Friday, October 22, 2021

House bill may kill Philippine's banana industry

DAVAO -- The country's thriving banana industry is being threatened by what industry players described as a "dangerous calamity," referring to a proposal in Congress that regulates agribusiness ventures arrangements (AVAs) in land reform areas.

"While we can't prevent natural calamities, there is now a more dangerous calamity threatening the industry. This threat to the banana export industry can be solved or eliminated if properly explained by the industry leaders," Stephen Antig, executive director of the Pilipino Banana Growers and Exporters Association Inc. (PBGEA), said in Wednesday's press briefing.

What concerns the industry players at present, he said, is a measure authored by Ifugao Representative Teddy Baguilat, the House Bill (HB) 5161, or the "Act Regulating the Establishment and Implementation of Agribusiness Ventures Arrangements (AVAs) in Land Reform Areas."

The bill is up for approval on final reading in the House of Representatives.

Antig said "HB 5161 might even kill the industry" that employs more than half a million workers in banana companies, cooperatives and plantations, including those employed in allied industries, scattered in Mindanao's 13 provinces.

"The proposal shies away investors in the industry....and this means adverse effects on more than 503,000 people directly and indirectly employed in the industry," he said, adding that these workers receive an estimated P44 billion in annual wages.

Banana is one of the country's best agricultural products second only to coconut oil. The country is the second largest banana exporter in the world, making the banana industry a consistent top dollar earner.

Citing statistics from the Philippine Statistics Authority (PSA), Antig said exports of cavendish bananas breached the $1 billion mark as it grew 18.06 percent from $962.58 million in 2013 to $1.13 billion in 2014.

It has remained the second most important export commodity, having shared 15-18 percent of the total top ten agricultural exports revenue.

In 2014, the total land area planted with different varieties of bananas all over the Philippines reached 441,951 hectares. Majority of the country's banana production is from Mindanao, which is produced from 243,450 hectares. Cavendish for export accounts for 34 percent or 83,843 hectares of that total area, 90 to 95 percent of which are in Mindanao.

The top major export destinations for fresh cavendish bananas are China, Japan, Korea, the Middle East and New Zealand.

"So why kill the goose that lays golden eggs?" Antig said.

He particularly questioned the term of the lease contract as provided for in HB 5161, which is only five years.

"Maybe, they should start from 10 years, renewable for other 10 to 15 years.... hindi yung idi-dicate ng gobyerno, na o, dapat five years lang. Then, of course, yung lease rental pwede naman mapag-uusapan yon eh, ganito, dapat ganito na ang lease rental natin," Antig said.

"Lease contract should be taken out of the coverage of the proposed bill and should be allowed as long as the contract does not violate the provisions of the New Civil Code. Lease as a contract cannot entirely be prohibited as it is expressly recognized even for agricultural lands under Article 12, Section 3 and Article 13, Sec. 6 of the Constitution," PBGEA said in a letter send to Baguilat, also the chair of the House committee on agrarian reform.

Antig said to be affected by this provision are the agrarian reform beneficiaries, who have entered into contract growing agreement with investors.

"The bill will eventually allow government interference in purely private commercial transactions. We maintain that the private sector is the most efficient and effective mover of businesses and investments," Antig said.

In the same letter addressed to Baguilat, PBGEA pointed out the bill itself was deemed unnecessary because there is an absence of any need or justification for a law on the specific and restrictive regulation of AVAs between private investors and ARBs.

"Involving the government in AVAs will further increase the presently cumbersome regulatory requirements for investments in the Philippines, including investments in agribusinesses in tandem with ARBs. If Congress is minded to protect the interests of ARBs who enter into contracts with the private sector, Congress should provide support services to these ARBs instead of mandating governmental approval of all contracts with them," Antig said.

BGEA also cited that HB 5161 alters a lot of contract principles and rules. First, it undermines the obligatory force and mutuality of contracts. Under the bill, an ARB can unilaterally opt out of the contract upon change of economic conditions.

"The bill virtually shields an ARB as a landowner and entrepreneur from investment and other risks and shifts these burdens to the private investor, negating the autonomy of contracts by providing mandatory provisions that will deter investors from entering into a contract with ARBs," Antig said.

He also stressed that HB 5161 will ultimately work to the detriment of the ARBs and the agricultural industry.

"With its restrictive regulatory requirements, HB 5161 removes the incentive for private investors to transact with ARBs and, thus, deny ARBs access to the private sector's expertise and resources that the government cannot provide. With the limitation of land contracts, it will constrict agricultural production and exports to the prejudice of the national economy," Antig said. (Sun.Star Davao)

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