan, Hongkong, US, South Korea,

Taiwan, UK and NorthIreland,

Singapore, Thailand, China,

26,335.80 23,284.59 42,967 54,507

Calamansi

calamansi fresh, calamansi dried, calamansi

juice concentrates, calamansi juice other

than concentrates

US, Japan, Canada, Hongkong 7.53 5.40 708 713

Papaya fresh papaya

Japan, New Zealand, South Korea,

Singapore, UAE, Iran, China,

Taiwan, Hongkong, France

4,059.91 5,030.27 5,451 6,853

Durian fresh durians France, Saudi Arabia, UAE, Kuwait 9.63 32.99 10 33

Avocado avacado fresh (2008 data)South Korea, France, Canada,

Kuwait, Saudi Arabia6.05 7.15 6 7

Watermelons fresh watermelons (2008 data) Taiwan, France 534.76 88.35 534.76 88.35

Total 2,505,209.75 482,072.90 2,873,104.12 748,762.31 (Source of Basic Data: NSO)

Banana is the Number 1 major export fresh fruit products in the Philippines (Table 9). It contributes

around 85 to 90 percent of the total fresh fruits volume per year and 80 to 85 percent of the total fresh

fruits FOB value. In 2007, total fresh banana export was recorded at 2.20 million MT valued at $US

396,279,000.

Pineapple and mangoes are the second and third biggest fresh fruit exports which valued at $US

57,344,000 and $US 26,335,000, respectively in 2007.

Potential Exotic Fruits Local Market and Export Market

Papaya is the most in demand and has a big potential to increase further its volume in terms of fresh

export. It was recorded at 4,059 MT in 2007 valued at $US 5,030,000. The major markets of fresh papaya

include Japan, New Zealand, South Korea, Taiwan, Singapore, United Arab Emirates, Hongkong, China,

and Iran.

On the other hand, processed calamansi has the big potential to increase its volume in the coming years.

The export markets of calamansi include US, Japan, Canada and Hongkong. Processed calamansi volume

in 2007 was recorded at 700 MT valued at $US 708,000. Other fresh fruits products that the country

initially exported include durian, avocado, watermelons, mangosteens, and guava.

Guapple: the future potential export product

Guapple is one of the varieties of guava with potential export of fresh fruit and processed products that

the country could be traded. It is known for its non-seasonal or ever bearing variety of guava with an extra

large size fruits, which has been currently being propagated in Negros Province and La Union. This

variety was collected from Thailand. According to Provincial Agriculturist of La Union Mr. Avelino

Lomboy, who is also a guapple farmer, it could be a fruit which has a strong resistance against climate

change and typhoon. If mango and banana are sensitive and could be greatly affected by climate change

and typhoon, guapple is not. This is the competitive advantage of guapple with the current major

exportable fruits.

Price and Cost Competitiveness of Selected Philippine Fruits under Export Trade Scenario

Producer’s price of top 10 producers of pineapple showed that the Philippines being the top three

producers in the world is highly price competitive with Thailand the biggest producer of pineapple in the

world. The Philippines and Thailand had the neck to neck price competitive advantage. In a much closer

look at the price, while Thailand is increasing by 4.73 percent per year from 1998 to 2005, the Philippines

is decreasing by 6.50 percent, which means that the Philippines has a higher level of efficiency with

Thailand that it was able to reduce its price from 1998 to 2005. Some of the top producers with the

similar higher level of efficiency improvement from 1998 to 2005 include: China with a reduction of

producer price by 1.37 percent per year and Nigeria, 8.18 percent per year. Kenya had the highest average

growth in price per year during the same period at 25.85 percent and then followed by Indonesia, 13.94

percent.

Based on the findings of Philippine Agriculture 2020 (NAST-DOST, 2008), export fruits products from

pineapple, banana, mango, and papaya are price competitive at the export trade scenario. The four fruits

such as mango, banana, pineapple, and papaya are price competitive because export parity price ratio of

each of these four fruits (export parity price/domestic wholesale price) is greater than 1 (Table 10).

Pineapple, mango, banana, and papaya, are cost competitive under export trade scenario because the

resource cost ratio (RCR) is less than one (NAST-DOST, 2008).

