“Maintaining the current price is unrealistic and unfair for banana farmers in the Philippines.”

In June 2022, the Philippine ambassador to Japan, Jose Castillo Laurel, asked Japan—currently the top destination for Philippine banana exports—to raise banana transaction prices. The background includes power imbalances between producers and trading firms, with producers in a weak position in price setting being driven into poverty by unfair transactions. To make matters worse, from 2020 the impact of COVID-19 and Russia’s invasion of Ukraine pushed costs higher, pushing many banana farmers to their limits. What is the reality in the banana industry surrounding farmers? This article explores the various issues the banana industry faces, focusing on Mindanao Island in the Philippines, where banana production is particularly active.

Bananas grown on Mindanao Island (Photo: Shubert Ciencia / Flickr [CC BY 2.0])

About the Philippines’ Mindanao Island

The Republic of the Philippines in Southeast Asia is home to more than 112 million people living across over 7,000 islands. The country is broadly divided into 3 regions—Luzon in the north, the Visayas in the center, and Mindanao in the south—each with different core industries. Luzon, where the capital Manila is located, is the center of the economy, finance, and government, while the Visayas have developed tourism industries around islands such as Cebu. Mindanao in the south has supported its economy primarily through agriculture, forestry, and fisheries.

Nationally, the economy is shifting from agriculture to services. In the 1960s, agriculture accounted for about 25% of GDP, but it is now about 10%. In 2020, 24.8% of the population worked in agriculture, most of them smallholders with farms of less than 1 hectare. In Mindanao, while the output of the service sector is higher than that of agriculture or industry, agriculture remains strong, and export crops led by bananas and coconuts account for 60% of domestic revenue in these categories. Fertile lands also produce corn, rice, coffee, and cacao. Fruits such as bananas, pineapples, and mangoes are often grown for export, and varieties are sometimes improved to meet the needs of export destinations. A prime example is the Cavendish banana, the most common in the global export market. Export Cavendish bananas are produced on large-scale plantations. A different variety (Lakatan) has also been grown for domestic consumption.

As industries have advanced, regional disparities have widened. In 2021, 23.7% of the population lived below the national poverty line (about 215 US dollars / month for a family of 5), a figure that rose by 2.6% compared with three years earlier. The government has set a long-term goal spanning 25 years from 2015 to eradicate poverty by 2040, rolling out policies across sectors including education and healthcare to reduce poverty. On Mindanao, 59% of people live below the poverty line—more than double the national average (23.7%). Data from the Philippine Statistics Authority also indicate that Mindanao regions account for 4 of the top 5 poorest regions in the country.

One of the reasons for poverty on Mindanao is an armed conflict that has lasted for nearly 40 years. The following paragraphs outline the history leading up to the conflict.

Around the 13th century, Islam was introduced to the Philippines, and an Islamic state was formed in Sulu province on Mindanao. In the 16th century, the territory of present-day Philippines became a Spanish colony and Christianity spread. Initially, Mindanao escaped direct Spanish rule and the Islamic state survived, but gradually came under Spanish pressure. After the U.S. defeated Spain in the Spanish-American War in 1898, the American colonial government began exerting control across the Philippines to expand its domain in response to land demands from Christian settlers. The colonial government implemented a “resettlement policy” that encouraged the migration of Christian settlers to Mindanao, displacing local Muslims and Indigenous peoples. Even after independence following two World Wars, the Philippine government continued Mindanao development policies. As many Christians settled on the island, some Muslims lost their land rights. Opposition to these policies and the struggle by Muslims for secession led to the Mindanao conflict that has continued since the late 1960s.

At the time, the Philippine government responded with military intervention and pursued efforts toward a ceasefire and peace agreements, but clashes between the Philippine military and anti-government forces continued intermittently. When armed clashes occur, many civilians are forced to flee to avoid fighting. Combined with human rights abuses and criminal acts accompanying the conflict, this led to a situation in which public services were not adequately provided. On the other hand, peace talks began between the government and anti-government forces in 1997, and peace agreements were signed in 2012 and 2014 under Malaysia’s mediation. A provisional autonomous government was later established, and elections are planned for 2025, signaling progress toward peace.

