Wednesday, February 27, 2008 Ledesma: Banana industry going bananas? By Jun Ledesma Sunbursts
WHILE the government is busy fending off the tide of discontent over charges of corruption it overlooked the millions of pesos lost in taxes amidst unabated and abetted thievery that presently bedevils the banana industry.
By irreducible estimate, no less than a million boxes of exportable Cavendish bananas are being poached by unscrupulous traders from growers who have long term marketing an growership contracts with established small and big time grower- exporters. They call this anomaly "pole-vaulting." This looks benign given the fact that growers are being paid almost double than the industry's price of $2.50 -$2.80 per 13-kilogram box but the predatory price will likely wreck the industry aside from the government loses in tax revenues. Pirates and their clients do not pay tax as the clandestinely negotiate and pay the agreed price on the spot.
Years ago, the industry players did not mind fly-by-night traders many of whom are Korean nationals. Wanting to make a quick buck, they buy virtual banana rejects from stringent quality control. Besides, Korea is considered non-traditional export market and consumers there are not priggish about the quality of bananas they eat.
In time however, these traders developed their own markets and demands for Davao-grown bananas can barely be met. To keep the markets, they have to increase their supply and since they are averse to invest in costly development of farms for banana culture spot buyers just make the shortcut by buying fruits from existing farms. The Philippine Banana Growers and Exporters Association places estimates of cultivating Cavendish bananas at no less than P1-million per hectare to include farm preparation, cost of planting materials, labor and maintenance, inputs and facilities. This is all the way to fruition. Except for the initial physical development of the farms, all other expense items are recurring.
This huge investment is applied to any of the following farm categories:
Landowner grower with marketing agreement with exporter
A lease agreement at P15,000 to P20,000 per hectare per year with the landowner or his assigns given an option of employment at the rate of one employee for every 1.5 hectares.
Land managed and with exclusive marketing agreement with the export firm
In most if not all instances, landowners are also given employment opportunities.
Poaching has become extremely profitable that even a priest is into it as purchasing front of pirates. A Department of Public Works and Highways (DPWH) contractor who also sits in influential government decision-making body found a lucrative trade in banana poaching. They do not worry about farm maintenance, labor and blow-downs from weather disturbances that hit farms now and then. In short they have zero capital in the industry and yet enjoy the fruits of labor of other investors.
But what has become alarming of late is that the big players in the industry has joined the fray in frustration over the inability of the government regulatory bodies, including the Philippine National Police authorities, to curb what has become a broad daylight activities. The Bureau of Plant Quarantine Office, for example, issues phyto-sanitary certificates to any Tom-Dick and Harry who claims to have farms. The Department of Trade and Industry officials do not know where to place themselves amidst the controversy. The Bureau of Internal Revenue is looking the other way.
Of late, two known multi-nationals let loose their own poachers ostensibly in an attempt to out-buy the fly-by-night operators. A breakaway group of Unifrutti Corporation identified as "Magdalo Group" organized its own network of poachers making unprecedented offers that many growers cannot resist. The government regulators know who they are but it's the least of their concern if the burgeoning banana industry goes bananas. It's a price war any which way you look at it. The strategy of the big guys only aggravated the situation as thievery even intensified.
At this point, Governor Rodolfo del Rosario of Davao del Norte, who at one time was on top of Tagum Agricultural Development Corporation (Tadeco), has taken the initiative for the industry, his province being the biggest banana producer in Asia. He issued stern warning to the multi-nationals not to engage in illegal activities. He also directed the PNP to keep an eye on their moonlighting police officials. An unimpeachable source told this writer that the governor personally directed a Japanese multi-national to return all the stolen bananas. They promptly did. The same firm is said to be facing a multi-million suit of "tortuous interference" for interfering with the live contract of Marsman with their growers by buying their fruits. The case was filed by former Solicitor General Frank Chavez in behalf of Marsman and the suit is now pending at the Regional Trial Court in Tagum.
Caught in the theater of the raging controversy is the One Network Bank which have been a major source of funds in financing cavendish banana farming. Alex Buenaventura, ONB President, said that they could no longer collect the monthly amortization from the landowner-growers as the produce are secretly sold to the "pole-vaulters." He hates to admit it but he confessed that the bank's technicians have gone to the extent of acting as security guards for farms that are indebted to them so that pilfering of fruits will not happened.
As these developed a few growers who also leased lands to develop aside from their own and with existing marketing contracts with exporters have pleaded for a temporary relief from their agreement to avail of the high prices offered to them by poachers. Among the reason cited is for them to settle over due accounts brought about by the appreciation of the peso against the dollar and the subsequent increase in farm inputs, labor and maintenance. Whether such arrangement will work depends entirely on the players involved in the industry. It is a more transparent arrangement but for as long as pole-vaulting continues such arrangement will be hard-pressed.
On the other hand, some growers wary over the end result of their own indiscretions are praying that with the appreciation of the price, they hope that the existing agreements be revisited and that some adjustments be done. PBGEA is presently looking into that as they are now looking very seriously at how they can completely put a stamp to fraud which some of them have dipped their fingers into.
In the meantime, the Bureau of Internal Revenue is still sleeping and slipping on its job while the Bureau of Quarantine does not care less whatever happens to the biggest dollar earning industry in Davao. Like in all scams that are unearthed and are unraveled these days, those who are in the take just laze it around.
