Phillippine Banana Market Guide

According to preliminary data released by the FAO, the Philippines slipped from second to third place in the global banana export rankings in 2022 with a total export volume of 2.235 million mt, overtaken by Guatemala (2.467 million mt). Ecuador is the top producer with 6.216 million mt. 

Data published by the Philippine Statistics Authority indicate that 2022 saw a 6.5% year-on-year decrease in the country’s banana export volume to 2.273 million mt. This figures hit their lowest levels since 2016. 

There are 2 main factors that affected the industry’s performance namely, the continued spread of the fungal disease Fusarium wilt (Panama disease) and high production costs, including substantial expenses on fertilizers.

As estimated by the PBGEA, the total area affected by Fusarium wilt is between 15,000 and 36,000 hectares, corresponding to 17–40% of the 88,000 hectares planted with bananas nationwide. 

Another major difficulty for the agricultural sector, the increase cost of the agro input. The fertilizer prices have eased from their 2022 peak, although they remain relatively high.

Covid-19: 

Banana exports from the Philippines have been severely impacted by the pandemic. The country is expecting overseas shipments to drop and lack of harvesting due to social distancing measures and shortages in labor. Bananas in the Philippines are harvested on a regular basis, and due to lack of labor this year, a large number of bananas rotted and were subsequently thrown away.

The banana production in the Philippines is competitive compared other producing countries in the market. The Philippine's banana is competitive internationally that the cost of producing these domestically is also relatively much lower even if the yield (52.62 mt/ha) goes down by 58%. 

Shown below is the SWOT analysis for bananas in the Philippines.

The Cavendish Banana value chain involves growing, harvesting, packaging, transport, importing/wholesaling/ripening, distribution/retail, and consumption. From a vertically integrated structure stemming from control of multinational companies, the Philippines CARP (The Comprehensive Agrarian Reform Program) redistributed corporate-owned agricultural land to farmer-workers, from 1987.

Due to CARP, even the big multinational companies(MNC) have to buy from cooperatives since their previous lands were redistributed. Some suppliers are relatives, and there are some relationships between suppliers who are in many years in the business.

Very few suppliers export directly because of the strict accreditation requirements by the BPI(Bureau of Plant Industry), so Agents/brokers play a big role within the industry. Big farms and multinational exporters have their own packing facilities for their names and brand. There is a partial oligopoly in the supply chain as small and medium individual farmers have learned how to process and export on their own.

The first quality check process is done at the packing plant where the worker will look for defects, bruises, and deformities. At the port of destination, the importer should inspect and identify SGRT(Surface Guided Radiation Therapy), yellowing, and other defects, if these go beyond 3%, the excess is claimable to the trader and then to the supplier. Government (BPI) checks every shipment for the presence of insects and pesticides before giving clearance for export.

3rd party inspection: commonly used by the importers to have a thorough inspection of shipment for the appropriate claim. The importer pays for it. When suppliers do not have their own personnel at the port of destination, the importer/buyer can just take pictures and videos of the rejects and send them to us, which we send to the supplier for claims. Ultimately, the supplier takes responsibility for problems with quality but there is an industry practice that gives a cap of 3% defects/rejects. Beyond that, the buyer should claim. 

The Philippines is the top producer and exporter of bananas in South East Asia and the second largest in the world. 

The country's main producing varieties include Cavendish, Saba, and Lakatan. In 2018, 84% of Cavendish bananas were produced in the islands of Mindanao, the southernmost islands of the Philippines. The top three producing regions in Mindanao are Davao, Northern Mindanao, and Socsargen. 

As for the Saba variety, the largest production regions are Davao, Socsargen, Northern Mindanao on the island of Mindanao, and Cagayan Valley. 

The main production region for Lakatan bananas is Soccskargen, Davao, and Northern Mindanao. Until Q2 of 2021, the total production volume of the Philippines has increased by 1.3% compared to the previous year of the same months (Q2). Out of the 3 varieties, Cavendish bananas dominated national production accounting to 52% of the total production. The country is set to expand its share of global banana export volume from 15.6% to 18.6% by 2029, further consolidating its position as the second leading supplier of bananas globally behind Ecuador.

