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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. Esplana3

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.

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_____________________________________________________________________________

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.

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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.

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Farm
Processing
Input Production Marketing
Subsystem
Subsystem Subsystem Subsystem
m

Support
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

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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 percent7 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.
Page 5
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 3rd 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.

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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).

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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
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>
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
profiles. Retrieved on October 2008 from <http://www.hvcc.da.gov.ph>
24
BAS. 2008 data.
25
Based on key informant interview and field visit in Cebu conducted in 2009.

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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


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
(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$
Banana Pineapple Mango Others Total
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%
(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.
Page 9
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
profiles. Retrieved on October 2008 from <http://www.hvcc.da.gov.ph>
30
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.

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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
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>
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>

Page 11
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.

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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)
% Change
Price Indicators for Banana 2006 2007 GR (00-07)
(2007/2006)
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
% Change
Price Indicators for Mango 2006 2007 GR (00-07)
(2007/2006)
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)
% Change
Price Indicators for Pineapple 2006 2007 GR (00-07)
(2007/2006)
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
% Change
Price Indicators for Calamansi 2006 2007 GR (00-07)
(2007/2006)
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

Page 13
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


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
(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.
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

(Source: FAOSTAT)

41
Based on key informant interview in Region 1 conducted in 2009.

Page 14
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
Total Export Total FOB
Major Export Market Country of Fresh Fruits (In FOB Value (In
Type of Fruits Type of Products Quantity (In Value (In $
destination Mt) $'000)
MT) '000)
Japan, Iran, South Korea, China,
banana fresh, banana dried, banana
Singapore, New Zealand, UAE,
Banana chips/cracker, flour, meal and powder of 2,199,321.02 396,279.32 2,235,609 439,125
Taiwan, Hongkong, Saudi Arabia,
banana, banana catsup, banana leaves
Russian Federation

pineapple fresh, pineapple dried, nata de Japan, Iran, South Korea, China,
Pineapple piña, pineapple juice, pineapple vinegar, Singapore, New Zealand, UAE, 274,935.06 57,344.84 587,819 247,436
pineapple fiber Taiwan, United States, Hongkong

fresh mango, dried mango, puree, mango in


Japan, Hongkong, US, South Korea,
Mango, guavas and brine sulphur water, mango cooked
Taiwan, UK and NorthIreland, 26,335.80 23,284.59 42,967 54,507
mangosteens uncooked, mango juices, mangosteen fresh
Singapore, Thailand, China,
and dried
calamansi fresh, calamansi dried, calamansi
Calamansi juice concentrates, calamansi juice other US, Japan, Canada, Hongkong 7.53 5.40 708 713
than concentrates
Japan, New Zealand, South Korea,
Papaya fresh papaya Singapore, UAE, Iran, China, 4,059.91 5,030.27 5,451 6,853
Taiwan, Hongkong, France
Durian fresh durians France, Saudi Arabia, UAE, Kuwait 9.63 32.99 10 33
South Korea, France, Canada,
Avocado avacado fresh (2008 data) 6.05 7.15 6 7
Kuwait, Saudi Arabia
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

Page 15
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).

Page 16
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.
Page 17
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.

Page 18
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)
Banana
Mango % share Pineapple % share % share Calamansi % share
ITEM (Cardaba)
2007
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
(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.

Page 19
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, 1st 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

Page 20
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.

Page 21
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.

Page 22
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National Academy of Science and Technology, Department of Science and Technology. (2008).
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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>.

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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.

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