Non-traditional agricultural exports doing well despite hurdles

MANILA, Philippines – The Philippines has been known as a traditional exporter of coconut products particularly coconut oil, copra, desiccated coconut and copra meal; fresh fruit products such as pineapples, bananas and mangoes; as well as fishery products led by tuna and prawns.

However, in the past couple of years, exports of traditional products have been falling, with the latest May 2009 exports figures showing a 26.95 percent decline to $3.086 billion from the $4.225 billion exported in May 2008.

Income from all agro-based products comprising 5.1 percent of total export revenues in May 2009 shrank by 28.7 percent to $156.55 million from $219.63 million in May 2008.

The May 2009 export figures include all traditional exports such as electronics; apparels and clothing accessories; cathodes, and sections of cathodes, of refined coppers, as well as woodcrafts and furniture; ignition wiring sets and other wiring sets used in vehicles, aircrafts and ships; metal components; petroleum products and other manufactured goods.

The same export data show a 40 percent decline in the traditional export of coconut oil (including crude and refined) to just $38.14 billion as of May 2009 from $63.554 billion in May 2008.

Traditional tuna exports, likewise, showed a 21.2% decline as of May this year to $30.7 million from its May 2008 level.

Thus, the DA has chosen to focus on increasing its exports of non-traditional products such as bangus and tilapia and processed agro-based products such as dried mangoes, pineapples and other exotic Philippine fruits; banana chips as well as canned and processed fruits, and food products such as fish paste (bagoong) and fish sauce (patis).

The growth of non-traditional agro-based products has been driven largely by the increasing number of overseas Filipino workers who have migrated to almost all parts of the world.

According to the definition of the National Statistics Office (NSO), non-traditional exports are defined as export goods whose value did not exceed US$5 million in 1968 and which have undergone a significant degree of processing.

Dr. Rene Espino, who heads the Department of Agriculture’s High Value Commercial Crops (HVCC) division, defines non-traditional exports as all other exports that have not been the traditional export revenue source of the government as well as those that have undergone processing.

Thus, non-traditional fruit exports, Dr. Espino explained, can include processed or canned traditional export fruits while non-traditional fishery products are farm-raised milkfish or bangus and tilapia.

Processed food products like banana chips and bagoong are also considered non-traditional food exports products.

The growth of non-traditional agro-based and food exports, Dr. Espino pointed out, has been tremendous primarily because it comes from a low base.

Unfortunately, he admits, the growth and demand for non-traditional exports is erratic primarily due to lack of supply.

During several food trade fairs that the Philippine government participated in, Dr. Espino noted that there had been good acceptance and orders for processed bangus, tilapia, canned sardines and processed fruit products.

Unfortunately, while the orders are there, the manufacturers soon lose face because they do not have adequate supply to meet the orders.

Agriculture Undersecretary Berna Romulo-Puyat, who actively promotes Philippine food products in several international trade fairs, has attested to the overwhelming demand for Philippine food products.

In particular, in the Middle East, she has cited, there is tremendous demand for banana chips.

Unfortunately, orders cannot be met because of the lack of the primary ingredient… the banana variety locally known as “saba.”

Dr. Espino confirms that the local saba industry has been neglected for far too long with production limited to a few backyard growers and no concerted effort to produce the variety in plantations.

While the government, through the DA tries to help Filipino food exporters, Dr. Espino said the department’s policy is to let the private sector lead the way with the government only providing the support.

Unfortunately, Dr. Espino points out, it is hard to eliminate the Filipino “mendicant” mentality of always waiting for a hand-out from the Government and blaming the DA for its “lack of support.”

Secondly, Dr. Espino cited, the manufacturers also lose credibility when their products fail to meet sanitary and phyto-sanitary requirements of the importing countries.

This was the case experienced by the Philippines for its fish paste (bagoong) and fish sauce (patis) products which were found to contain certain undesirable elements (such as rat feces).

The Philippines, Dr. Espino revealed, soon lost the market to Thai as well as Vietnamese manufactured fish paste and fish sauce which adhere to internationally accepted manufacturing standards.

Another potential market in which the Philippines initially found a gold mine was Japan which craved for the specialty nata de coco.

Since the process of making nato de coco takes some time, Dr. Espino explained, some manufacturers decided to take shortcuts and started using some chemical ingredients to speed up the process.

Unfortunately, Japanese food authorities quickly discovered the adulterated manufacturing process and the export market for nata de coco immediately collapsed, ruining the credibility of Filipino food manufacturers in general. Dr. Espino said.

Despite such problems and setbacks, the DA and the Bureau of Agricultural Research (BAR) as well as the country’s state universities continue to look for various ways to commercialize the country’s bountiful agricultural resources.

Dr. Espino points out the DA-BAR’s success in improving the technology in making dried mangoes so that apart from Cebu, Luzon-based mango growers are now also able to produce and export their own dried mango products.

Digna Sandoval of the BAR’s Technology Commercialization Unit reveals, for instance, success in the production of ube powder which has facilitated the production of various ube-flavored food products.

She said the BAR could do so much more if it had a bigger budget to pursue other technologies which could be commercialized and could generate more profit for the agriculture sector.

The future is bright for the non-traditional exports, Dr. Espino acknowledges as ASEAN investors look towards the Philippines for joint ventures to supply their own markets. –Marianne V. Go Updated, Philippine Star