Rising geopolitical tensions in the West Philippine Sea have led to a decrease in China's purchases of bananas from the Philippines, impacting the country's position in crucial Asian markets. According to International Trade Centre data, China's imports of Filipino bananas dropped by 49 percent year-on-year to 255,636.069 metric tons as of July, reducing the Philippines' market share in China to 24.53 percent from 37.49 percent. Consequently, Vietnam has surpassed the Philippines as China's top banana supplier with a 19 percent increase in exports to China, amounting to 438,573 MT and capturing 42 percent of the market.
The Pilipino Banana Growers and Exporters Association (PBGEA) attributes this downturn to the geopolitical tension between the Philippines and China, stating that such tensions have historically led to negative impacts on trade, especially in the banana industry. The industry is also grappling with production challenges, including the spread of Fusarium Wilt and the unpredictable spot pricing mechanism in China's market, which discourages exporters seeking more stable profits through long-term contracts.
Experts agree that political relations significantly affect trade dynamics, with the banana trade between the Philippines and China being notably influenced by geopolitical issues. The local banana industry faces multiple challenges, including high production costs, pests, logistical issues, and weather disturbances, alongside stiff competition from neighboring countries like Vietnam, Cambodia, and Lao PDR, which have enhanced their production capabilities and offer more competitive prices.
Vietnam's banana industry growth is attributed to its larger planted area and investments in Cambodia, further intensifying competition for the Philippines in key markets such as China and Japan. This reduction in market share in China coincides with the Philippines also losing ground in the South Korean market, where its share decreased to 60 percent from January to August from 70 percent in the previous year.
Source: philstar Global