Residents evacuating to escape the Mindanao conflict (Photo: EU Civil Protection and Humanitarian Aid / Flickr [CC BY-NC-ND 2.0])

The reality of the banana industry on Mindanao

Next, we take a look at the banana industry on Mindanao.

Historically, one view holds that bananas spread from New Guinea about 10,000 years ago to the Philippines and other tropical regions view. From ancient through medieval times, bananas were often traded via personal commerce. In the modern era, banana trade expanded across merchants from different countries, and the global banana market grew rapidly at the end of the 19th century expanded. Drivers included the development of the sturdy Gros Michel variety, low unit prices, safety and high calories, and bananas’ status as a health food. With rising demand, companies such as the U.S.-based United Fruit Company, which developed large plantations in Latin America from the late 19th century, emerged to dominate the market and gain huge interests.

After the Spanish-American War in 1898, the Philippines came under U.S. rule and received investment from multinational corporations. Former public lands became plantations, products were exempted from tariffs in the United States, and an export-oriented economy developed. On Mindanao, then seen as an undeveloped “frontier,” banana and pineapple plantations were established. By 1912 there were 159 large plantations of over 100 hectares, according to records. Conflicts with residents whose land was taken at the time of plantation establishment were constant, and the owners of the plantations (mainly American companies) were the ones who benefited most from banana trade.

After World War II, the Philippines became independent and shifted toward industrialization and services, but for reasons such as political instability due to the aforementioned conflict and lack of investment, agriculture remained the main industry on Mindanao. Bananas continued to be grown, but there was a shift in varieties around the 1950s. This was because a disease called “Panama disease,” which causes bananas to wither, was discovered in Latin America in the Gros Michel variety that had been traded up to that point. The new Cavendish variety, resistant to Panama disease, was durable and suitable for export, and cultivation began in the 1960s mainly for the Japanese market, with production steadily increasing.

Today, bananas are a major fruit export of the Philippines, and Mindanao accounts for over 80% of national production. Export destinations are mainly Asian countries such as Japan (45%), China (27%), and South Korea (12%) most. In the 21st century, the government improved agricultural infrastructure and attracted foreign investment, influencing the expansion of plantation areas owned by major agribusinesses, including foreign-affiliated companies.

Issues facing the banana industry: chronic problems

As mentioned at the outset, the Philippine banana industry faces a variety of issues and is in dire straits. Some of these relate to the supply chain leading up to export, so this section summarizes how banana plantations work and the stakeholders involved before analyzing each issue.

The supply chain in the banana industry is complex and multifaceted, with stakeholders spanning many areas. In export markets, bananas are typically shipped through cooperatives and multinational companies that have contracts with local farmers, then ripened and sold in the importing country. However, some multinational companies control the supply chain end-to-end. For example, Japan’s Itochu Corporation established and invested in a company producing bananas on Mindanao and secured distribution channels through exporters, importers, and even the retailers selling in Japan.

In this supply chain, two major problems are that banana farmers—the starting point—do not sufficiently benefit, and that labor conditions are opaque and unfair. Smallholders, estimated to be 75% of all farmers, have historically signed contracts with companies that put them at a disadvantage. The primary cause is the power imbalance between farmers and foreign companies. Farmers have limited buyers, while foreign companies with large capital and networks have dominated the supply chain and hold overwhelming leverage in transactions. As a result, farmers are forced to sell bananas at prices unilaterally set by companies, and data show they receive only 2.4% of gross sales as profit. In one reported case, a contract farmer received only about 0.03 US dollars for a bag of bananas weighing 600~800g report.

Labor conditions for workers on banana plantations are also poor. Workers face long hours, low wages, and human rights abuses. In an on-the-ground field survey, one worker reportedly worked 18 hours but received only 7 US dollars for the day without night or overtime pay. Breaks are insufficient, and time away for handwashing can be deducted from wages, leading workers to endure and suffer illnesses such as urinary tract infections. Local residents suffering from poverty have limited job opportunities and work on plantations to get by day-to-day, but it is hard to say they receive adequate compensation.

Woman recording harvested bananas (Photo: East Asia & Pacific on the rise / Flickr [CC BY-NC-ND 2.0])

Next are issues related to health damage to farmers and residents living near plantations, and environmental pollution.

