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Saba B anana Business & Investment Opportunities. Undersecretary Merly M. Cruz DEPARTMENT OF TRADE & INDUSTRY Regional Operations Development Group Makati. OUTLINE OF PRESENTATION. Overview & Market Profile of Saba Banana Industry Business & Investment Opportunities

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Saba B anana Business & Investment Opportunities


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    1. Saba Banana Business & Investment Opportunities Undersecretary Merly M. Cruz DEPARTMENT OF TRADE & INDUSTRY Regional Operations Development Group Makati

    2. OUTLINE OF PRESENTATION • Overview & Market Profile of Saba Banana • Industry • Business & Investment Opportunities • Strategic Responses & Plans for the Industry

    3. Banana Industry Profile

    4. WORLD situation • Philippines is the only producer of banana cardava around the world • It is the leading producer of banana chips globally • Global snack food market is forecast to reach US$380 billion by the year 2017 • Europe is the largest market for snack products amounting to Euros 12.4 billion • Chips/crisps market in UK is expected to achieve a volume growth rate of 17.5% from 2009 to 2014.

    5. Phil Banana Products 1 • Fresh • Cavendish 6 Banana Fiber 2 10 Saba Banana Chips Banana Tree 7 Banana Powder 3 Saba Frozen (Microwavable) 11 ? 8 Banana Heart Banana Puree 4 Vacuum Fried Banana Banana Flour 12 Banana Syrup 5 9 Banana Plain Paper Sheet

    6. Saba Banana Chips Export Performance, 2006 - 2010 38, 000 • In 2010, banana chips exports amounted to US $ 40 M • With close to 60 country-markets • Top Destinations: • Vietnam @ 20% • US • China • Germany • United Kingdom • Exports declined by 7% per year from nearly 28, 000 Volume, MT Year Source: Bureau of Agricultural Statistics

    7. VOLUME AND VALUE OF EXPORTS OF BANANA CHIPS Source: BAS

    8. BANANA CHIPS: EXPORT DESTINATION Export value increased by 15% per year from 2009 to 2011. Source: BAS

    9. BANANA CHIPS: LOCAL MANUFACTURERS Updated as of 2012

    10. Sector Profile Map of Banana Chips Product: CHIPS Employment Number of Enterprises 58 152 TRADING PROCESSING 2nd Fry 356 75 SEMI PROCESSING 1st Fry 42 184 TRADING/ CONSOLIDATION 14 270 14,352 1,548 PRODUCTION 1 research station; 74 registered fertilizers/pesticide dealers; 5 laboratories for tissue culture INPUTS Source: MASICAP Study,2012

    11. Business & Investment Opportunities

    12. 1. US to buy 3,000 MT Philippines bananasThe US Department of Agriculture (USDA) is allowing about 3,000 MT of banana from the Philippines for delivery in December, accdg to a Bureau of Plant Industry official.  Washington is now reviewing a final workplanfor US Trust territories, including Guam and The Marianas Islands - potential buyers of Philippine Cavendish. (Source: www.gmanetwork.com ) 2. Banana to be potato of the future A new report says climate change could lead to bananas becoming a critically important food for millions of the world's inhabitants. The report, which is the result of research carried out by CGIAR agricultural partnership, says that, in the event of certain climate change models becoming reality, bananas may replace potatoes in some developing nations. (Source: bbc.co.uk/news)

    13. 3. Opportunities for Organic banana • The price of organic bananas makes them a luxury for most people. Currently, Germany consumes the most organic bananas, with England the second in demanding organic produce. • Organic bananas have been a familiar sight in the sector for over 20 years. With the advance of Fair Trade bananas the organic bananas have to make room on the shelf. “Despite the fact that Fair Trade and organic bananas aren’t technically the same, I do think they go well together …that many organic growers are Fair Trade-certified.” • Mr. Martijn van Es • Savid International • Banana importer from the Dominican Republic.

    14. 4. Vacuum Fried Banana?

    15. Cost of Investments (cardava) Banana Nursery Banana Production Processing, i.e., Banana Chips Production

    16. BANANA NURSERY • Total Investment Cost : PhP 194,000.00 • Average Net Income : PhP 68,500.00 • ROI :35% • Payback Period : Approximately 2 Years

    17. BANANA PRODUCTION • Total Investment Cost : • PhP150,000.00 • Average Net Income : • PhP 139,400.00 • ROI : 93% • Payback Period : • 3 Years and 3 Months

    18. BANANA CHIPS PRODUCTION • Total Investment Cost : • PhP 258,000.00 • Average Net Income : • PhP 510,300.00 • ROI : 198% • Payback Period : • 9 Months

    19. Strategic Responses & Plans for the Industry

    20. Priority Industries for National Convergence

    21. INDUSTRY CLUSTER MAP

    22. Driving Objective and Strategy Product Banana Chips Market Domestic Export Growth Objectives 30% increase per year 20% increase per year Timeline 2012-2016 • Market Penetration Strategy • Increased Farm Level Productivity • Strengthened Business and Market Arrangements • Institutionalization of Banana Producers & Processors • Market Promotion • Standards and Quality Compliance By 2016

    23. Banana Chips Value Chain Strategies Constraints UpgradingStrategy Access to market intelligence Set up Banana Marketing Board Product Branding Limited market information No Branding system TRADING Limited access to technology Limited supply of rawmaterials Limited Product lines Access to financing Strengthen linkage w/ suppliers Product dev’t & innovations PROCESSING 2ND FRY High set up cost Limited supply of rawmaterials Non complianceindustry standards Access to appropriatefinancing Business linkage withfarmers Certification System, HACCP, GMP, SEMI PROCESSOR 1ST FRY TRADING Volatile PricingScheme High price for local competition Strengthen business linkage Set up Supply arrangement High Pest & diseases infestations Small farm holdings Lowproductivity SectoralEconomic Policy - DiseaseControl Protocol, - Implement GAP , Productivity - Facilitateaccess to HY seedlings - LGU Plant NowPayLater PRODUCTION Promoteorganicfarming High cost of inputs INPUTS

    24. 5-YEAR BANANA INDUSTRY CLUSTER ACTION PLAN: CY 2012 – 2016

    25. Swot Analysis OPPORTUNITIES

    26. Recommendations

    27. Value Chain Map of Banana Chip Domestic Market Export Market Product: CHIPS • Convergence!!! • BANANA INDUSTRY DEV’T COUNCIL • BANANA INDUSTRY CLUSTER TEAMS DTI DOST DA DAR Coops GFIs DOLE LGU MSMEs WHOLESALER/RETAILER # EXPORT/TRADERS # TRADE PROCESSING 2nd Fry PROCESSOR/EXPORTER # SEMI PROCESSING 1st Fry FARMERS COOP/ SEMI PROCSR # SEMI PROCESSOR # TRADE/ CONSOLIDATION TRADERS/ CONSOLIDATORS # FARMERS COOPS/ TRADERS # PRODUCTION FARMERS # TISSUE CULTURE OPERATORS/ INPUT PROVIDERS INPUTS

    28. Thank you!

    29. VALUE CHAIN MAP FOR BANANA (cardava) INDUSTRY Functions Actors Involved Enablers Consumers Local Traders Exporter Backyard Processors Processing Firms Local Traders Exporter Green Banana Consolidators Plantation Owners Smallholders Nursery Operators DTI , BOC, ISO and other International QAB, PBGEA Consumption Commercial trading DTI , FDA, FPA & DOST Processing Fresh banana trading LGU & DTI, BOC, PBGEA Consolidation Funding Inst’ns, LGU, PAO, DAR, DA, PBGEA Production Banana Nurseries