sadp pineapple report_111109
TRANSCRIPT
WORKING PAPER
DEPARTMENT OF AGRICULTURE AND
JAPAN INTERNATIONAL COOPERATION AGENCY
Formulation Team on the Drafting of the
Strategic Agribusiness Development Plan
COMMODITY SITUATION REPORT: PINEAPPLE
Prepared by
JOSE ULYSSES J. LUSTRIA
November 2009
____________________
Mr. Lustria is OIC-Chief, Public Investment Program Division (PIPD), Planning Service,
Department of Agriculture. He would like to acknowledge the assistance of Ms. Acquilyn
Morillo and Mr. Aldrin G. Nacional (Technical Assistants, PIPD) in preparing this report.
.
ii
TABLE OF CONTENTS
I. OVERVIEW ...................................................................................................................... 1
A. Background ..................................................................................................................... 1
B. Contribution to the Economy ........................................................................................... 1
II. SITUATIONAL ANALYSIS ............................................................................................. 2
A. Production ....................................................................................................................... 2
1. World Production ........................................................................................................ 2
2. Domestic Production ................................................................................................... 4
B. Supply and Demand ......................................................................................................... 7
1. Supply .......................................................................................................................... 7
2. Demand ....................................................................................................................... 8
a) World demand (exports) .......................................................................................... 8
b) Domestic demand. ................................................................................................. 11
C. Value Chain of System ................................................................................................... 11
1. Input Subsystem ......................................................................................................... 11
2. Production Subsystem ................................................................................................ 12
3. Marketing Subsystem ................................................................................................. 13
4. Processing Subsystem ................................................................................................ 15
5. Support Subsystem………………………………………………………………………….…. 16
D. Prices ............................................................................................................................ 16
1. World prices. ............................................................................................................. 16
2. Domestic prices.. ....................................................................................................... 17
E. SWOT Analysis .............................................................................................................. 18
F. Problem Tree Analysis ................................................................................................... 19
III. SUMMARY, ISSUES AND RECOMMENDATIONS .................................................... 22
IV. REFERENCES .............................................................................................................. 277
V. ANNEXES .................................................................................................................... 279
iii
LIST OF FIGURES
Figure 1 . Percentage share of top producing countries in pineapple
production, 2007………………………………………………………
2
Figure 2 . Annual percentage share of top producing countries in pineapple production (in „000 MT), 1998-2007. ……………………………..…
3
Figure 3 . Percentage share of top producing provinces in pineapple production (in MT), 2008.. ……………………………………
4
Figure 4 . Annual percentage share of top producing provinces in pineapple
production ………………………………………………………….…
5
Figure 5 . Production, area, and yield of pineapple, 1998-2008……...……….… 6
Figure 6 . Value of pineapple production (in Million Pesos),
1998-2008.……………………………………. ……………………...
7
Figure 7 . Export value of pineapple (in %) by Product, 1998-2007……………. 9
Figure 8 . Top markets of Philippines fresh pineapple (in MT),
1998-2008.……………………… ……………………………………
10
Figure 9 . Top markets of Philippines prepared/preserved pineapple (in MT),
1998-2008.. ……………………………………………… …………..
10
Figure 10 . On farm major costs in pineapple production (in %), 1998-2008 ........ 12
Figure 11 . Pineapple agribusiness system.….……………………………………. 14
Figure 12 . Value chain of the pineapple industry.……….…………….………… 14
Figure 13 . Geographic flow and marketing channels of Queen pineapple
in Camarines Norte, 1994. ……………………………………………
15
Figure 14 . Various prices of Hawaiian pineapple (in Php /kg), 1998-2008......…. 17
Figure 15 . Farmgate price of Formosa and Native pineapple, 1998-2008. ……... 17
Figure 16 . Price ratios of Hawaiian pineapple (in %), 1998-2008……….……… 18
Figure 17 . Problem tree of the pineapple industry………………………………. 21
iv
LIST OF TABLES
Table 1 . Countries with highest pineapple yield, (in hg/ha)
1998-2007…………………………………………………………….
3
Table 2 . Supply and utilization account of pineapple (in MT), 1998-2008…………………………………………………………….
8
Table 3 . Philippine share in world export quantity of pineapple (in „000 MT), 1998-2007…………………………………………………………….
8
Table 4 . Philippine share in world export value of pineapple (in „000 MT),
1998-2007. ……………………………………………………………
9
Table 5 . Countries with lowest producer price of pineapple (in US$/MT),
1998-2007. ……………………………………………………………
16
Table 6 . Issues and recommendations in the pineapple industry……………. 24
v
LIST OF ANNEXES
Annex 1 . Gross value output of selected fruits (At constant prices), 1998-2008.…………………… ………………………………………
29
Annex 2 . Updated average costs and returns of pineapple production (in PhP/Ha), 1998-2008..……………..…… ……………………………
30
1
I. OVERVIEW
A. Background
World production of pineapple continues to expand from 13 million metric tons in
1998 to over 21 million metric tons in 2007, an increase of 61 percent. In 1998 to 2007,
Thailand has become the largest producer of pineapple followed by Brazil and the Philippines
(FAO, 2009). The growth of the Philippines fresh and processed export industry is increasing.
Also, the country is the top exporter of juice concentrates and pineapple juice.
Output of large plantations in Mindanao is mainly exported, either fresh or processed
while those in Luzon and Visayas are consumed locally. Forty seven (47) percent of the total
national production is processed and 53% is directly consumed or exported fresh (Digal,
2005).
The major pineapple (Ananas comosus Merr.) varieties in the Philippines are Smooth
Cayenne or Hawaiian, Formosa or Queen or African Queen, Native Philippine Red or Red
Spanish and Cabezona. Hawaiian variety is the most well known and is the most exported. It
also has the biggest size. The variety of pineapple that is traditionally grown in Camarines
Norte is the Queen or Formosa variety. It is mainly grown under coconut trees and in
isolated cases, the open field. Native Philippine Red or Spanish Red is an excellent source of
piña fiber.
Pineapple is eaten fresh, dried, canned in slices, chunks, and tidbits. Also, it is
processed into concentrates, jam, marmalade, juice, vinegar, wine, candy or nata de piña.
