Professional Documents
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ECO-C203
BASIC MICROECONOMICS
Submitted by:
Barreto, Baby Jane D.
203TM
Introduction
I. Industry Profile
A. Nature of Industry
B. History of Industry
Reference
Introduction
Bananas are considered the fourth largest food crop in the world. It is widely grown in
countries like Africa, Asia, Europe, Oceania, Latin America, and the Caribbean. According
to a United Nation agency, India remained as the largest producer of banana, while
Philippines remained as the world’s second-largest exporter of bananas for the fourth
consecutive year in 2021 despite od the stiff competition from Latin American producers.
Banana, with its many potential health benefits, is the most important fruit crop in the
Philippines. The Philippine Banana Industry comprises farmers, cooperatives, traders,
exporters, and manufacturers but is mainly dominated by large multinational companies. It
is also a vital source of income and employment in the Philippines. The majority of bananas
produced in the country are for export purposes, making it one of the largest global
suppliers of the fruit. The Philippines is among the top five countries worldwide in terms
of banana production and export, with most bananas grown on large plantations in
Mindanao and Visayas. The industry is particularly important to the economy of Mindanao,
where bananas are a major export product and provide jobs for thousands of workers in
rural areas. In fact, the banana industry has been credited with helping to reduce poverty
and promote economic development in the region. Despite challenges such as disease
outbreaks and competition from other countries, the banana industry continues to play a
significant role in the Philippine economy.
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, making it the table fruit of the country. This unique
tropical fruit is extremely high in potassium yet low in salt, making it the perfect food to
beat high blood pressure. The US Food and Drug Administration noted the many medicinal
uses of bananas and recognizes its ability to reduce the risk of high blood pressure and
stroke. Furthermore, this leads to a greater impact on the economy as well as society.
I. Industry Profile
The banana industry is crucial for economic development and food security in the
Philippines. In fact, the industry is one of the major economic drivers in the country, with
the Philippines being the second-largest banana exporter globally within Asia. The United
Nations Food and Agriculture Organization market analysis predicts that continuous
expansion of banana production in the Philippines could increase the export volume to 135
million tons by 2028. The local industry is not spread out around the country; rather, it is
concentrated in Mindanao, the southernmost island among the three main islands of the
Philippine archipelago. Beginning in the 1960s in Davao del Norte, the industry has now
spread to eleven provinces in Mindanao with some 50,000 hectares of farmland used for
planting bananas. In 2008, about 150 million boxes (each box weighing a gross of 14 kilos)
were exported to the industry’s main markets, which are: Japan, Korea, Hongkong, New
Zealand, Brunei, China, Singapore, the Middle East, Indonesia, Russia and Canada. Some
of the export-quality bananas are also sold in the Philippine market. However, the industry
faces challenges related to environmental sustainability and disease management. The
banana industry in the Philippines must adopt sustainability measures to address these
challenges. The implementation of these measures is being led by the government and
industry stakeholders. For example, some sustainability measures include reducing water
usage, decreasing greenhouse gas emissions, and utilizing integrated pest management
practices to mitigate the impacts of harmful diseases on crops. The success of these
measures would not only ensure the sustainability of the industry but also protect the
environment. Given that the banana industry is closely tied to both economic development
and food security, it is crucial that these measures are taken seriously and implemented
effectively.
In 2020, the logistical effects of the COVID-19 pandemic as well as the Panama disease (a
soil-borne fungus that affects bananas), which already destroyed over a quarter of banana
plantations in Mindanao, caused a decline in both volume (18.35%) and value (20.6%).
Though expectations are largely the same this year, Pilipino Banana Growers and Exporters
Association Executive Director Stephen A. Antig remains optimistic. Japan has become
the number one importer of Philippine bananas and the group is also seeking to lower fees
and streamline logistical restrictions. An Overview of Philippine Bananas - Food
Philippines
On its most basic level, the value chain of fresh bananas undergoes five stages: input
provision (planting), production (plant care, maintenance, and other agricultural practices),
post-harvest consolidation (cleaning, grading, labeling, packing), trading and distribution
(storage, transport, wholesale circulation), and retail (sale or manufacturing). The
coronavirus caused bottlenecks in the system, which also resulted in more rapid spread of
diseases.
Fortunately, measures are already being taken to reboot the banana industry. According to
the Department of Agriculture, it set aside P262.7 million for rehabilitation. The
Department of Science and Technology, meanwhile, has launched a three-year program to
study other banana afflictions. Although the country’s banana production got off to a slow
start this 2021, there’s no doubt that, with consolidated efforts and a little determination, it
will soon perk up.
A. Nature of Industry
The banana industry is an economically significant driver and key employment generator
in the Philippines, particularly in Region XI, recognized worldwide for its capacity to
provide decent and productive jobs on a sustained basis, and for enabling government,
businesses and institutions to achieve higher productivity and competitiveness. The
Philippines is one of the largest producers of bananas in the world and the second largest
exporter of Cavendish banana. The banana Industry's contribution to employment in region
11 and other regions in Mindanao are at 240,000 workers at the ratio of 4 workers per
hectare. Around 1.4 million people, workers and their immediate families are directly and
indirectly dependent on the banana industry. In terms of the industry's contribution to
government revenues, the industry's annual average tax payments are at P832,440,000, plus
Php916,560,000.00 of local taxes from banana suppliers and contractors.RO-11-
Banana.pdf (dole.gov.ph)
Bananas are one of the most consumed and cheapest fruits worldwide: they are the most
traded fruit and the fifth most traded agricultural product. Therefore, no doubt that it leaves
a greater impact in different fields.