Philippine banana is competitive with India, the biggest producer of banana in the world. While India’s

producer price is increasing by 3.65 percent per year from 1998 to 2005, the Philippines increased only by

0.45 percent per year. In 2005, while the producer price of India was $US 179 per tonne, the Philippines

had only $US 116 per tonne. Among the most efficient top producers of banana include Brazil which

decreased by 9.70 percent per year; Mexico which went down by 5.10 percent per year and Colombia,

which reduced by 6.11 percent per year.

Table 10. Price and Cost Competitiveness of Major Philippine Fruit Products, 2004

Price Competitiveness Export Parity, Trade Scenario Cost Competitiveness Export Trade Scenario

Exportable Fruits Crops Exportable Fruits Crops

Mango Competitive Mango Competitive

Banana Competitive Banana Competitive

Pineapple Competitive Pineapple Competitive

Papaya Competitive Papaya Competitive (Source: NAST-DOST, Philippine Agriculture 2020, January 2008, taken from Industry Cluster ISPs, 2020).

Although Thailand is not decreasing in terms of producer per year from 1998 to 2005, in fact it increased

by 26.79 percent per year during the said period, the producer price of Thailand is almost close to the

price of Brazil in terms of absolute value in 2005 ($US89/tonne). Thailand’s producer price is the lowest

since 1998 among the top 10 producers. Aside from Thailand, Ecuador is also increasing by double digit

figure per year at an average of 34 percent from 1998 to 2005.

According to Food and Agriculture Organization, in 2005, the Philippines is the number 7 producer of

mango in the world. Although, the FAO data was not updated since then, many international and local

observers of Philippine mango industry believed that local mango industry is at par with other major

mango producers.

The DA Strategic Action Plan for Calamansi (2002) noted that the Philippines is the sole exporter of fresh

calamansi juice and calamansi concentrate in the whole world. Being the sole exporter of calamansi

products, there is no competition yet for this fruit segment of the other fruit segment of the Philippine

fruits industry and therefore, Philippine calamansi is technically competitive.

Similar to pineapple, banana, mango, papaya is also price competitive under export trade scenario

because export parity price ratio is greater than 1 based on the Philippine Agriculture 2020 findings.

Below are some of the best practices/positive developments in the different segment of the fruits

agribusiness chain.

Some Best Practices/Positive Developments in the Industry Supply, Production, Processing

Marketing and Consumption Subsystems

One good development in the input supply subsystem is the Department of Agriculture’s (DA) promotion

of organic fertilizers and bio-pesticides which could help offset the high cost of inorganic fertilizers and

pesticides.

In the production subsystem, a good development is the continuous crafting of codes for Good

Agricultural Practices (GAP). Just recently approved by the DA was the “Code of GAP for Mango.”

In the processing subsystem, our processed exports are increasing. One fast growing sector is the banana

chips industry. This is a good development that the country should focus on especially in the light of

climate change; quality of fruits would likely be affected by climate change and processing is an answer

since rejects can be processed. Mr. Ruben See, President of See’s International, a banana chips exporter,

encouraged the growing of cardaba banana (or saba) because it is easy to cultivate and there is also no

problem on Maximum Residue Limit (MRL), since it is “organic by neglect”.42

It is a healthy food which

is particularly popular for health conscious consumers both local and abroad.

In the marketing subsystem, there are success stories such as the Profoods International Corporation for

dried mango and See’s International for banana chips (both already discussed earlier), the Federation of

Cooperatives in Mindanao or FEDCO for Cavendish banana as well as smaller enterprises, such as

Pangasinan Tropical Fruits Multi-Purpose Cooperative for fresh and dried mango.43

42

Department of Agriculture. (2008). Proceedings of the Agribusiness Situation Analysis Stakeholders

Consultation Meeting. Quezon City. December 9-10, 2008. 43

Based on key informant interviews and field visits in 2009.

In terms of consumption, the fruit industry is in a good position because both world and local demand is

increasing.

Table 11. Best Practices/Positive Development in the Fruits Agribusiness Chain

Subsystem Practice/Development

Input Supply Department of Agriculture’s (DA) promotion of organic fertilizers

and bio-pesticides which could help offset the high cost of inorganic

fertilizers and pesticides.

Production Continuous crafting of codes for Good Agricultural Practices

(GAP). Just recently approved by the DA was the “Code of GAP for

Mango.”

