Type 2: Non-adopters of the PhilGAP Certification Programme Who Have Implemented

Key informants identified that there were a number of banana plantations in the Philippines that had adopted PhilGAP practices, but were not certified. Two of these plantations were investigated to gain insights into the reasons they had partially adopted PhilGAP. That is, they had implemented PhilGAP

practices, but they had not obtained PhilGAP certification. The two independent banana companies

are coded as ‘Plantation C’ and ‘Plantation D’. The central offices of both companies are located in

the Davao region but their banana plantations are located on Mindanao Island. Both companies have corporate-managed farms along with contracted grower areas. The following section describes the two plantations in more detail.

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5.4.2.1 Plantation C

‘Plantation C’ is a local subsidiary of a multinational corporation that engages in many other businesses such as agrochemicals, machinery, transportation and communication among others.

‘Plantation C’ has been an institutional buyer, grower and exporter of Cavendish bananas since the 1970s. It covers a total area of 13,000 hectares of Cavendish bananas and distributes across five provinces in Mindanao Island (Figure 20). The provinces include Bukidnon, Compostela Valley, Davao del Norte, South Cotabato and Surigao del Sur. Of the total plantation area, 50% is leased by the company from different land owners and it manages the operations (Table 7). The corporate- managed farms are subdivided into 10 districts, and each district is composed of different growing areas in which 50% is in the highlands and another 50% in the lowlands. These areas produce bananas

– at least 3,500 boxes per hectare annually. These areas have been participating in the GlobalGAP

certification programme beginning with one district in 2009, and achieving certification for the entire managed farms in 2014. The areas with GlobalGAP certification are also following PhilGAP practices but did not seek to obtain certification. On the other hand, the farms under contract growership have a total area of 6,500 hectares, of which 1,300 hectares are in the highlands and 5,200 hectares are in the lowlands. In these areas, only 200 hectares are GlobalGAP certified, but the company aims to obtain

GlobalGAP certification for the total area by the end of 2018. The non-GlobalGAP-certified areas are following GAP practices, but the infrastructure needed for the certification programme is not yet in place.

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Figure 20. Map of the Philippines (Google Maps, 2016), magnifying Mindanao Island where 'Plantations C's’ banana growing areas are located.

Table 7. Land distribution of ‘Plantation C’ for managed farms and contracted grower areas.

Land Coverage Corporate-managed Farms

Contract Grower Areas

Total area 6,500 ha 6,500 ha

Highland areas 3,250 ha 1,300 ha

Lowland areas 3,250 ha 5,200 ha

GlobalGAP-certified areas 6,500 ha 200 ha PhilGAP-compliant areas 6,500 ha ≥ 200 ha

Figure 21 shows the high-level management structure of ‘Plantation C’. It is headed by a general manager who oversees the whole operation including both managed farms and contracted grower areas. Reporting to the general manager are the COO, the research director and the chief financial officer (CFO). The 10 district managers who supervise the activities in their districts, the 32 packing station managers who manage the packing facilities, and the agricultural services managers who provide technical assistance to both managed farms and contracted grower areas report to the COO. Reporting to the research director are the different group heads of the Entomology, Plant Pathology and Agronomy departments. Reporting to the CFO are the human resources manager who is responsible to look after recruitment and employee welfare, the purchasing manager who is responsible for the acquisition of assets and supplies, and the accounting manager who is responsible

Chapter 5: Case Description

74 20,000 people for both the corporate-managed farms and the support services that include the contract grower areas. However, most of the workers in the field are outsourced from labour service providers or manpower agencies.

Figure 21. The high-level management structure of ‘Plantation C’.

The bananas produced from ‘Plantation C’ are sold to Japan, Korea, China, New Zealand, the Middle East and Singapore under their own brand. In fact, 30% of the Cavendish bananas sold in the Japanese market come from this plantation. Their customers from Japan and Korea require them to present

GlobalGAP certificates for all bananas by 2019, although non-GlobalGAP-certified bananas are still acceptable prior to 2019.

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5.4.2.2 Plantation D

‘Plantation D’ is Filipino-owned institutional buyer. It is a company that was set up in the 1970s to produce and export bananas. Over the years, it has expanded to a total area of 6,000 hectares that produce 20 million boxes of bananas annually. The plantation areas are distributed across four provinces in Mindanao Island, namely: Davao del Sur, Davao del Norte, South Cotabato and North

Cotabato (Figure 22). As with ‘Plantation C’, this plantation has corporate-managed farms and contracted grower areas (Table 8). The managed farm has 154 hectares of highland bananas and 4,013 hectares for lowland bananas. Among the managed farms, only 600 hectares of lowland bananas have

GlobalGAP certification and this occurred in 2015. In 2016, they applied to certify another 150 hectares of highland bananas. Nonetheless, all operations are aligned with ISO 9000 and follow GAP, although no certification process has taken place. Despite the absence of a certification procedure, bananas grown in the managed farms and produced in the contract grower areas are exported to Japan, Korea, China, Singapore, Hong Kong, Iran and Dubai under the company’s own brand.

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Figure 22. Map of the Philippines (Google Maps, 2016), magnifying Mindanao Island where 'Plantation D's’ banana growing areas are located.

Table 8. Land distribution of ‘Plantation D’ for managed farms and contracted grower areas.

Land Coverage Corporate-managed Farms Contract Grower Areas

Total area 4,167 ha 1,833 ha

Highland areas 154 ha Not provided

Lowland areas 4,013 ha Not provided

GlobalGAP-certified areas 600 ha None PhilGAP-compliant areas ≥ 600 Not known

‘Plantation D’ is run by a corporation that is mainly focused in the production of tropical fruit such as

bananas and pineapple. A top-level management structure is presented in Figure 23. It is headed by a chairman and chief executive officer (CEO), and under them a vice-chairman. Reporting to the vice- chairman are the chief operating officer (COO) and chief finance officer (CFO). The head of the banana production and services operation reports to the COO, while the respective heads of human resources, manufacturing plants and purchasing report to the CFO. The company employs about 6,000 people, of which 150 of them perform managerial functions.

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Figure 23. The high-level management structure of ‘Plantation D’.

5.4.3 Type 3: Non-adopters of the PhilGAP Certification Programme Who Have Not Implemented