Furthermore, the industry also makes positive impact on the cultural and political aspects
through:
• Minimized contact with and influence of insurgency;
• Improved peace and order situation;
• Effective local governance;
• Integration of indigenous people (e.g., Bagobo, Manobo, Muslim) into mainstream
society; and
• Better understanding of cultures.
As part of the agricultural sector, the banana industry also ensures that it contributes
to the protection of the environment through the observance of globally accepted practices
and abiding by Philippines laws.
B. History of Industry
Some horticulturists believe that bananas were the first fruit on earth. Their origin is placed
in Southeast Asia, in the jungles of Malaysis. Indonesia or the Philippines. where many
varieties of wild bananas still grow today. Africans are credited to have given the present
name, since the word banana would be derived from the Arab for ‘finger’.
Bananas started to be traded internationally by the end of the fourteenth century. The
development of railroads and technological advances in refrigerated maritime transport
subsequently enabled bananas to become the most traded fruit in the world.
Contrary to popular belief, banana plants are not trees but giant herbs, which reach their
full height of between 10 and 20 feet after only a year. Every banana blossom develops
into some fruit, which is ripe enough for consumption after about three or four months.
After producing fruit, the plants’ stems die off, and are replaced by new growth. The
number of bananas produced by each plant varies. However, ten or more bananas growing
together forms a “hand.” Banana stems have on average 150 “fingers” and weigh nearly
100 pounds. The trunks of banana plants are not woody but composed of sheets of
overlapping leaves wrapped tightly around one another, a design feature that enables them
to conserve water. Because banana plants are approximately 93 percent water, even
moderate winds can knock them down and destroy entire plantations.
Bananas are indigenous to the tropical portions of India, Southeast Asia and northern
Australia, and were brought to South America by the Portuguese in the early 16th century.
Today, banana plants grow in the humid, tropical regions of Central and South America,
Africa, and Southeast Asia where there are high temperatures and rainfall. Modern
agricultural technologies also enable people to cultivate banana plants in non-tropical
regions such as California in the United States. Bananas are the fourth largest fruit crop in
the entire world and the most popular fruit in the United States. In Central and South
America, bananas are vital to the economy. Most bananas sold in the United States
originated there. Banana leaves are used worldwide as cooking materials, plates, umbrellas,
seat pads for benches, fishing lines, clothing fabric, and soles for inexpensive shoes.
For much of its history, the banana industry was notorious for environmentally destructive
and socially irresponsible farming practices. As companies attempted to keep production
high and costs low, they tended to cultivate only single crops in their plantations. The lack
of biodiversity made the plants susceptible to disease, which farm managers controlled
using frequent applications of pesticides that would leak into drinking water, pollute
irrigation canals, and endanger the health of workers, their families, and communities.
DOLE-Stanfilco.
Stanfilco started exporting giant Cavendish bananas in 1968, setting a record as the
Philippines' first banana exporter. General Santos was chosen as the first site of the
Philippine banana project. Banana seeds from Honduras and Costa Rica arrived in General
Santos on September 2, 1966. In 1967, the germinated seeds were distributed to the farmers
for commercial planting. On November 2, 1968, Stanfilco’s maiden shipment was made.
Stanfilco now covers vast hectares of banana plantations and exports several million boxes
of bananas annually to its markets in Japan, Korea, Hong Kong, China, New Zealand and
the Middle East, as well as other emerging markets.
In the Philippines, Stanfilco pioneered the effective implementation of the Independent
Growers Program, a unique farming concept that allows local farmers to grow bananas for
Stanfilco while retaining full control of their land and operations. Over the years, thousands
of growers and thousands of associates and contractors have partnered with Stanfilco both
directly and indirectly.
Stanfilco also proudly counts itself as one of the few companies that pioneered the
introduction and implementation of Total Quality Management or TQM in the agro-
industrial sector of the Philippines. Having helped bring Dole bananas to dominance in the
Philippines and the markets abroad, Stanfilco looks forward to spending many more years
in the apex of the banana industry through continued improvement and quality.
The plantation is actively supporting the local government in conservation efforts through
tree planting, coastal cleanups and other activities. Medical and dental missions and other
community activities are also conducted through the Dona Luisa Foundation.
Export
In 2021, Philippines exported $1.49B in Bananas, making it the 2nd largest exporter of
Bananas in the world. At the same year, Bananas was the 9th most exported product in
Philippines. The main destination of Bananas exports from Philippines are: Japan ($706M),
China ($426M), South Korea ($202M), Saudi Arabia ($34.3M), and Hong Kong ($24.3M).
The fastest growing export markets for Bananas of Philippines between 2020 and 2021
were South Korea ($11.9M), Russia ($390k), and United States ($356k).
Imports
In 2021, Philippines imported $89.6k in Bananas, becoming the 135th largest importer of
Bananas in the world. At the same year, Bananas was the 1139th most imported product in
Philippines. Philippines imports Bananas primarily from: South Korea ($85.8k), Indonesia
($1.6k), Brazil ($812), Sri Lanka ($677), and Japan ($674).
The fastest growing import markets in Bananas for Philippines between 2020 and 2021
were South Korea ($64.8k), Indonesia ($1.6k), and Sri Lanka ($282).Bananas in
Philippines | OEC - The Observatory of Economic Complexity
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