Processing Our processed exports are increasing. One fast growing sector is the

banana chips industry. This is a good development that the country

should focus on, especially in the light of climate change; quality of

fruits would likely be affected by climate change and processing is

an answer since rejects can be processed.

Marketing There are success stories such as the Profoods International

Corporation for dried mango and See’s International for banana

chips, the Federation of Cooperatives in Mindanao or FEDCO for

Cavendish banana as well as smaller enterprises, such as Pangasinan

Tropical Fruits Multi-Purpose Cooperative for fresh and dried

mango.

Consumption The fruit industry is in a good position because both world and local

demand is increasing.

G. Support Subsystem

Support for the fruit industry comes from government and non-government/private institutions. The

Department of Agriculture, through its GMA-HVCC banner program, provides a comprehensive package

which includes: Production Support Services, Market Development Services, Credit Facilitation Services,

Irrigation Development Services, Other Infrastructure/ Post-Harvest Development Services, Extension

Support, Education and Training Services, Research and Development, Regulatory Services, Information

Support Services, Policy Formulation, Planning, and Advocacy Services. Moreover, various donor

countries or agencies have also provided support, both technical and capital assistance.

Comparative Cost of Production, Net Income and Return on Investment (ROI) of Mango,

Pineapple, Banana and Calamansi per hectare, 2007

Table 11. Cost of Production, Net Income and ROI and Percentage Share of Cost for the

Four Major Fruits, 2007 (In Peso or Percent)

Mango % share Pineapple % share Banana

(Cardaba)% share Calamansi % share

Cost of Production

Planting materials - 12,336.00 20.00 17,600.00 38.18 -

Fertilizer 8,382.00 16.13 16,922.00 27.44 15,640.00 33.93 6,356.00 13.70

Pesticide 8,009.00 15.41 1,685.00 2.73 947.00 2.04

Hired Labor 8,060.00 15.51 8,809.00 14.28 10,400.00 22.56 20,978.00 45.21

Operator and family labor 4,013.00 7.72 5,826.00 9.45 4,245.00 9.15

Depreciation 7,292.00 14.03 817.00 1.32 1,245.00 2.68

Interest on operating capital 3,912.00 7.53 6,489.00 10.52 4,450.00 9.59

Repair and Maintenance 1,084.00 2.09 1,721.00 2.79 1,137.00 2.45

Rental Expenses 1,489.00 2.87 2,032.00 3.29 1,200.00 2.60 76.00 0.16

Interest on crop loan 774.00 1.49 821.00 1.33 23.00 0.05

Transportation costs 1,249.00 2.40 1,492.00 2.42 877.00 1.89

Miscellaneous Expense 7,694.00 14.81 2,720.00 4.41 1,260.00 2.73 6,065.00 13.07

Total Cost of Production 51,958.00 100.00 61,670.00 100.00 46,100.00 100.00 46,399.00 100.00

Gross Income 122,020.05 182,675.73 134,750.00 114,921.94

Net Income 70,062.05 121,005.73 88,650.00 68,522.94

ROI 134.84 196.21 192.30 147.68

Cost per kilogram (P) 9.35 1.65 1.20 4.73

Farmgate price (peso/kg) 21.95 4.89 3.50 11.71

Yield/hectare (kg.) 5,559.00 37,357.00 38,500.00 9,814.00

ITEM

2007

(Source of Data: BAS)

Cost and Return Survey from the Bureau of Agricultural Statistics of four major fruits in 2007 showed

that pineapple with ROI of 196 percent was the most profitable fruits in terms of return on investment for

per cycle operation. It was followed by Cardaba banana with 192 percent ROI, then calamansi, 148

percent and mango the last with 135 percent.

For mango, the three major costs were contributed by fertilizer (16.13%), hired labor (15.51%), and

pesticide (15.41%). In the case of pineapple, the three major costs were contributed by fertilizer (27.44%),

planting materials (20%) and hired labor (14.28%). On the other hand, cardaba banana’s major three costs

contributors include planting materials, 38.18 percent; fertilizer, 34 percent and hired labor 23 percent.

The three major cost contributors for calamansi were hired labor, 45 percent; fertilizer, 14 percent and

miscellaneous expense, 13 percent.