It is interesting to note that until the mid-1960's, when the pineapple industry in the
Philippines was already flourishing, the fruit was just a minor crop in Thailand. But today,
around 85 percent of the pineapple area in Thailand is managed by small landowners, while
multinational companies manage 85 percent of the pineapple farms in the Philippines (Digal,
2005).
There are three major producers and processors of pineapple for export in the island.
Their large production area requires contract arrangements with landowners or farmers to
sustain the large fresh pineapple requirements. These are Del Monte, Dole and Tiboli
Agricultural Development Corporation (TADI). At present, there are 28 processing plants in
the Philippines (GMA-HVCC, 2008).
“With its 20,000-hectare contiguous pineapple plantation in the Philippines, 700,000-
ton processing capacity and a port beside the Cannery, Del Monte Pacific operates the
world‟s largest fully-integrated pineapple operation” (Del Monte Pacific, 2008).
B. Contribution to the Economy
Pineapple's economic contribution is gradually increasing. For the period 1998 to
2008, pineapple recorded an average contribution of 2.41 percent to total value of agricultural
crop production (increasing from 2.49 to 2.58%). Also, an average contribution of 1.17
percent to total value of agricultural sector output, increasing from PhP 2,754 million to PhP
4,065 million (see Annex 1).
2
II. SITUATIONAL ANALYSIS
A. Production
1. World Production
a) Major producing countries (by volume of production). In 2007, world
pineapple production accounts to 20,911,077 Metric Tons (MT) from a production area of
846,475 hectares (Ha). The largest producer of pineapple in the world is Thailand
accounting to 13% of world production from 1998 to 2007 followed by Brazil (13%) and
Indonesia (10%). Leading producers also include Philippines, Costa Rica, China, India,
Nigeria, Mexico and Vietnam (see Figure 1).
Figure 1. Percentage share of top producing countries in pineapple
production, 2007.
(Source: FAO, 2009)
On the average, from 1998 to 2007, pineapple production has been increasing at a
growth rate of 5.49 percent. Most of this growth is attributed to Indonesia‟s production
with average growth rate of 25.25 percent, Costa Rica (14.19%) and Vietnam (8.00%).
In 2007, the Philippines ranked fourth among the top pineapple producing countries in
the world with share of 10 percent. For the period 1998-2007, the average percentage
share of Thailand in production accounted to 13 percent (Figure 2). Indonesia and Costa
Rica have evident increase in share to total production from 2007 to 2008 among other
top producers.
3
Figure 2. Annual percentage share of top producing countries in pineapple production
(in „000 MT), 1998-2007.
(Source: FAO, 2009)
b) Productivity. The Philippines has been consistently among the top producers
of pineapple in the world. The Philippines, among Asian countries, is second to Indonesia
with the highest yield. Average production (Hg) with respect to total area (Ha), accounted to
372,426 Hg/Ha, from 1998 to 2007. The level of productivity is relatively higher than the
world average of 193,939 Hg/Ha (see Table 1).
Table 1. Countries with highest pineapple yield, (in hg/ha)1998-2007
(Source: FAO, 2009)
4
According to the Philippine Agriculture 2020 report (NAST, 2008), pineapple is also
price competitive under export trade scenario because export parity price ratio is greater than
1. It is also cost competitive because resource cost ratio for export is less than 1.
2. Domestic Production
a) Major producing provinces by volume of production. Pineapple production
in the Philippines is dominated by provinces from Mindanao. In 2008, production accounted
to 2,029,973 MT (87%) of the total production. Followed by Camarines Norte - Bicol Region
(5%) and Cavite - Southern Tagalog Region (3%), this scenario can be attributed to the
continuous expansion of the cultivating area and the presence of Dole Philippines and Del
Monte Philippines, two large processing plants in Mindanao, as shown in Figure 3.
Figure 3. Percentage share of top producing provinces in pineapple
production (in MT), 2008.
(Source: BAS, 2009)
For the period 1998 to 2008, the average percentage share of Bukidnon in production
accounts to 48.53 percent (Figure 4). The production share of the top producing provinces
has been consistent throughout the years.
The average growth in pineapple production (1998-2008) accounted to 3.50 percent.
On the average, the top producing provinces are consistently increasing production for the
past years. In the case of Sarangani, there was a notable average production growth of 116.19
percent in the same period.
5
Figure 4. Annual percentage share of top producing provinces in pineapple production
(in MT), 1998-2008.
(Source: BAS, 2009)
b) Volume, area planted and productivity. The domestic production of pineapple
is increasing due to gradual increase in the area for cultivation. The average growth rate of
production and area from 1998 to 2008 translated to 3.50 and 3.14 percent respectively,
showing no significant increase in yield with only 0.34 percent growth rate. Before 2006,
yield levels have been fluctuating and may suggest production-related causes such as price
increase of planting materials. See Figure 5.
6
Figure 5. Production, area, and yield of pineapple, 1998-2008.
(Source: BAS, 2009)
7
c) Value of pineapple production. The value of production is increasing with an
annual average growth of 4.01 percent, brought by the increasing level of production. From
1998 to 2008, contribution of pineapple production to the economy was gradually increasing,
with an average annual value of PhP 3,258 million, see Figure 6.
Figure 6. Value of pineapple production (in Million Pesos), 1998-2008.
(Source: BAS, 2009)
B. Supply and Demand
1. Supply
For the past years, there is a slow growth in Pineapple production, with an average
growth rate of 3.50 percent. At a minimal volume, imports also add to the national gross
supply. The 9.70 percent average growth rate of exports for fresh fruit is higher than the rate
of production. The gap shows that there exists a market potential for the Philippine pineapple
brought by the increasing export demand. The country must be able to address this demand,
otherwise, it may result to under supply in either or both domestic and export market.
Apparently this scenario is already evident with the very low growth (0.71%) of the net food
disposable (per capita), see Table 2.
8
Table 2. Supply and utilization account of pineapple (in MT), 1998-2008.
