The Philippines: spotlight on an emerging market
Increasing market demand from Asia and the Middle East should continue to drive the Philippines’ impressive growth as an export producer of bananas, pineapples and other tropical fruits over the coming years. And while competition from other supplying countries in these markets remains relatively low, internal competition in the Philippines is intensifying.
These were some of the key messages from session five of the Asiafruit Congress, which spotlighted the Philippines development both as an exporter and importer.
The Philippines is now the world’s second largest exporter of bananas and pineapples respectively, having seen consistent growth in plantings and production over the past 10 years, Luciano Frederick Puyod III of Philippine Fresh Fruits Corp detailed. Low operating costs, high efficiencies and good quality have helped to underpin this growth, he said, and the outlook for future expansion looks good, a point underlined by Francisco X Lorenzo of Lapanday Foods.
“Most of our markets are growing so keeping pace with demand is key,” said Mr Lorenzo, who noted that China in particular presented good potential as it evolves from a Class B to a Class A market.
The Philippines also faces limited competition from other tropical fruit supplying countries. Where Ecuadorian and Taiwanese bananas were once big players in Japan on account of their size and sweetness, the growth of highland production in the Philippines has edged them out, according to Mr Lorenzo. And although India is emerging as a supplier to the Middle East, he said it has “a long way to go on quality standards”.
Competition within the Philippines is, however, intensifying as small growers and exporters and independent buyers and consolidators vie for a market traditionally controlled by multinationals and corporate entities. “Short-term spot buyers are coming into the market and Chinese or Arabian buyers can now fly into Davao and entice farmers to break their contracts, which is disrupting the market,” said Mr Puyod.
The shift from break-bulk to containerised shipments has also spurred this trend, Mr Lorenzo explained. “Today you can go to any shipping line and load bananas for any destination,” he said.
Establishing a private regulatory body similar to those in South America could help to address the issue, Mr Puyod suggested, and he also highlighted the need for land reform in the Philippines to encourage further private investment in the sector. “Limiting land ownership to 5ha limits investment,” said Mr Puyod.
The Philippines role as a market for imported fruits, meanwhile, is undergoing dynamic change, as outlined by Elite Fruit Marketing’s Kingson Chan.
While China remains the dominant supplier, aided by a zero duty on its imports, he said other countries such as the US have been seeing more rapid growth in sales of apples and grapes. Once a dumping ground for lower grade apples from China, the Philippines has become far more quality-focused. Meanwhile, speciality fruits such as cherries, persimmons and kiwifruit, have begun to take off, aided by the expansion of supermarket retailing in the country. “Manila is saturated with retailers, so there is a lot of development outside the capital in Cebu and Davao,” said Mr Chan. “Newly built supermarkets are looking for wider `product` range.”
Nevertheless, the vast majority of fresh produce sales in the Philippines remains in the hands of the traditional street vendors, and Mr Chan said new government laws preventing them from selling fresh fruits have impacted consumption in recent months. A change in administration has also contributed to a tough year for imports in 2010, he noted, with importers lowering their volumes as they wait and see what policies are ushered in.
A full report on Asiafruit Congress and ASIA FRUIT LOGISTICA will appear in the October edition of Asiafruit Magazine.