To prevent pest damage, large amounts of pesticides are aerially sprayed during banana production. The pesticides and insecticides used are highly toxic, and many health problems among residents have been reported. The so-called “poison rain” of pesticide spraying has caused harm such as pesticide poisoning, blindness, and skin disorders among farmers and nearby residents, and there are suggestions that exposure during pregnancy could impair fetal brain function. In a story the author heard directly from a local teacher living next to a banana plantation, large-scale aerial spraying is unavoidable; pesticides have landed on people’s bodies and skin, and children sometimes have to walk through sprayed fields on their way to school.

Contaminated drinking water is unsafe, so residents need to purchase water from other areas. Beyond water contamination, excessive pesticide distribution is also linked to environmental issues such as soil and air pollution, and has been analyzed as leading to secondary disasters such as deforestation and threats to biodiversity.

In addition to the above, because armed conflict has continued on Mindanao, plantations have been used in military operations. One study found that in provinces with high banana production, increases in production were accompanied by an increase in the occurrence of armed clashes. It is thought that anti-government forces may have extorted plantations to raise funds.

Issues facing the banana industry: intermittent shocks

Thus far we have looked at human-caused, chronic issues. There are also unexpected events such as natural disasters and banana diseases.

Natural disasters include typhoons, earthquakes, and floods. The Philippines is hit by as many as 20 typhoons and tropical storms every year, which have destroyed crops and infrastructure. Mindanao is no exception and suffers typhoon damage almost every year. For example, when a typhoon struck in 2012, as much as 25% of banana plantations were lost, with damages estimated at 318 million US dollars.

The Philippines is considered one of the countries most vulnerable to climate change ranked, and new damage from natural disasters has been reported. In 2015, an extended El Niño brought drought and heatwaves, dealing a severe blow to many crops including bananas. More recently, research indicates that typhoons are becoming stronger and more frequent research findings. The serious concern is that global warming could further amplify the damage from natural disasters.

A vast banana plantation (Photo: Shubert Ciencia / Flickr [CC BY 2.0])

There are also cases where disease affecting banana varieties causes losses. When the aforementioned “Panama disease” was found on Mindanao in 2015, more than 25% of all plantations were considered at risk. No complete solution to prevent the disease has been found, and growing more disease-resistant varieties has been the approach. However, other diseases sometimes emerge in response to new varieties, creating a cat-and-mouse situation. There is also concern that natural disasters could spread disease within regions, forcing farmers to scramble for countermeasures. Cavendish, the dominant global variety, is cloned and lacks genetic diversity, so once infected, disease can spread rapidly. Because banana diseases and pests are easily transmitted, increasingly potent and toxic chemicals and insecticides have been used to exterminate pests that can act as pathogens. In some cases farmers cannot properly manage these chemicals, putting themselves at even greater risk.

Additionally, due to COVID-19 border closures and reduced cultivated area from Panama disease, the Philippines’ banana export volume fell by 18.4% in 2020. The war in Ukraine also pushed global production costs higher—fuel, transport, and more rose. With Russia’s logistics halted, shipments of Latin American bananas to Russia were reportedly stopped. Some bananas that could not be shipped were redirected to the Middle East and East Asia exports. As a result, there may be price competition between the Philippines, which mainly targets East Asian markets, and Latin American producers.

As seen above, the banana industry struggles to cope with sudden shocks, worsening farmers’ livelihoods.

Examples from other countries

The problems seen in the Philippine banana industry have many parallels elsewhere. Here, we compare with Latin America, where banana exports are also strong.

In many Latin American countries, ever since the banana industry developed over 100 years ago, the advance of foreign companies, power dynamics with local governments, and the backdrop of U.S. military power were criticized, and because local governments were heavily influenced by foreign corporations, they came to be called “banana republics.” At the time, there were also many armed conflicts involving U.S. military intervention around the banana industry.

What about today? In Ecuador, for example, trading arrangements still disadvantage farmers. Companies set purchase prices, and there are cases where production costs exceed sales revenue. Plantation workers also commonly experience child labor and long hours, and are not paid enough, according to research. Severe child labor is widespread; many child workers start at ages 10–11, work an average of 12 hours a day, and receive only about 60% of the legal minimum wage. Participation in labor unions is just 1% due to fear of dismissal or blacklisting, leaving workers’ rights poorly protected. As for health impacts, the same aerial spraying-related issues seen on Mindanao have been documented.