S u p p l y U t i l i z a t i o n
Net Food Disposable YEAR
PRODN
Imports
Gross Supply
Exports
Seeds
Feeds & Waste
Processing
Total
Per Capita Kg./Yr.
Grams /Day
1998 1,575,145 1 1,575,146
117,384
87,466 641,415
728,881 9.96 27.30 1999 1,565,878 0 1,565,8
78 127,600
86,297 632,84
2 719,139 9.62 26.36
2000 1,559,563 1 1,559,564
135,424
85,448 626,621
712,070 9.31 25.50 2001 1,617,906 0 1,617,9
06 153,149
87,885 644,49
3 732,379 9.40 25.75
2002 1,639,161 0 1,639,161
178,639
87,631 642,630
730,261 9.19 25.17 2003 1,697,952 1 1,697,9
53 194,595
90,201 661,47
8 751,679 9.27 25.40
2004 1,759,813 3 1,759,816
203,998
93,349 684,560
777,909 9.41 25.78 2005 1,788,218 0 1,788,2
18 210,754
94,648 694,08
4 788,732 9.25 25.34
2006 1,833,908 0 1,833,908
262,133
94,307 691,581
785,887 9.04 24.77 2007 2,016,462 0 2,016,4
62 276,400
104,404 765,62
7 870,031 9.82 26.90
2008P 2,209,337 0 2,209,337
291,676 115,060 843,771
958,830 10.60 29.04
P - Preliminary data (Source: BAS, 2009)
2. Demand
a) World demand (exports). As reported by FAO (2009), the Philippines
contribute 11.67 percent to the export quantity and 6.43 percent to export value from 1998 to
2007 (in the world market,. The quantity of world exports are consistently increasing, which
shows the increasing demand for pineapple and can be seen as an opportunity. Evidently, the
country have not been concurrently meeting this demand, the Philippines‟ share to the world
export quantity is declining.
The Philippine share in world export of fresh pineapples is shrinking because of its
lower growth compared to global growth. An average increase of 9.77 percent from 1998 to
2007 appears high but relatively low compared to global growth of 14.39 percent in the same
period. Thus, despite an increase in value and quantity of exports, the share in the world
market declined, see Table 3 and 4. Opportunity abounds the pineapple export industry and
must be addressed to continually develop the industry thus benefiting the country in the long
run.
Table 3. Philippine share in world export quantity of pineapple (in „000 MT), 1998-2007.
(Source: FAO, 2009)
9
Table 4. Philippine share in world export value of pineapple (in „000 MT), 1998-2007.
(Source: FAO, 2009)
The country‟s top exports are preserved/prepared pineapple, followed by its fresh
form, see Figure 7.
Figure 7. Export value of pineapple (in %) by Product, 1998-2007.
(Source: NSO, 2008)
In 2008, the fresh export market volume was 291,676 MT with the value of US$ 61
M. As shown in figure 8, the top fresh fruit export destinations includes; Japan (207,223
MT); Republic of South Korea (40, 802 MT), and Singapore (14,995 MT).
10
Figure 8. Top markets of Philippines fresh pineapple (in MT), 1998-2008.
(Source: BAS, 2009)
Philippines is second to Thailand in terms of processing. Products include pineapple
juice, piña fiber, jellies, jams, candied, dried & processed pineapples, pineapple vinegar and
fruit cocktail. The top market for preserved and prepared pineapple is the USA, see Figure 9.
Figure 9. Top markets of Philippines prepared/preserved pineapple (in MT), 1998-2008.
(Source: BAS, 2009)
11
b) Domestic demand. Produce from pineapple farms in Luzon and Visayas are
mainly consumed locally, which primarily constitutes the Formosa or Queen variety. In 2008,
almost half (43.40%) of the gross supply is for local consumption in both fresh and processed
forms.
C. Value Chain of System
Below is a description of the pineapple value chain.
1. Input Subsystem
The major cost drivers in pineapple production are presented in Figure 10.
a) Seeds and seedlings. Many fruit seedlings are provided from BPI crop station
as subsidized price to ordinary farmers. Fruit seedlings are also provided by accredited
nurseries. Multinational companies produce seedlings by themselves through modernized
laboratories without contamination of virus disease. Planting materials are major cost
drivers, it accounted to 26 percent of production costs for pineapple from 1998 to 2008.
b) Fertilizer and pesticide. The increasing prices of fertilizer and pesticides are
a major concern. Both are major cost drivers. From 1998 to 2008, the average share of
fertilizer and pesticides to pineapple production cost is 24 percent (BAS, 2009). Digal
(2005) gives a higher figure for fertilizer and pesticides (38%).
c) Agricultural Machinery. In non-plantation farms, agricultural machinery
and equipment used are simple such as plow and harrow and simple harvesting implements.
Thus, these are not major cost items. Harvesting implements include, protective clothing
(long-sleeved shirt, hand gloves and boots) and baskets (bamboo or rattan-made with a
capacity of 30 to 40 fruits (BPRE, 2008). In addition, manual harvesting and handling makes
use of simple implements such as sacador (bamboo poles with hook and net), ladder, kaing
(basket) and rope (BPRE, 2008).Multinational companies have fully integrated operations.
These companies implement cost-reduction and productivity-enhancement programs, and
invest in new technology and equipment for mechanization in order to maintain their
leadership position in the industry (Digal, 2005).
d) Labor. Labor is considered a major cost driver, it accounted to 24 percent of
pineapple production cost, from 1998 to 2008. Labor is employed from planting to
harvesting.
12
Figure 10. On farm major costs in pineapple production( in %), 1998-2008
See Annex 2 for detailed data.
(Source: BAS, 2009)
2. Production Subsystem
Two production systems are utilized for fruits – the plantation and the small to
medium-scale farms. Hawaiian variety is grown in plantation scale in Mindanao. The Queen
or Formosa variety in Camarines Norte is mainly grown under coconut trees and in isolated
cases, the open field. (GMA-HVCC, 2008).
NSO (2002) data show the number of farms in the country accounts to 124,940. The
major producing regions are Northern Mindanao (top producer), followed by Southern
Mindanao ,Southern Tagalog and Bicol region with an average yield of 33 tons per hectare.
