Iran's ban on RP bananas creates supply glut, causing prices to dive

DAVAO CITY (MindaNews/7 Oct) — Even this early, Iran’s ban on Philippine bananas is already creating a supply glut, causing market prices to dive, said an official of a farmer’s federation who also ventures into banana exports.

Even banana exporters whose market is not Iran have been affected by Iran’s ban on Philippine bananas as the oversupply of bananas cause prices to plummet, Ireneo Dalayon, the chief executive officer of the Federation of Agrarian Reform Beneficiaries/Banana Based Cooperatives of Davao (Fedco), said.

After Iran imposed its embargo two weeks ago, prices in the China market have gone down to as low as over US$1 a box, down by almost half from the US$3 a box prevailing before the ban.

Dalayon said 30 percent of the 50 million boxes, which makes up Iran’s share in the Middle East market, will cause an oversupply in the market, causing the prices to dive.

Fedco is a federation of small farmers and growers who supply leading multinational exporters with fresh bananas for the export market. While some of its member cooperatives supply big multinational companies like Dole, Stanfilco and Unifrutti, others have also been directly exporting to the Japanese, China and Middle East market.

“Although the Japan market remains a stable one, we have problems with the China and the Middle East market,” he said, referring to the plummeting prices.

Although only a small volume of their produce are intended for Iran, Dalayon said they were forced to sell their bananas to China when Iran announced the ban. Their bananas, which used to sell at US$3 per box in Iran, fetched only at half the price in the Chinese market, after Iran declared a ban on Philippine bananas as a response to intensifying international pressure on its uranium enrichment program. He said some of their member cooperatives have been told by the Unifrutti Corporation to stop harvesting bananas in the field.

“Even if we’re not largely (exporting to) Iran, we’re also affected because the market gets flooded,” said Dalayon. “Even at half the price, we decided to sell. It’s better than chopping off the banana (stalks).”

Stephen Antig, president of the Philippine Banana Growers and Exporters Association (PBGEA), said exporters are bound to lose an estimated P7.2 billion in export receipts at current foreign exchange rate if the situation continues.

Mindanao banana exporters ship some 50 million boxes of bananas a year to the Middle East market, 16 to 27 per cent of which are bound for Iran. Antig said over 64,000 workers, translated into 384 households, who depend on the banana industry will face a bleak Christmas this year if the situation will not improve.

Exporters have been lobbying for the national government to exert diplomatic efforts to encourage Iran to lift the ban.

Antig said that Lapanday Corporation, one of the major banana exporters, has been lobbying for the government to do something about Iran’s ban on Philippine bananas. Exporters are also eyeing other measures to cope with the crisis, including a possible oil-for-fruit barter with Iran. (Germelina Lacorte / MindaNews)