Banana and The Local Economy

“At the center, the farmers/growers will now

have the choice to whom, what, when,

where, how and why sell their produce.”

I was commissioned by my cousin, Tata Baloca, to develop a business activity structure depicting how farmers can fairly and competitively sell their products in the emerging high value market of Cavendish Banana.  This is for the purpose of his presentation to the officials of the local government (LGU).

For the love of the economy of my town and my dedication to serve the people through my little knowledge, I agreed to do the request.

First thing first, before going to the details of the structure, I plotted the market players of the industry.  I did identified demand, supply and price factors.

With a little amount of understanding in economics, I believe that with the recurrence of competitively high prices per box of Cavendish Banana in the periods from February to September of the current year, the demands of the product is relatively high.  I further believe, based on records, that the demands have not been uniquely phenomenal because of the presumption that the banana consumption as one of their staple food is no longer confined in Japan but already have expanded in countries such as China, countries in Europe, the Americas and Middle East.

Understanding these demands, countries growing Cavendish Bananas like the Philippines, given the limited areas of production, cannot sufficiently supply all the fruits on demand. Thus, prices are relatively and comparatively higher than the usual.

Given the above-mentioned arguments, here’s my take:

  1. Organize the growers to ensure sufficiency of supply, with assured quality and quantity of products.
  2. Simultaneously, identify traders and buyers who have direct contacts and agreements with the distributor of Cavendish Banana in other countries.  These traders and buyers ensure demands, determine the buying price, provide production supplies and materials, and define specifications.
  3. There must be someone or an entity who will consolidate the organized farmers/growers and at the same time act as service providers in marketing and coordinating the transaction.  This should not confine to only one person, anyone can participate.
  4. There must be sales coordinator who will represent the traders in the business transaction.  This should not confine to only one, anyone can participate.
  5. The local government unit (LGU) should establish policy for taxation, regulation and protection.  An office, preferably the MAGRO, shall monitor the business activities based on the policy established.
  6. A market center shall be created and established.  This market center shall function as the hub of the supplier/consolidator (item # 3) , the sales coordinator ( item #4) and the LGU (item #5).  For competitiveness and fair play, the market center shall transparently provide access to all stakeholders vital information on prevailing price for the week, quantity and quality specifications, quarantine requirements and other factors related to business transactions.  At the center, the farmers/growers will now have the choice to whom, what, when, where, how and why sell their produce.
  7. Freight, handling and shipping is part of the chain.
  8. The end point of the structure is exporting.

Below is the structure and model which I gave to my cousin.

business-model-fig

For the time being, I’ve done my share.

The ball now is passed on to whom it may concern.

 

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