From 1975-2000, Northern Mindanao contributed 52% while Southern Mindanao had
38%.Forty seven (47) percent of the total national production is processed and 53% is
directly consumed or exported fresh (Digal, 2007).
There are three major producers and processors of pineapple. Their large production
area requires contract arrangements with landowners or farmers to sustain the large fresh
pineapple requirements. These are Del Monte, Dole and Tiboli Agricultural Development
Corporation (TADI).Moreover, cooperatives engaged in contractual arrangements account for
over 82% of the total area utilized for pineapple production. The Del Monte Employees and
Agrarian Reform Beneficiaries Cooperatives covers 46% or 14,000 hectares, the Dole
Agrarian Reform Beneficiaries Cooperatives accounts for 29% or 8,937 hectares, and the
partner cooperative of the Tiboli Agricultural Development Inc. utilizes 16% or 5000
hectares. Only 3,000 hectares are planted through contract growing with independent growers
(Digal, 2005).
13
Production system in Multi-national Companies (MNCs) is characterized as follows
(Digal, 2005):
Del Monte Pacific Resources Ltd (DMPRL) owns the Del Monte trademark in the
Philippines and manages Del Monte Phils., Inc. (DMPI) which operates the world‟s largest
contiguous pineapple plantation. It covers over 14,000 hectares (1,600 feet above sea level
and a plateau) in Bukidnon (Northern Mindanao) and produces in excess of 600,000 metric
tons of pineapple per annum. This plantation is located in Manolo Fortich, Libona, Impasug-
ong and Sumilao. DMPI is considered to be the biggest pineapple plantation in the Far East,
and one of the oldest in the Philippines, having started in 1926. It now produces pineapples
under leaseback agreement contract with the Del Monte Philippines Inc (DMPI) Employees
Agrarian Reform Beneficiaries Cooperative (DEARBC).
Dole Philippines, Inc. (Dolefil) operates around 9,000 hectares of pineapple plantation
and a processing plant at the foot of Mt. Matutum, covering the municipalities of Polomolok,
Tupi and Tampakan. Pineapples are produced from the plantation under lease contract with
DoleFil Agrarian Reform Beneficiaries Cooperative and a portion from contract growers
under an expansion project. Dolefil basically has three types of contract arrangements to
interested landowners; Growership Agreement, Self-financed Farms and Farm Management
Contract (FMC).
3. Marketing Subsystem
The marketing of fruits from non-plantation farms is complicated because of many
middlemen, characterizing several layers. Multi-national companies engaged in contracts
with farmer-growers, serves as supplier of inputs likewise the recipient of the produce, see
Figures 11 and 12.
Output of large plantations in Mindanao is mainly exported, either fresh or processed
while those in Luzon and Visayas are consumed locally (Digal, 2007). Several intermediaries
are involved in the marketing of pineapple. From the growers, the fruits are either sold to
wholesalers, wholesalers-retailers, viajeros or travelers, and retailers or directly sold to
processors before they reach the consumers. Contract growers, however, sell directly to big
company processors. Pineapple is sold in fruit stalls and supermarkets in many different
forms: dried, processed in chunks, tidbits, juice, etc. (Digal, 2005).
14
Figure 11. Pineapple agribusiness system.
(Source: ILRF, 2008)
Figure 12. Value chain of the pineapple industry.
(Source: Digal, 2005)
15
Figure 13 shows a more detailed flow and channel for pineapple (Queen variety).
Figure 13. Geographic flow and marketing channels of Queen pineapple in Camarines Norte,
1994.
(Source: Lustria, 1994)
4. Processing Subsystem
Food processing is one activity that strengthens the linkage between agriculture and
industry. It enhances both upstream and downstream activities in the production-marketing
chain. With agro-processed products, the value-added contribution of agricultural fresh
produce is increased. At the same time, downstream activities are enhanced to more efficient
utilization of agricultural inputs and machineries (Elazegui, 1998). Forty seven (47) percent
of the total national production is processed and 53% is directly consumed or exported fresh
(Digal, 2007).
Philippines is 2nd
to Thailand in terms of processing, wherein, 85% of processing
belongs to multinational companies like Del Monte and DOLE. At present, there are 28
pineapple processing plants in the Philippines. Dole, for example markets 20% of production
as fresh fruits and the rest are processed. Pineapple is processed into puree, dried, juice
concentrates, canned products and fruit cocktail in syrup that is intended for export. Native
Philippine Red or Spanish Red when processed is an excellent source of piña fiber (GMA-
HVCC, 2008).
16
5. Support Subsystem
Support for the fruit industry comes from, government and non-government / private
institutions. The DA through its GMA-HVCC banner program provides a comprehensive
package which includes:
a) Production Support Services;
b) Market Development Services;
c) Credit Facilitation Services;
d) Irrigation Development Services;
e) Other Infrastructure/ Post-Harvest Development Services;
f) Extension Support, Education and Training Services;
g) Research and Development;
h) Regulatory Services;
i) Information Support Services; and
j) Policy Formulation, Planning and Advocacy Services.
Various donor countries or agencies have also provided support – both technical and
capital assistance.
D. Prices
1. World prices
On the average, from 1998 to 2007, the Philippines has been one of the pineapple
exporting country with a low producer price, at an 10-year average value of 104.78 US$/MT.
In general, 2007 pineapple producer price increased in the world. In the case of the
Philippines, even with the increase, it recorded the lowest producer price for that year, see
table 5.
Table 5. Countries with lowest producer price of pineapple (in US$/MT), 1998-2007.
(Source: FAO, 2009)
17
2. Domestic prices
In 2008 various prices on Hawaiian pineapple increased at a minimal level. On the
average, for the period 1998 to 2007, retail price of pineapple is consistently increasing at a
gradual rate. It is interesting to note, however, that farm gate price have been decreasing with
a negative average growth of 1.30 percent and wholesale price had no significant change,
almost stagnant at 0.46 percent growth rate, see Figure 14.
Figure 14. Various prices of Hawaiian pineapple (in Php /kg), 1998-2008.
(Source: BAS, 2009)
In contrast, despite the fluctuations the farm gate prices of Formosa and Native
pineapples have been generally increasing at 3.92 and 2.57 percent growth rate, respectively
(Figure 15).