Comparative Profitability Analysis for Investment Opportunity for Cardaba Banana,

Mango and Guapple Production, Year 1 to Year 5

Table 12. Comparative Profitability Analysis for Cardaba Banana, Guapple and Mango

from Year 1 to 5 (In Peso) Yearly Year 1 Year 2 Year 3 Year 4 Year 5 Total Yr1- Yr5 Year 6-15 Yr 1-Yr15

Production Cost

Cardaba Banana 43,580.00 25,260.00 27,440.00 27,180.00 27,560.00 151,020.00

Mango 33,935.00 8,248.00 8,568.00 55,025.48 22,347.70 128,124.18 672,122.65 800,247

Guapple 123,128.00 426,196.00 427,433.00 389,133.00 389,133.00 1,755,023.00

Gross Income

Cardaba Banana 96,000.00 200,750.00 200,750.00 200,750.00 200,750.00 899,000.00

Mango - - - 2,100.00 5,250.00 7,350.00 1,702,000.00 1,709,350

Guapple 1,260,000.00 1,703,989.35 2,592,000.00 2,628,000.00 8,183,989.35

Net Income

Cardaba Banana 52,420.00 175,490.00 173,310.00 173,570.00 173,190.00 747,980.00

Mango (33,935.00) (8,248.00) (8,568.00) (52,925.48) (17,097.70) (120,774.18) 1,029,877.35 909,103

Guapple (123,128.00) 833,804.00 1,276,556.35 2,202,867.00 2,238,867.00 6,428,966.35

Return on Investment

Cardaba Banana 495.29

Mango (94.26) 153.23 113.60

Guapple 366.32 (Source of Data: BPI-NMRDC, 1

st Bukidnon Banana Congress, DA-RFU 1 and PA-La Union)

Comparative profitability analysis for cardaba banana, guapple and mango showed that for an investment

of at least 1 to 5 years, the highest return on investment (ROI) among the three commodities is cardaba

banana at 495 percent, followed by guapple, 366 percent. During the first to five years, mango production

is not year generating net income until it reaches 9 years life span. For a life span of 15 years for mango

production, it will only generate an ROI of 114 percent. This comparative analysis validates the reason

why some of the mango producers are shifting from mango to other exotic fruits trees, with the impact of

climate change to mango in the recent years, particularly, guapple which is also profitable, compared to

other high value fruit crops. Guapple fruit trees are considered robust against natural calamities (typhoon,

flood, etc.) and the effect of climate change.

For guapple fruits, with a production costs of 123,128 during the first year will only have a fifth year cost

of production (COP) of P389,133, but with a net profit of P2.23 million. Return on investment is

projected to reach 366 percent during the fifth year and will be able to generate even higher income in the

succeeding years (Table 13). In an interview with Provincial Agriculturist Avelino Lomboy of La Union,

who is also an owner of a guapple farm, he said that guapple is one of the most potential fruits that is not

affected by climate change and calamities.

For the internal rate of return (IRR), guapple has 840 percent for five years; cardaba banana by 192

percent while mango has 22 percent. Net present value (NPV) for cardaba banana is P336,040; P11.69

million for guapple while 84,051 for mango. Benefit cost ratio (BCR) for cardaba banana is 4.38; mango,

1.31 and guapple 5.85. In the case of return on investments (ROI), cardaba banana has 323 percent in five

years and guapple by 369 percent in five years. In the case of mango, the ROI is 31 percent for 15 years

and 485 percent for guapple (Table 13).

In this profitability analysis, it shows that guapple is very profitable compared to mango or even cardaba

banana which means that planting guapple has a competitive advantage as a fruit production investment

compared with banana and mango. It is a very profitable investment for both those Filipino fruit farmers

who would like to diversify their fruit products, or even those who are new agribusiness entrepreneurs in

the fruits industry agribusiness chain. Instead of planting mango, an existing fruit farmer could plant

guapple as his/her strategy to diversity his/her investment, considering that guapple is robust against

calamities and the effect of climate change.

Table 13. Internal Rate of Return, Net Present Value and Return on Investment for Cardaba,

Mango and Guapple

IRR, NPV and ROI Cardaba Mango Guapple

IRR (In Percent) 192.00 22.00 840.00

NPV (In Pesos) 336,040.00 84,051.00 11,693,498.00

BCR 4.38 1.31 5.85

ROI (at five years in %) 323.00 369.00

ROI (at 15 years in %) 31.00 485.00 Source: Authors’ Analysis

Supply Chain Gaps: The Need for a Comprehensive Approach

Despite climate change and other problems, the fruit industry is a growing sector and it plays a big part in

Philippine economy. Both export and local demand is increasing. But much remains to be done to make

it even more competitive and sustainable in the succeeding 30 years.

