The Philippine banana industry: market performance, constraints and policy directions

Professorial Chair Lecture

SEARCA Professorial Chair

Place

University of the Philippines Los Banos, College, Laguna

Date

5-2008

Abstract

The banana marketing system is characterized by low level of efficiency. Tests for spatial price efficiency using the Ravallion model revealed a low level of short-run market integration. This implies a weak price transmission such that changes in the wholesale or retail prices for banana have limited effect on farmgate prices. The cointegration analysis also confirmed the insignificant connection for banana price series between the local and urban markets. Small-hold growers relied on the traders as the main source of price information and in their transaction; the latter usually set the price. The practice of selling all-in or rumble banana has lowered the prices received by growers. This situation is further aggravated by incorrect counting of banana at the farm level. The automatic provision of additional quantity of banana as an allowance for postharvest losses, counting of banana by fives so any excess fingers are not paid, and discounting of small-sized banana put the growers at the disadvantage position.

The cost and returns analysis revealed that selling banana by size instead of rumble and removing the quantity discount through proper counting of banana would substantially increase the net returns of growers. a diversified farm that grew three banana cultivars obtained higher net returns than the typical Saba farm. Assembler-shipper-wholesaler-retailers in Oriental Mindoro and assembler-wholesaler-retailers in Quirino received high net returns suggesting that banana trading is a profitable business venture for them. To improve the market performance of the banana industry, the following marketing strategies and procedures are suggested: (1) strengthening existing farmers' associations or formation of a strong banana cluster; (2) forging strong linkages between banana growers and/or government/input suppliers and potential buyers; (3) adopting the per kilogram basis of payment for banana instead of per piece; (4) enhancement of market infrastructure and facilities; (5) adoption of proper grading/sorting of banana; (6) establishment of an effective market information system; and (7) undertaking an aggressive market promotion

Location

UPLB Main Library Special Collections Section (USCS)

College

College of Economics and Management (CEM)

Language

English

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