Figure 15. Farmgate price of Formosa and Native pineapple, 1998-2008.
(Source: BAS, 2009)
18
The price scenario in Figure 16 reflects that the Hawaiian pineapple wholesalers are
the gainers in the industry. Farmgate prices showed sluggish growth, reflecting that through
the years (1998-2008) farmers are not gaining at the same rate of retailers and wholesalers.
Figure 16. Price ratios of Hawaiian pineapple (in %), 1998-2008.
(Source: BAS, 2009)
E. SWOT Analysis
As identified by GMA-HVCC, the following strengths are exemplified by the
pineapple industry; the country‟s suitable climate and soil condition, the relatively lower
labor cost and the availability of experienced farmers with harmonious relationship.
On the other hand, the weakness of the industry is insufficient supply of quality fruits,
with losses of 40 percent of total production due to hauling, rat infestation and damage, pests
and diseases such as mealy bugs, root grubs and Phytopthora. Also, there is a high barrier to
entry, lack of post harvest facilities/techniques, low plant density, limited reach of domestic
market and the unavailability of affordable financing scheme.
In addition, for pineapple fiber, there is inadequate supply of planting materials and
piña leaves which resulted to low fiber supply, lack of capital needed for the establishment of
piña plantation for fiber production, the tedious process of fiber extraction and knotting,
inconsistent quality of hand woven fabrics and uneven embroidery, embroiderers sometimes
resort to cut-throat competition which adversely affects the industry and expensive price of
piña cloth which is limiting the market to the upper class only.
The opportunities that are bound to the pineapple industry are having greater access to
markets, the presence of information and communication technology (ICT) facilities,
heightened global consciousness for health foods, high employment and investment
generator. In addition, there is an increasing productivity of area with availability of area for
19
expansion, potential fiber production from leaves, wide marketing opportunities, increasing
local government support, potential for processing and commercializing pineapple products,
product development in terms of packaging and labeling and industry development in the
province will result to increase demand for agricultural equipment as well.
The impending threats are unparalleled population growth, and ineffective cultural
practices.
F. Problem Tree Analysis
Despite the slight increase in pineapple production from 1997 to 2004, its share of
world production declined from 13% to 11% during this period (FAOSTAT, 2005). This
implies that the other producers expanded faster than the Philippines. Hence, there is a need
to tap the industry to become more competent and efficient in the pineapple business.
Increasing the competitive edge and efficiency of the industry will encourage new aspirants
to participate efficiently in pineapple business, improve the income of small growers and
realize the potential of the processing industry.
However, widespread issues in the industry hamper the advancement of pineapple
business. High cost of production is among the issues that have to be addressed to improve
the grower‟s profitability. Pineapple industry has shown promising market of its processed
food such as juice, puree and canned pineapple; however, manufacturing expenses hinders
the industry to expand its production. For instance, sugar, packaging materials, and food
equipment highly contribute in the production cost of processing industry. In the case of fresh
pineapple, labor and agricultural chemicals are the major cost drivers of the production. For
most of small players, expanding their production is an unworkable option since this would
require them to put more money on the business. Whereas credit facilities are inadequate and
unavailable, small growers cannot step forward to increase their production and compete with
large producers. Large companies, on the other hand, can integrate some input materials to
reduce the production cost. While large producers enjoy this benefit, expansion of their
production emphasizes the sporadic production of pineapple since ownership of large land is
prohibited under the Comprehensive Agrarian Reform Program. Integrating vast tracts of
land, therefore, will necessitate large companies‟ substantial financial backing, which
eventually drives up the cost of their production as well.
On the contrary, development of the industry should not be overstressed in reducing
the cost of its production. Improving the quality of the fruit will also sharpen the competitive
edge of the industry in the international market. Sustaining the supply of quality produce in
the market starts at the farm production level. It is imperative to note that pineapple plant is
also susceptible to pests and diseases, which are also accountable to 40 percent, lost of its
total production.
Inasmuch as sporadic planting of pineapple is prevalent in the industry; most growers
are cultivating their farm based on their own practices without the proper technical skills
needed to have a good grown plant. Lack of uniform grade standards further aggravates this
situation. Alongside with these issues, inefficiencies in handling and shipping also affect the
quality of the produce. To maintain freshness and quality upon reaching the market, fresh
pineapples require appropriate temperature. Small growers, however, are deficient in post
harvest facilities such as cold storage, which make it more difficult for them to meet the
quality requirements.
20
Despite of the existing farm-to-market road network, there are still notable
inadequacies in the sectors‟ infrastructure. Some of the plantations are located near in the
areas that are not easily accessible, making the transfer of the products more costly. In the
case of small integrators, poor market infrastructures compounded the cost and risk entail in
shipping fresh products. There are cases where small shippers are often forced to bribe the
loading crew, which drives up shipment cost, to ensure that their cargoes are prioritized or
given favorable spaces in the ship to maintain its quality. Note that importing countries are
implementing stringent quality requirements. Unfortunately, small growers are always at a
significant disadvantage in the export field because only large companies can sufficiently
meet these conditions.
Figure 17 shows a graphical analysis of the problems in the pineapple industry.