The issues/gaps44

that should be addressed are: insufficient planting materials with high quality,

increasing costs of fertilizers and pesticides, need for standards in farm equipment, increasing cost of

labor, inconsistent supply of fruits, fragmented production, inefficient marketing system, inadequate

postharvest and processing facilities and standards, inadequate support systems and adverse impact of

climate change in the fruit and agriculture industry which depend on the choices made by Filipinos today

and in the succeeding 30 years.

Given the gaps in every supply chain subsystem for fruits, there is a need for a comprehensive approach

addressing the said gaps.

V. Conclusion and Recommendations

The study presented the development of the fruit industry along the fruits supply agribusiness chain. The

profitability of guapple, as an example of exotic fruit for production, could be explored either through

diversification by existing fruits industry farmers/agribusiness stakeholders or through the new

investment of potential new fruit agribusiness entrepreneur. This could also be one of the proactive

responses for the future impact of climate change and to sustain the profitability and productivity of the

fruits industry in the Philippines in the succeeding 30 years or more, as being advocated by the Club of

Professional Researchers, a group of young professional interdisciplinary researchers and student

researchers with membership in the government, private sector and non-government organizations.

44

Department of Agriculture. (2009). Strategic Agribusiness Development Plan. First draft. Supported by Japan

International Cooperation Agency.

Overall, the specific strategic directions and recommendations45

to improve the agribusiness supply chain

of the fruits industry are: 1) development of new varieties, accreditation of nurseries, and intensification

of R & D through SUCs and other agro-based research and development institutions; 2) improvement of

logistics; 3) utilization of organic fertilizers; 4) establishment of agricultural machinery and equipment

standards; 5) expansion of production areas; 6) integration of supply; 7) conduct of policy/legislative

work such as public land access; 8) improvement of logistics (to address high postharvest losses); 9)

establishment of trans-shipment facilities; 10) revisit of the Food Terminal approach; 11) improvement of

market intelligence and information systems, particularly on price monitoring, supply and demand

forecasting and analysis of the different fruits; 12) increase and improvement in processing and

postharvest facilities (e.g., processing and packaging plants, peeling and cutting machines); 13)

utilization of biotechnology; 14) provision of more support facilities such as ports, farm-to-market roads,

cold chain systems and irrigation facilities; 15) development of regulatory and food safety system (e.g.,

traceability, database/s); 16) promotion of GAP and monitoring of compliance; 17) provision of credit

and crop insurance facilities; and, lastly, 18) strengthening of the Research and Development-Extension

system in the different levels of government, from national to local government level, and 19) lastly,

development of proactive climate change package response program in preparation for the further impact

of climate change in the country in the succeeding 30 years.

45

Department of Agriculture. (2009). Strategic Agribusiness Development Plan. First draft. Supported by Japan

International Cooperation Agency.

REFERENCES

Arnold, J. (2002). Philippine Logistics Study.

Banana Cardava Production. (2005). First Bukidnon banana congress: Banana cardava production-an

alternative crop. Powerpoint Presentation. November 3-4, 2005. Retrieved on October 2008 from

<http://www.hvcc.da.gov.ph/pdf/cardaba2.pdf>

Bureau of Agricultural Statistics, Department of Agriculture (2002). Marketing Costs Structure for

Mango. September 2002.

Bureau of Agricultural Statistics, Department of Agriculture (2000-2008). Various statistics on

agriculture.

Bureau of Plant Industry- National Mango Research and Development Center. (2009). Estimated Cost

and Return for a Hectare of Mango Orchard. Jordan, Guimaras.

Office of the Provincial Agriculturist-La Union. (2009.) Cost and Returns Analysis for Guapple

Production (1 Hectare).

Calderon, R. P. and Rola, A. C. (2003). Assessing benefits and costs of commercial banana production in

the Philippines. Working paper no. 04-03. ISPPS, CPAF, UPLB.

Department of Agriculture. Calamansi Strategic Action Plan. April 2002.