Banana is a tropical plant that grows in all regions in the Philippines. It is not seasonal and bears fruit at any time of the year

Cavendish bananas are mainly produced for export with more than half of the export volume is this variety. Other varieties Lacatan (Musa acuminata (AA Group) 'Lakatan'), Latundan (Musa acuminata × M. balbisiana (AAB Group) 'Silk'), Bungulan (Musa acuminata (AAA Group) 'Masak Hijau'), and Saba or Cardaba (Musa acuminata × balbisiana (ABB Group) 'Cardava') variety. 

A good portion of the Saba and Cardaba variety is processed into banana chips and other value-added products for both domestic use and export. 

In 2020, total export value decreased by more than 10% compared to the previous year, from USD 1,930,879 thousand to USD 1,607,797 thousand. Although the export value to main destination countries fell in 2020, the middle eastern countries tend to import more Philippine bananas than in 2019.

In 2022, the total land area used for banana cultivation in the Philippines was approximately 443 thousand hectares. According to the data from the Philippine Statistics Authority (PSA), the Davao region is the top producer of bananas with approximately of 40% of the total banana production of the country comes from this region. Davao is primarily an agricultural province with many plantations operated by local and multinationals companies, and also small holder plantation.

The Bananas must be inspected in the Philippines under the direction and supervision of BPI- NPQSD inspectors before exportation. A sample equivalent to 5% of the total number of boxes from each consignment shall be randomly selected by BPI-NPQSD for inspection for quarantine pests

The key players in the export process are:

1. Licensed Producer-Exporter

2. Licensed Trader-Exporter 

3. Licensed Packing Facilities 

4. Registered Growers 

Unique codes is assigned to every licensed exporter & packing facilities, and registered farmers/growers 

Bananas should be carefully handled at all stages of the harvesting and packing process. Rough handling can result in damage that does not become evident until the carton is opened at the markets after the ripening process. In very hot weather, bananas should be harvested during the coolest part of the day. Once packed, bananas should be cool stored at 13°C 

Bananas are packed as whole hands, part hands or clusters in cardboard cartons with plastic liners. Plastic slip-sheets are used between full hands and absorbent paper is placed in the bottom of the carton. Cartons are staked onto pallets for ease of pickup and delivery for transport. 

The packaging must clearly marked to show the name & license code of the exporter, packing facilities, registered code of the growers, date of packing, destination, and any other information that may required by the importing country. 

The quality standard for the fresh Banana product is referring to The Philippine National Standard for Banana, PNS/BAFPS 64:2008 by the Bureau of Agriculture and Fisheries Product Standards (BAFPS) of the Philippines and  

According to the standard, the fresh Bananas are classified in 3 classes:

Extra class – Banana in this class must be of superior quality. It must have all the typical characteristics and color of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed and free of decay, split fingers, loose fingers, bruises, blemishes and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Very slight superficial defects are allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package.

Class I – Banana in this class must be of good quality. It must have all the typical characteristics and color of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed and free of decay, split fingers, loose fingers, bruises, blemishes and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Slight defects of the fingers, however, may be allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package:

- slight defects in shape and color

- slight defects on the skin due to rubbing and other defects such sunburns and

- blemishes not exceeding 5 % of the total surface area.

The defects must not, in any case, affect the flesh of the fruit.

Class II – This class includes banana which do not qualify for inclusion in higher classes but satisfy the minimum requirements specified in Section 5 of the standard document. The following defects, however, may be allowed, provided the banana retain their essential characteristics as regards the quality, the keeping quality and presentation in the package:

- defects in shape and color;

- defects on the skin due to rubbing and other defects such as sunburn and

- blemishes not exceeding 10 % of the total surface area.

The defects must not, in any case, affect the flesh of the fruit. 

There are 3 groups of the sizing; Large-sized fruits, Medium size and Small sizes. The size classification is determined either by length or diameter. The length is measured based on the middle finger in the outer row from the blossom end to the base of the pedicel where the edible flesh ends and maximum diameter of the equatorial section of the fruit. The size tolerance, for all classes, is 10%  by number or weight of banana corresponding to the size immediately above or below that indicated on the package. 

The Bureau of Agriculture and Fisheries Standards (BAFS) also published the Philippine National Standards (PNS) Fresh Fruit - Saba & Cardaba Bananas - Specification (PNS/BAFPS 08:2004). These variety is mainly for cooking. 

In the Philippines, the certifications for MNC, corporate growers and cooperative growers include PhilGAP, JAS, GlobalGap, ISO, ECOCERT, and Rainforest Alliance.