Supply and demand in the banana business

In a local economy predominantly sustained by agriculture, specifically the banana industry, timely interventions by the local government unit are indispensable especially in the interplay of demand, supply and prices in a given market.

For purposes of this article, the subject is Cavendish bananas for export—an international market where the products are sold based on demand on the part of consumers and supply on the part of the producers.

About three weeks ago, I attended the 2017 Banana Conference at the SMX Convention Center in Davao City. Fortunately, I was given the chance to take the floor during the open forum where an industry expert, Mr. David Delorenzo, Chairman of Dole Asia Holdings, was one of the panellists. I asked him how the plight of small banana farmers could be alleviated from the challenge of finding the right price of the fruit, at the right time, through the right buyers.

Specifically, my point was:

While the government encourages farmers to treat farming like they were running a business, there has been no intervention on the part of the former in making the market transparent to the latter. Small farmers should have full access to the market, the interplay of real demand in relation to real supply so that prices should be relatively and comparatively real. My concern centered on the situation of small farmers dependent on and selling at the spot market. How can this be possible?

Here’s the summary of Mr. Delorenzo’s advices:

1. Organize small farmers. The organization should find ways and means to look for and negotiate with the direct market by leveraging the collectiveness of intent, farm areas and fruit products.

2. Government should provide an avenue, through the internet, for small farmers to have true access of real prices from the country of destination like China and the Middle East, among others.

3. In countries like Honduras, traders and exporters were penalized if they were buying far lesser or far higher than the real prices. A policy should be in place to monitor the trade.

4. Bagging reports should be institutionalized to ascertain real supply for the spot market. Among others, it will protect contracted areas from pole-vaulting.

5. People working in the farm and service providers should be educated on promoting and maintaining quality products competitive in the marketplace. It is not just about competition between traders and exporters; it has become one country in competition versus another. (Mr. Garcia is a management and community relations trainor based in Compostela Valley (ComVal), Mindanao, and president of the Compostela Chamber of Commerce.)