Banana exporters can pivot to Japan, South Korea to offset loss

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MANILA, Philippines — Agriculture Secretary Francisco Tiu Laurel Jr. said the loss in banana exports due to trade disruptions in the Middle East can be diverted to key markets like Japan and South Korea, the country’s top two markets for the prized commodity.

Tiu Laurel said the Philippines is in a good position to supply more to nearby Asian markets since other suppliers like Ecuador are currently “uncompetitive” due to more expensive freight costs.

“Our exporters can shift their supplies to nearby countries since other suppliers like Ecuador and Mexico are facing much higher freight costs,” Tiu Laurel said in an interview with “Storycon” on One News Tuesday.

Pilipino Banana Growers and Exporters Association (PBGEA) executive director Stephen Antig told The STAR that it is plausible for Filipino exporters to divert the banana shipments intended for Iran and other Middle Eastern markets to Asian markets.

However, he pointed out that local banana exporters are not spared from the increase in shipping costs due to higher oil prices as a result of the global oil shocks driven by the escalating conflict in Middle East.

Nevertheless, Antig explained that the country might be able to keep its competitive advantage over other Asian banana exporters since they are also challenged with higher freight costs and fuel prices.

The STAR broke the story earlier this week that banana exporters in the country stand to lose almost $200 million in revenues due to trade disruptions in the Middle East as the war in the region escalates.

Some banana exporting companies have stopped shipments to the Middle East since the war in the region erupted, according to PBGEA.

PBGEA has already appealed to President Marcos to waive certain fees and defer minimum wage hikes to help them cope with the market disruptions.

PBGEA proposed that banana firms be exempted from the recent minimum wage hikes in regions where fresh bananas for export are cultivated like Regions 10, 11, 12, 13 and BARMM to curb additional financial burden.

Furthermore, the group recommended that export charges and fees imposed by various government agencies be suspended to cut the costs incurred by banana exporters amid market shocks caused by the Middle East conflict.

The proposed measures, PBGEA pointed out, would help Philippine banana exports to be more competitive in foreign markets amid logistical woes in the Middle East market coupled by supply challenges locally.

Iran, the country’s fourth largest market for bananas, accounted for eight percent of banana export receipts last year, amounting to $97.52 million, according to the Philippine Statistics Authority (PSA).

Meanwhile, the combined export value of bananas to the six Gulf Cooperation Council member-countries plus Iraq last year reached nearly $95.5 million, based on PSA data.

The Middle East market accounted for 12 percent of total banana export value last year. Revenues from banana exports to Middle East market last year expanded by 60 percent to $193 million from $120 million, driven by increased shipments in most countries except Kuwait and Oman.