Price Plunge in Black Market’s “Spot Buying” of Cavendish Bananas Baffles Small Independent Growers in DavNor

Top export banana producing province of Davao del Norte has been flocked in by tens of hundreds of buyers procuring Cavendish bananas of small independent growers through “spot buying”.

Small independent banana growers at the mercy of this low-priced “spot buying” of banana buyer-exporters are in the dire economic straits since January this year, giving doom to the fading golden age of Cavendish bananas in a province hailed as the banana capital of the Philippines.
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“Spot buying” means that individual buyers would just come to small growers who have plantation area and access to packing plant and they offer to buy the bananas at variable price and provide them brand’s cartons. Spot buyers offer cash advances (C.A.’s) to do financing to the growers.
“Spot buying” is different to “contracted pricing” where companies would have a contract with the growers specifying costs to deduct and the fixed price whole year round to buy the bananas.
These banana spot buyers usually export Cavendish bananas to China, but “we have no idea why their buying prices remain so low while they ironically appear to be the black market of our export bananas,” said small banana grower Dominggo Tambien, who has only one-hectare banana plantation in Sto. Tomas town in the province.
He said that “spot buying” prices for export bananas plunged first to P120 per box in December 2016 and then suddenly the price nosedived to lowest P60 to P80 per box in January 2017.
“We don’t know the real reason of the price decreases. Spot buyers have varied reasons in saying at the farmers’ level. They first said they had to give Christmas bonus to their workers, that’s why the price sank. Then they would say the price sank in China due to the other fruits that competed our bananas, then we were told of high quarantine fees which was already stopped, and so on,” Tambien said in an interview.
He however said that it is about three weeks now that the spot buying prices increased to P100 plus per box of “4 to 6 big hands” bananas, the first-class bananas weighing an average of 13.5 kilos per carton.
Tambien said at that price it could at least tide them over to breakeven levels even as he informed that prevailing contracted prices of a banana company in one case he knew of range from P250 to P290 per box.
Juanito Angco, another small banana grower having only a fourth of a hectare banana farm in the same town, believe that small independent growers having an average of 1 to 2 hectares of banana plantation, have now become the number 1 producer of Cavendish bananas if the aggregate hectarage of banana plantations is considered.
From 2016 data of Sto. Tomas municipal agriculturist office, the town has a total of 10,180.05 hectares of banana plantations, 7,140.404 hectares or 70.14 percent of which were cultivated by 4,973 small independent growers, while multinational and corporate banana producers Marsman, Stanfilco, Lapanday and Tadeco have a combined 3,039.596 hectares of banana plantation or 29.86 percent of the total. That is in one town in Davao del Norte alone.
Angco said that small growers have to bear with gross expenses per box that hover at P110 and these would include the usual P12 for the crew (per packer) and P5 for the packing plant fee, all per box.
Given a fairly good price, a hectare of banana plantation could make a gross of 4,000 boxes in a year for a gross income of P1 million and gross expenses of P600,000 thereby giving a net income of P400,000 to the grower, and ”that is good enough but not now under this low spot buying levels,” he said.
Tambien recalled that spot buying had strong resurgence after typhoon Pablo struck in 2012 as Chinese buyers or canvassers flocked in and procured cavendish bananas at P600 to P700 per box resulting to polevaulting of small growers over the contracted price they had with big companies due to lure of high prices from Chinese buyers and canvassers.
This spot buying strategy started rawly in early 2000, and showed first expansion in 2005 but it got a foothold in the province around 2010. Then Pablo struck.
“But now, there is no polevaulting anymore as spot buying sticks to low prices, while contracted pricing remains high. What is there to polevault when the price offered by spot buyers have changed from high to low?” Tambien said.
He added that big buying companies have already made some price rectifications with the assertive farmer growers given the yearly economic review provision in the contracts.
Before typhoon Pablo, there was also a heyday of banana “consols”, short for consolidators, who acted as bulk buyer-shippers of bananas produced by small growers, buying at high prices but without much regard to quality control of bananas. The consols went bankrupt when their bananas arrived ripe in Saudi Arabia.
It was during Arroyo time that foreign buyers started to flock in to Davao Region and partnered with the local “consols” and canvassers, changing the configurations of banana buying players and threatening the longtime-hold of the so-called Big Four of banana industry: Dole, Unifrutti, Del Monte and Sumifru.
Tambien said that spot buying transactors have been the ones relied on by small growers due to their fast cash advance systems “without O.R.-O.R. and with gentleman’s agreements only coupled with their abundance of container vans and cartons.”
“Facilitator na lang ang mga malalaking kumpanya dito, and Davao del Norte becomes the territory of spot buying than any other areas in Mindanao,” he said. This as Unifrutti, besides having contracted pricing, engages also into “spot buying.”
“We appeal to our Speaker Pantaleon Alvarez to save our banana industry. The small independent banana growers need help, the industry badly needs immediate government intervention. The government needs to intercede to the plight of thousands small independent banana growers,” said Nick Suaybaguio, Sr., who has three-hectare banana plantation in upland Talaingod town in Davao del Norte.
Industry insiders in the province alleged that the Pilipino Banana Growers and Exporters Association (PBGEA), which is controlled by big banana companies and subsidiaries, has only worked for their interests since then and not for the interests of the small independent growers and agrarian reform beneficiary cooperatives, which are now tilting the balance to their favor.
Recent regional data came congruent to this. The PBGEA in 2015 put at around 44,670.29 hectares the total hectarage of companies cultivated by big banana companies while some 30,000 hectares were tilled by small landowners and agrarian-reform beneficiaries.
These banana plantations are found in the provinces of Davao del Norte, Compostela Valley, Davao Oriental, Davao del Sur, Davao Occidental, North Cotabato, South Cotabato, Sarangani, Sultan Kudarat, Bukidnon, Agusan del Norte, Agusan del Sur, Surigao del Sur, Maguindanao and Lanao del Sur. (mindanaosunchronicle/Cha Monforte)

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