Department of Agriculture. Guapple. Agriculture and Fisheries Information Service. Elliptical Road,

Diliman, Quezon City 1100. Retrieved on May 2009 from <http://www/da/gov.ph>

Department of Agriculture. (2008). Proceedings of the Agribusiness Situation Analysis Stakeholders

Consultation Meeting. Quezon City. December 9-10, 2008.

Department of Agriculture. (2009). Strategic Agribusiness Development Plan. First draft. Supported by

Japan International Cooperation Agency.

Digal, L.N. (2005). Benefit diffusion and linkage development in the Philippine tropical fruits sector.

Retrieved on October 2008 from <http://siteresources.worldbank.org/ INTPHILIPPINES/

Resources/Digal-word.pdf>

Digal, L.N. (2007). Agricultural contracts in Mindanao: The case of banana and pineapple. Discussion

Paper Series No, 2007-24. Philippine Institute for Development Studies. Philippines.

Esplana, Elmer R., Lary Nel B. Abao, Rolando M. Vasquez. (2007). Development in the supply chain of

the Philippine goat industry: An Assessment. Grand Prize Winner in Socio-economics Research

Category, 19th DA-BAR National Research Symposium. Bureau of Animal Industry and Club of

Professional Researchers. October 2007.

Food and Agriculture Organization. FAOSTAT. (2008). http://www.fao.org

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture.

Commodity Profiles. Retrieved on October 2008 from <http://www.hvcc.da.gov.ph>

Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of Agriculture.

Mango Industry Strat Plan and Updates. November 2006.

Lustria, J. U. et al. (1994). Marketing and Information Needs Assessment Report. Camarines Norte. A

Technical Report. Published by the Department of Agriculture - Bureau of Agricultural Statistics.

August 1994.

National Academy of Science and Technology, Department of Science and Technology. (2008).

Philippine Agriculture 2020: A Strategy for Poverty Reduction, Food Security, Competitiveness,

Sustainability, Justice and Peace. Main report. January 2008.

National Statistics Office. (2002). Census of Agriculture and Fisheries.

Philippine Atmospheric Geophysical Astronomical Services Administration. Climate Change Impacts in

the Philippines. Retrieved on October 2009 from <http://www.pagasa.dost.gov.ph>.

http://www/da/gov.ph

http://www.fao.org/

http://www.pagasa.dost.gov.ph/

Philippine Atmospheric Geophysical Astronomical Services Administration. Facts on Global Warming

and Climate Change. Powerpoint presentation material. Retrieved on October 2009 from

<http://www.pagasa.dost.gov.ph>.

Rivera, R.A. (2004). Philippine Banana Production and Marketing. Retrieved on August 2008 from

<http://www.hvcc.da.gov.ph/pdf/banana_phil_prodn_market.pdf>

United States (June 2009). Climate Change Impact in the Unites States. Retrieved on October 2009 from

<http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts>.

KEY INFORMANT INTERVIEWS/FOCUS GROUP DISCUSSION PARTICIPANTS AND

RESOURCE PERSONS

1. Ms. Erlinda Arenas, Pangasinan Tropical Fruits Multi-Purpose Cooperative. Manaoag, Pangasinan.

2. Mr. Ruben See, President, See’s International.

3. Mr. Ireneo Dalayon, Chief Executive Director, Federation of Cooperatives in Mindanao (FEDCO).

Davao City.

4. Mr. Avelino Lomboy, Provincial Agriculturist-La Union.

5. Mr. Joselito Yap, MIS Officer, Profoods International Corporation. Cebu City. 6. Ms. Norma Lagman, Provincial Agriculturist of Ilocos Norte.

7. Ms. Merle Carriaga, Provincial Agribusiness Coordinator, Sta. Barbara, Pangasinan.

8. Ms. Maribel Cabradilla, Chief, AMAD, DA-RFU 1. La Union.

9. Mr. Yondre Yonder, OIC, National Mango Research & Development Center, Jordan, Guimaras.

http://www.pagasa.dost.gov.ph/

http://www.globalchange.gov/publications/reports/scientific-assessments/us-impacts

A Supply Chain Assessment of the Philippine Fruits Industry: Towards Sustained Profitability,...

Documents

Transcript of A Supply Chain Assessment of the Philippine Fruits Industry: Towards Sustained Profitability,...