21
Inco
nsis
tent
sup
ply
of
qual
ity fr
uits
Inco
nsis
tent
sup
ply
of
qual
ity fr
uits
Lack
of u
nifo
rm
grad
e st
anda
rds
Lack
of u
nifo
rm
grad
e st
anda
rds
Lack
of
post
harv
est
faci
litie
s
Lack
of
post
harv
est
faci
litie
s
Agr
aria
n R
efor
m
Law
Agr
aria
n R
efor
m
Law
Hig
h la
bor
cost
Hig
h la
bor
cost
Exp
ensi
ve fo
od
equi
pmen
t
Exp
ensi
ve fo
od
equi
pmen
t
Hig
h co
st o
f sug
ar/
liqui
datio
n of
sug
ar
Hig
h co
st o
f sug
ar/
liqui
datio
n of
sug
ar
Inef
ficie
ncie
s in
han
dlin
g
and
ship
ping
Inef
ficie
ncie
s in
han
dlin
g
and
ship
ping
Inad
equa
te
acce
ss to
cre
dit
Inad
equa
te
acce
ss to
cre
dit
Hig
h co
st o
f pa
ckag
ing
mat
eria
ls
Hig
h co
st o
f pa
ckag
ing
mat
eria
ls
Hig
h co
st a
nd
low
qua
lity
of
suga
r
Hig
h co
st a
nd
low
qua
lity
of
suga
rH
igh
cost
of
agric
ultu
ral
chem
ical
s
Hig
h co
st o
f ag
ricul
tura
l
chem
ical
s
Lack
of
tech
nica
l-kno
w-
how
of s
mal
l
grow
ers
Lack
of
tech
nica
l-kno
w-
how
of s
mal
l
grow
ers
Hig
h co
st o
f
inpu
ts
Hig
h co
st o
f
inpu
ts
Hig
h co
st o
f pro
duct
ion
for
smal
l pla
yers
Hig
h co
st o
f pro
duct
ion
for
smal
l pla
yers
Sub
stan
tial f
inan
cial
ba
ckin
g to
inte
grat
e
vast
trac
ts o
f lan
d
Sub
stan
tial f
inan
cial
ba
ckin
g to
inte
grat
e
vast
trac
ts o
f lan
d
Spo
radi
c pr
oduc
tion
Spo
radi
c pr
oduc
tion
Low
inco
me
of
smal
l gro
wer
s
Low
inco
me
of
smal
l gro
wer
s
Unr
ealiz
ed
pote
ntia
l of
proc
essi
ng in
dust
ry
Unr
ealiz
ed
pote
ntia
l of
proc
essi
ng in
dust
ry
Diff
icul
t for
new
asp
irant
s to
pa
rtic
ipat
e ef
ficie
ntly
in p
inea
pple
busi
ness
Diff
icul
t for
new
asp
irant
s to
pa
rtic
ipat
e ef
ficie
ntly
in p
inea
pple
busi
ness
Low
inco
me
of
smal
l gro
wer
s
Low
inco
me
of
smal
l gro
wer
sU
nrea
lized
pot
entia
l of p
roce
ssin
g
indu
stry
Unr
ealiz
ed p
oten
tial o
f pro
cess
ing
indu
stry
Hig
h fr
eigh
t/
ship
ping
cos
t
Hig
h fr
eigh
t/
ship
ping
cos
t
Poo
r in
fras
truc
ture
faci
litie
s
Poo
r in
fras
truc
ture
faci
litie
s
Sus
cept
ible
to
pest
s an
d di
seas
es
Sus
cept
ible
to
pest
s an
d di
seas
es
Lost
40%
of t
otal
prod
uctio
n du
e to
ha
ulin
g, r
at in
fest
atio
n
and
dam
age
Lost
40%
of t
otal
prod
uctio
n du
e to
ha
ulin
g, r
at in
fest
atio
n
and
dam
age
Fig
ure
17. P
roble
m t
ree
of
the
pin
eapple
indust
ry.
22
III. SUMMARY, ISSUES AND RECOMMENDATIONS
Growth opportunities abound the pineapple industry, as the world market increases its
demand for pineapples, both for fresh and processed. Along with banana and mango as major
fruits, pineapple has a relatively high growth potential. Besides the increasing demand of
fresh fruit, various processed forms of pineapple are also in demand, as food and as fiber.
Both export and local demand is increasing, an opportunity that must be addressed
accordingly.
In production, the number of farms in the country accounts to 124,940 farms (NSO,
2002). The major producing regions are Northern Mindanao, Southern Mindanao, Southern
Tagalog, and the Bicol region with an average yield of 33 MT per hectare. From 1975 to
2000, Northern Mindanao contributed 52 percent while Southern Mindanao shared 38
percent. Forty-seven percent of the total national production is processed and 53 percent is
directly consumed or exported fresh (Digal, 2007). Hawaiian variety is grown in plantation
scale in Mindanao. The Queen or Formosa variety in Camarines Norte is mainly grown
under coconut trees and in isolated cases, the open field.
There are three major producers and processors of pineapple. Their large production
area requires contract arrangements with landowners or farmers to sustain the large fresh
pineapple requirements. These are Del Monte, Dole, and Tiboli Agricultural Development
Corporation (TADI). Moreover, cooperatives engaged in contractual arrangements account
for over 82 percent of the total area utilized for pineapple production. The Del Monte
Employees and Agrarian Reform Beneficiaries Cooperatives covers 46 percent or 14,000 ha,
the Dole Agrarian Reform Beneficiaries Cooperatives accounts for 29 percent or 8,937 ha,
and the partner cooperative of the Tiboli Agricultural Development Inc. utilizes 16 percent or
5,000 ha. Only 3,000 ha are planted through contract growing with independent growers
(Digal, 2005).
Output of large plantations in Mindanao is mainly exported, either fresh or processed,
while those in Luzon and Visayas are consumed locally (Digal, 2007). Several intermediaries
are involved in the marketing of pineapple. From the growers, the fruits are either sold to
wholesalers, wholesalers-retailers, viajeros or travelers, and retailers, or directly sold to
processors before they reach the consumers. Contract growers, however, sell directly to big
company processors. Pineapple is sold in fruit stalls and supermarkets in many different
forms: dried, processed in chunks, tidbits, juice, and the like (Digal, 2005).
Forty-seven percent of the total pineapple production is processed and 53 percent is
directly consumed or exported fresh (Digal, 2007). The Philippines is 2nd
to Thailand in terms
of processing, wherein 85 percent of processing belongs to multinational companies like Del
Monte and Dole. At present, there are 28 pineapple processing plants in the Philippines. Dole,
for example markets 20 percent of total production as fresh fruits and the rest are processed.
Pineapple is processed into puree, dried, juice concentrates, canned products, and fruit
cocktail in syrup that is intended for export. Native Philippine Red or Spanish Red, when
processed, is an excellent source of piña fiber (GMA-HVCC, 2008).
A major key player in the pineapple industry is the multinational companies, which
greatly influenced the country‟s fruit sector in terms of exports, investment, and employment.
