John P Perrine, Chairman, Unifrutti Group Philippines: Interview

Interview: John P Perrine

How will the Bangsamoro Basic Law (BBL) help unlock Mindanao’s agribusiness potential?

JOHN P PERRINE: Political unrest in Mindanao has had a huge impact on the nation’s perspective of the BBL, the Moro Islamic Liberation Front (MILF), the Moro National Liberation Front (MNLF) and the country’s Muslim minority. Whereas Manila has experienced continuous economic growth, this has not been felt in rural areas, particularly the Bangsamoro region. Luzon has many regions, but when one talks about Mindanao – the second-largest island in the country – it is usually referred to as a block. Only those who recognise the different identities and socioeconomic realities within the regions can work successfully in these areas.

Over 60% of Bangsamoro’s inhabitants live below the poverty line, creating an environment with limited means and many victims of decades-long neglect – an environment where extremism and insurgency can and have originated. As administration after administration has not delivered on promises to address abject poverty in Mindanao and its incidence worsens with population growth, communities have come to accept and allow extremism, which fuels repercussions not only in Mindanao, but also in the country’s capital.

Since the establishment of the La Frutera banana plantation in Maguindanao in 1996, two expansions in Lanao del Sur have been successfully completed – both completely within Bangsamoro. From the onset 60% of the workers at La Frutera were former MNLF and MILF fighters. The realisation was that the region could not sustain peace without development. However, the question of how to replicate this business model remained.

The primary strategy is to look for an investment area under the control of a single clan to avoid disputes. The reality is that Bangsamoro has feudal conditions that cannot be changed overnight. Second, investors must find a clan with enlightened leadership, which can be observed through the types of social services delivered. Lastly, investors should look at areas under MILF control, as it acts as the only functioning police force in Bangsamoro. Once an investor enters an undeveloped area, it will cause major positive changes in the community, as an important catalyst for sustainable economic development and thus, a key to lasting peace.

To what extent can the expansion of banana production encourage sustainable development?

PERRINE: Banana plantations once flourished in Mindanao because it was historically free of typhoons. In 2011 Typhoon Sendong affected Mindanao, and Typhoon Pablo also devastated the area in 2012. As a result, the banana industry cluster is working to adjust to climate change, which has put Mindanao in the typhoon belt. All the banana plantations operating in Mindanao have acknowledged that the clock is ticking and a typhoon could wipe out the area. The change in agricultural conditions has brought flooding-originated Panama disease, which as yet has no cure and effectively wipes out plantations. Typhoons have facilitated the spread of Panama disease and reduced the coverage of banana plantations from 80,000 ha to 65,000 ha as of 2014. The only remaining expansion area is Maguindanao, in the middle of Bangsamoro.

A major competitor for Philippine banana exports is Ecuador. The Philippines is a competitive source for Cavendish bananas for the Asia region, but other markets the Philippines serves, such as the UAE, Iran and Saudi Arabia, can be reached by Ecuador. In Asia the Philippines has a natural competitive advantage, especially for serving Japan, which needs twice weekly deliveries on small vessels to ensure freshness.

To ensure agriculture expansion in Mindanao, the cultural context must be appreciated. Women serve as stabilising influences in the community, creating family businesses that generate high revenues. By partnering with small enterprises and women’s businesses, investors enable the entire community to grow. For banana plantations, investment is $30,000 per ha, as high-value plantation crops need greater investment, and this has a multiplier effects in these communities.