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DAVAO
CITY—The largest rural bank in Mindanao, providing most
of the farm loans to small banana growers, and
multinational growers and buyers have teamed up to
protect their respective turfs—banana plantation and
farms—against the rampaging price war that continues to
hit the banana industry since early January this year.
The move
was meant to contain the effects of the price haggling
and marketing maneuvers from spilling over to their
growers still bound in long-term supply contracts, as
industry leaders predicted that the major harvest season
may come sometime in July yet, farther than expected.
Alex
Buenaventura, president of One Network Bank, said it has
stepped into the banana price war by installing a
“strict monitoring system” to prevent its
borrower-farmers from reneging on their long-term
contract to supply to their partner-buyers and
multinational growers.
“We have
warned our farmer-growers against doing pole vaulting,”
he told a regular bimonthly Tuesday business forum at
the MediSpa Clinic at the SM City Mall. “Pole-vaulting”
has become an industry term to refer to farmers bound in
a long-term supply contract who try to default on their
obligation by selling their products to the buyers
offering hefty prices.
Reports
have been circulating in many farms and former
plantations that farmer-growers in Davao del Norte,
Compostela
Valley
and Davao City have engaged in this activity, and
Buenaventura said his bank has discovered about ten of
their farmer-growers in Santo Tomas town doing it.
“We warn
our farmers against engaging in pole-vaulting, and in
worse cases, we threaten them to close their farms,” he
said, saying that their farms were also collaterals of
their loans.
He
confirmed that the price war continued to happen in the
industry that is mostly concentrated in the Davao
Region, and also confirmed that the industry
leaders—plantation owners, multinational growers and
exporters and other institutional growers—“have been
very alarmed.”
He said
that this was how such multination firms Dole
Philippines-Stanfilco and Sumitomo Fruits would look at
the current price war. He said that the One Network Bank
has worked closely with these two big buyers, saying
that the bank has provided the farm loans to a majority
number of the growers of the two companies.
“We are
working together to protect our farmers, that they can
continue to pay their obligations and perform
productively, and on the side of the companies, that
their growers can continue to comply with their
obligations to supply them with banana,” he said.
Buenaventura
said, however, that it would not meddle in the price
haggling and setting in the market that has been seeing
a rapid price change every day since early January this
year, “when the abnormal low supply of banana here and
the abnormal high demand for banana in the Middle East
came to contribute to this price war.”
He said
that the price war was involving mainly the
multinational buyers and the independent producers. Yet,
as the price war was largely seen as affecting only the
mostly multinational companies buying the Davao bananas,
he said the hefty incomes derived by independent
suppliers “has caused our growers with long-term
contracts to be uncomfortable, probably wanting to sell
to these big offers, too.”
This
week, he said, buying price has been monitored at $4.60
per box of 13.5 kilos of the exported Cavendish variety.
This offering is already double the buying price fixed
in the long-term marketing contracts between the former
plantation workers-turned-growers and the former
plantation owners-turned-both buyers and growers for
multinational firms.
Most of
the contracts have tied banana growers to sell their
produce at agreed prices ranging from $2.35 to $3.60.
Anthony
Sasin, spokesman for the Pilipino Banana Growers and
Exporters Association (PBGEA), earlier told
BusinessMirror that the probable solution to stopping
the price war would be the flooding of the market with
banana during the industry-wide harvest expected to
happen next month.
“I don’t
think that the buyers who started this price war have
pockets the size of the balloon as to corner all the
products. Besides, the association [PBGEA] would not
allow that to happen,” he said.
Industry
experts have pointed at a supposed renegade group of
former banana-industry executives who have been
financially backed by a big Middle Eastern buyer of
banana as the one who began rigging the prices above the
contract prices.
The
industry, many of whose leaders preferred not to talk
publicly about the phenomenon, has called this renegade
group the Magdalo Group.
The One
Network Bank has an exposure of slightly more than half
a billion pesos in the banana industry, funding mostly
small farmholdings devoted to the banana-growership
scheme. |