Enhancing the linkages of these firms with small farmers and enterprises are considered
necessary. There are also issues that need to be addressed to improve these linkages so that
23
small farmers and enterprises may be able to tap higher value chains and improve quality,
production, and competitiveness of their produce (Digal, 2005).
Increasing the competitive edge and efficiency of the industry will encourage new
aspirants to participate efficiently in pineapple business, improve the income of small
growers and realize the potential of the processing industry. However, widespread issues in
the industry hamper the advancement of pineapple business. Among these issues are the high
cost of production and inconsistent supply of quality fruit. In the pineapple processing
industry, cost of inputs such as sugar, packaging material and food equipment is the main
cost driver of production. Labor, agricultural chemicals and quality planting materials are the
major cost skeleton of fresh pineapple production. Integrating vast tract of land also
contributes to the production cost of fresh pineapple. Advancement of the industry, on the
other hand, should not be solely drawn in reducing the cost of its production. Supply of the
quality produce considerably affects the competitiveness of the industry in the world market.
Factors that significantly influence the supply of quality fruit are technical-know-how skill of
the farmers, uniform grade standards, and infrastructure and post harvest facilities. Handling
and shipping the product is also as significant as maintaining the quality of the fruit at the
farm production level. In addition, keeping the plant resistant to pests and diseases has a say
on increasing the yield and quality of the fruit.
Opportunities abound the pineapple industry, among the investment opportunities
identified were growership for fresh and processed pineapple, individual production of fresh
pineapple (MD-2, Queen) for local and export markets, organic production of fresh and
processed pineapple. For production inputs, opportunity arises for organic fertilizers and
tissue culture plantlets. Also for logistics which includes cold chain facilities. Moreover,
investment opportunities in the supply chain includes farm mechanization, post harvest
facilities (Input subsystem), total area expansion and credit (Production subsystem), increase
processing plants, peeling and cutting machines (Processing), trading from farm to market
(Marketing) and transport facilities from the farm to Metro Manila (Logistics).
Among the stakeholders who participated in the conducted stakeholders consultation
(DA, 2008) was Mr. Michael Lao (Executive Vice President KLT Fruits- exporter of mango
and other tropical fruit products). Accordingly, he recommends that for the success of the
fruit industry, in general, focus must be set to lower the production cost and to improve and
provide technology needed by the industry. Importance of government and private sector
partnership was also stressed. Mr. Lao stated that the country‟s competitiveness has become
less and less and one way to reduce cost is to find client that will cover the overheads or
infrastructures. He also encouraged farmers to form a cooperative that will lead to organize
production. He suggested that Cooperative Development Agency should conduct more
training on cooperative management.
24
Table 6 illustrates the issues and gaps in the pineapple industry, accordingly, recommendations were also provided. Table 6. Issues and recommendations in the pineapple industry.
Supply chain Issue/Gap Recommendation
I.
Input Supply Subsystem
Seeds and Seedlings, etc. Insufficient planting materials with high quality
Development of new varieties, varietal improvement through biotechnology, accreditation of nurseries, and intensification of R & D through SUCs and other agro-based research and development institutions
Fertilizer and Pesticide Increasing costs Improvement of logistics; utilization of organic fertilizers
Agricultural Machinery/equipment
Need for standards in farm equipment
Establishment of agricultural machinery and equipment standards
Labor Increasing cost of labor
Maximum utilization of family labor
II. Production Subsystem Inconsistent supply; fragmented production Prevalence/existence of pests and diseases
Expansion of production areas; integration of supply; policy/legislative work on issues such as public land access Strict quarantine regulation to prevent spread of pest and diseases and intensified information campaign about the threat of disease R, D and extension program aimed at developing an effective and efficient Integrated Pest Management (IPM) Strategies
III. Marketing Subsystem Inefficient marketing system
Improvement of logistics (to address high postharvest losses); establishment of trans-shipment facilities; revisit of the Food Terminal approach; improvement of market intelligence and information systems, particularly on price monitoring, supply and demand forecasting and analysis of the different fruits
25
IV. Processing Subsystem Inadequate postharvest and processing facilities; need for standards in equipment Low awareness on proper postharvest handling Lack of awareness of importing countries standards Limited access to product testing and quality/safety system certification services
Increase and improvement in processing and postharvest facilities (e.g., processing and packaging plants, peeling and cutting machines); utilization of biotechnology Establishment of postharvest clinic to address postharvest related concerns in the area Conduct of capability building Compilation/updating of importing countries standards and dissemination of these information to processors Supplementing of Food Development Center testing services available only in Manila; upgrading of DOST regional testing laboratories to conform with the Codex guidelines for the assessment of the competencies of food testing laboratories
V. Support Subsystem Inadequate support systems
Provision of more support facilities such as ports, farm-to-market roads, cold chain systems, irrigation facilities; also regulatory and food safety system (e.g., traceability, database/s); promotion of GAP and monitoring of compliance; credit and crop insurance facilities; strengthening of the Research and Development-Extension system in the different levels of government, from national to local government level
Note: Issues and Recommendations were identified from (through) key informant interviews, secondary data,
workshops, consultations and field visits.
26
Moreover, reviews on the existing programs formulated by the government to solve the
concerns of the industry - from access to agricultural resources and services to market
information- is imperative in strengthening its competence in dealing with the prevailing
issues of the fruit industry. One good example is the Food Terminal Concept which is
developed by DA. This concept is especially designed to develop market infrastructure of the
industry by establishing chain of marketing facilities from farm to consumers and developing
distribution centers (food terminal hubs) which are designated regional or provincial agro-
industrial centers for proximity to value-adding and processing activities. Active involvement
of LGUs, NGOs, private sector, GOCCs, and joint-venture between any of the parties above
is highly encouraged to operate the hubs so that trading system will be more efficient and
transparent and market information will be more accessible to the agents of the market.
27
IV. REFERENCES
Del Monte Pacific. Del Monte Pacific Corporate Profile. Retrieved on October 2008 from
<http://www.delmontepacific.com>
Department of Agriculture - Bureau of Agricultural Statistics, DA-BAS. (2008). Countrystat.