Banana processing plant in Ecuador (Photo: Port of San Diego / Flickr [CC BY 2.0])

Problems related to banana diseases are also common, and many measures are taken in Latin America to prevent them. Because many countries share land borders, once a disease emerges it can spread across countries, so strict measures are in place. In Ecuador, for instance, after detecting pathogens in neighboring Peru, the government established disinfection facilities along the border and distributed test kits to plantations, working at the ministerial level to contain the disease. In Colombia, after the pathogen was found domestically, all ports, airports, and borders in the country were inspected.

Toward solutions

Finally, we summarize efforts and the current state of attempts to solve problems in the Philippine banana industry.

According to a document from the Philippine Department of Agriculture, various actors are working to address the wide range of issues. For example, the Department of Agriculture has established subsidy programs for fertilizers, pesticides, and agricultural machinery to improve productivity, and insurers are planning “harvest insurance” for smallholders. Diplomatically, as noted at the outset, the ambassador’s direct outreach to consumers and retail groups in export destinations can also prompt consumers to consider issues in the banana industry. In fact, multiple Japanese media outlets covered the ambassador’s request (※1), and it was addressed in a Diet Q&A. At the ministerial level in the Philippines, there are also programs anticipating abnormal weather, tariff reviews to secure markets, and moves to expand markets.

Internationally, business forums have been held to promote fair trade (※2) bananas, and sales of certified bananas have begun. To ensure profits are fairly distributed to producers, it is necessary to involve trading companies and retailers who influence pricing, so tackling problems through meetings and organizations that bring together many perspectives will be meaningful.

At the grassroots level, efforts by cooperatives, nonprofits, and NGOs have also increased producers’ earnings in some cases. Thanks to the activities of “FARMCOOP” (FARMCOOP), an agricultural cooperative launched on Mindanao in 1995, cooperatives have been able to sign contracts with companies offering higher purchase prices. Under such contracts, a box of bananas trades at US$4.5, and there are reports that children who had been working on plantations were able to attend school—an indication of improvements in some areas.

In addition to labor conditions, multiple NGOs and environmental groups have campaigned to ban aerial spraying to prevent health damage. In Davao City on Mindanao, an ordinance banning aerial spraying was passed in 2007, but legal battles over its validity have continued.

People calling for a ban on aerial pesticide spraying (Photo: Keith Bacongco / Flickr [CC BY 2.0])

To combat banana diseases, many actors—including government agencies, universities, research institutes, and local experts—are working on solutions. For example, the Philippine Department of Science and Technology has developed a pesticide that reduces mortality in Cavendish bananas infected with Panama disease. While there are concerns about new health impacts from pesticides, this is a step toward overcoming banana diseases. A team of local experts also reported that part of a farm infected with Panama disease recovered, helping to stop the spread.

The banana-related problems covered in this article—trade prices, labor conditions, disease—are common not only in the Philippines but across producing countries around the world. Actors involved include not only companies that impose unfair systems on farmers and workers, but also end consumers in high-income countries who demand “cheapness.” For local farmers and workers to receive realistic and fair compensation, and for local residents to live safely, consumers should understand how the current system works and make purchasing decisions with an ethical perspective.

※1 Yomiuri Shimbun, “Philippines asks Japan to raise banana prices amid rising production and transport costs,” published June 7, 2022.

　　  Asahi Shimbun, “Philippine government requests banana price hike amid inflation and soaring transport costs,” published June 9, 2022.

　　  Mainichi Shimbun, “Philippines: Ambassador appeals, ‘banana farmers in crisis’; Philippine government requests price hike,” published June 9, 2022.

　　  Yomiuri Shimbun, “Philippine government asks retail sector to raise banana prices,” published June 9, 2022.

※2 Fair trade refers to trade in which producers in a weak position receive fair compensation for their labor, in accordance with the International Fairtrade Standards.

Writer: Koki Morita

Graphics: Mayuko Hanafusa

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