Retrieved on December 2008 from <http://www.countrystat.bas.gov.ph>
Department of Agriculture - Bureau of Postharvest Research and Extension, DA-BPRE. (2008)
Philippine Postharvest industry profile: Pineapple. Retrieved on October 2008 from
<http://www.bpre.gov.ph/phindustry/pineapple.htm>.
Department of Agriculture. (2008). Proceedings of the Agribusiness Situation Analysis
Stakeholders Consultation Meeting. Quezon City. December 9-10, 2008.
Department of Agriculture-Ginintuang Masaganang Ani High Value Commercial Crops (DA -
GMA-HVCC) Banner Program. Commodity Profiles. Retrieved on October 2008 from
<http://www.hvcc.da.gov.ph>
Digal, L.N. (2005). Benefit Diffusion and Linkage Development in the Philippine Tropical Fruits
Sector. Retrieved on October 2008 from <http://siteresources.worldbank.org/
INTPHILIPPINES/ Resources/Digal-word.pdf>
Digal, L.N. (2007). Agricultural Contracts in Mindanao: The Case of Banana and Pineapple.
Discussion Paper Series No, 2007-24. Philippine Institute for Development Studies.
Philippines.
Elazegui, D.D. (1998). Food processing in the Philippines: Issues and Challenges. Working paper no.
98-03. ISPPS, CPAF, UPLB.
FAOSTAT. (2005). Food and Agriculture Organization of the United Nations, 2005. Retrieved on
October 2008 from < http://faostat.fao.org/default.aspx/ >
FAOSTAT. (2008). Food and Agriculture Organization of the United Nations, 2008. Retrieved on
October 2008 from < http://faostat.fao.org/default.aspx/ >I
International Labor Rights Forum. (2008). The Sour Taste Of Pineapple: How An Expanding Export
Industry Undermines Workers And Their Communities. October 2008. Retrieved on
November 2008 from http://www.laborrights.org/files/ILRF_pineapplereport.pdf >
Lustria, J. U. et al. (1994). Marketing and Information Needs Assessment Report. Camarines Norte. A
Technical Report. Published by the Department of Agriculture - Bureau of Agricultural
Statistics. August 1994.
28
National Academy of Science and Technology, Department of Science and Technology.
(2008). Philippine Agriculture 2020: A Strategy for Poverty Reduction, Food
Security, Competitiveness, Sustainability, Justice and Peace. Main report. January
2008.
National Statistics Office. (2002). Census of Agriculture and Fisheries.
National Statistics Office. (2008). Quantity and Value of Exports and Import, 1994-2007.
29
V. ANNEXES
Annex 1. Gross value output of selected fruits (At constant prices), 1998-2008.
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE
TOTAL AGRI OUTPUT 224,172 245,874 242,318 253,131 262,788 272,011 286,245 292,581 304,000 318,068 330,396 275,599
TOTAL AGRI CROP OUTPUT 110,733 129,268 120,249 124,046 126,035 129,250 136,181 137,305 143,699 151,559 157,543 133,261
VALUE OF PRODUCTION IN AGRICULTURE AT CONSTANT PRICES, 1998 - 2008, (IN MILLION PESOS)
BANANA 6,252 8,181 8,824 9,056 9,442 9,610 10,080 11,274 12,162 13,396 15,551 10,348
PINEAPPLE 2,754 2,831 2,885 2,993 3,032 3,141 3,256 3,290 3,374 3,710 4,065 3,212
MANGO 6,307 6,297 6,167 6,392 6,950 7,244 6,947 7,058 6,589 7,341 6,338 6,694
CALAMANSI 216 908 922 927 923 923 913 1,024 1,003 1,028 1,018 891
PAPAYA 144 151 163 171 171 175 179 196 211 220 245 184
POMELO 66 68 65 61 64 61 58 57 55 54 52 60
DURIAN 593 545 526 552 646 813 835 966 990 1,496 1,050 819
MANGOSTEEN 17 16 15 16 16 16 16 17 15 15 3 15
SHARE TO TOTAL AGRI OUTPUT, 1998 - 2008, (IN %)
BANANA 2.79 3.33 3.64 3.58 3.59 3.53 3.52 3.85 4.00 4.21 4.71 3.71
PINEAPPLE 1.23 1.15 1.19 1.18 1.15 1.15 1.14 1.12 1.11 1.17 1.23 1.17
MANGO 2.81 2.56 2.55 2.53 2.64 2.66 2.43 2.41 2.17 2.31 1.92 2.45
CALAMANSI 0.10 0.37 0.38 0.37 0.35 0.34 0.32 0.35 0.33 0.32 0.31 0.32
PAPAYA 0.06 0.06 0.07 0.07 0.07 0.06 0.06 0.07 0.07 0.07 0.07 0.07
POMELO 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
DURIAN 0.26 0.22 0.22 0.22 0.25 0.30 0.29 0.33 0.33 0.47 0.32 0.29
MANGOSTEEN 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.01
SHARE TO TOTAL AGRI CROPS, 1998 - 2008, (IN %)
BANANA 5.65 6.33 7.34 7.30 7.49 7.44 7.40 8.21 8.46 8.84 9.87 7.67
PINEAPPLE 2.49 2.19 2.40 2.41 2.41 2.43 2.39 2.40 2.35 2.45 2.58 2.41
MANGO 5.70 4.87 5.13 5.15 5.51 5.61 5.10 5.14 4.59 4.84 4.02 5.06
CALAMANSI 0.20 0.70 0.77 0.75 0.73 0.71 0.67 0.75 0.70 0.68 0.65 0.66
PAPAYA 0.13 0.12 0.14 0.14 0.14 0.14 0.13 0.14 0.15 0.15 0.16 0.14
POMELO 0.06 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.03 0.05
DURIAN 0.54 0.42 0.44 0.45 0.51 0.63 0.61 0.70 0.69 0.99 0.67 0.60
MANGOSTEEN 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.01
(Source: BAS, 2009.)
30
Annex 2. Updated average costs and returns of pineapple production (in PhP/Ha), 1998-2008.
(Source: BAS, 2009)
31