DEPARTMENT OF TRADE AND INDUSTRY

Policy
Briefs
Series No. 2018-02

The Philippines in the

Mango Global Value Chain1
Source: trending.ph

Highlights

• Global mango production has grown rapidly over the past ten years, from US$696 million (in
value) in 2005 to nearly US$2.1 billion (in value) in 2015 (UN Comtrade, 2016).

• The mango industry in the Philippines serves as an important source of livelihood for around 2.5
million farmers (PCARRD-DOST, 2011).

• The Philippines’ participation in the mango GVC is in the export of processed mango wherein 85
percent of its overall production is sent to the export market.

• In 2015, the country ranked 7th among exporters of fresh and dried mangoes and took up almost 4
percent of share (US$91 million in exports) in the global market (UNComtrade, 2016).

• Despite the Philippines’ favorable climate conditions, its exports of mango products have been
declining in recent years because of difficulty in meeting strict SPS requirements in major markets.

The Mango Global Value Chain

Mango trees thrive primarily in Asia, Latin America and Africa due to the ... trade
warm tropical and subtropical climates. The major mango producing countries
include India (42%), China (10%), Thailand (7%), Indonesia (5%) and Mexico in mango
(4%) (FAO, 2016). Previously, mango products were consumed locally and products have
limited trade existed. However, trade in mango products have risen for the past risen for the
10 years, amounting to almost US$2.1 billion in total exports in 2015 (UN
Comtrade, 2016). As a result, mango prices in the global market have declined, past 10 years,
encouraging developed countries to include mango products in their diets. The amounting to
characteristics of the mango global value chain (GVC) are presented below: almost US$2.1
billion in total
exports in 2015.
1
Condensed from the April 2017 study on “The Philippines in the Mango Global Value Chain”
prepared by the Duke University Center on Globalization, Governance and Competitiveness
(Duke CGCC) on behalf of the USAID/Philippines, through the Science, Technology, Research
and Innovation for Development (STRIDE) Program.
The Philippines in the Mango Global Value Chain 1
Global demand for mangoes is increasing.

The nutritional characteristics of the mango contribute to its growing demand.

Particularly, there is an elevated demand for “ready-to-eat” mangoes and
processed products such as dried or pureed mango.

Few countries have been able to penetrate the global market.

Despite growing mango production, some countries have not been able to
sustain or participate in the GVC due to failure in meeting Good Agricultural
Practices (GAP) and Sanitary and Phytosanitary Standards (SPS) requirements
for global markets. The lack of logistical and commercial infrastructure that
would support the requirements of large buyers is also a limiting factor.

Trade in fresh mango is more regional in scope, while dried mango trade is
more globally oriented.

Fresh mangoes that are imported into the United States and Japan are sourced
from their neighbor countries. For instance, US imports are mainly from Latin
America – Mexico, in particular.. Japan’s imports on the other hand, are from
Thailand, Taiwan, and the Philippines. On the contrary, trade in dried mangoes
is unconstrained by geographic location; shifts in supplier occur as countries
advance their capabilities.

The global mango sector operates as a buyer-driven value chain.

Large supermarkets act as the main actor involved in the sale of fresh mangoes
in key export markets (National Mango Board, 2015). In the past two decades,
these establishments have influenced how fresh mangoes are produced,
cultivated, harvested, transported, processed, and stored.

Mango producers and processors face a complex system of standards.

Consumers of mango products are increasingly seeking more information on

how their food is produced. Thus, higher standards are being established at the
national, regional and international levels.

The Philippines in the Mango Global Value Chain

The Philippines has been a significant player in the global export of mangoes
since the 1980s. The country supplies about 10 percent of the world’s fresh and The Philippines
dried mango exports (FAO, 2016). The leading major export destinations in has been a
2015 include US (24 percent), Hong Kong (17 percent), Republic of Korea (13 significant
percent) and Japan (12 percent) (UN Comtrade, 2016).
player in the
Figure 1 illustrates the Philippines’ participation in the mango GVC. Generally, global export
the country is involved in the production and processing stages of the mango of mangoes
GVC. Its fresh mango exports are limited because of constrained capability in
cold chain management, packaging and pre-export SPS treatments. Such issues
since the
prevent exporters from meeting the standards imposed in major markets. 1980s. The
country
Mango production in the country is characterized by small-scale farmers with an supplies about
average farm size of 1.34 hectares. Production occurs throughout the country,
with Luzon in the leading position, followed by Mindanao, then Visayas. 10 percent of
the world’d
The Philippines’ most important contribution is in the processing segment. fresh and
Processed mango exports amounted to US$91 million in 2014, with dried
mango occupying the largest share at 77 percent; followed by mango juice at dried mango
9 percent, airtight and puree mango at 8 percent and 7 percent, respectively exports.
(Philippine Statistics Authority, 2007-2014). Fruit quality is less of an issue for the
processing segment. Moreover, destination markets do not demand restrictive
SPS requirements typically imposed on fresh mango exports.
The Philippines in the Mango Global Value Chain 2
 Figure 1. Philippines’ Participation in the Mango GVC

The Philippine mango sector is overtaken by local buyers who, due to their
economies of scale, dictate the prices of fruits being sold by local producers
(Field Research, 2016). In 2014, about 66 companies were exporting processed
mango, including dried, puree, airtight, and juice; around 70 percent of these
are small and medium-sized that export less than US$500,000 in value.
Processors of dried mango are mostly based in Cebu, while processors of other
mango products are based in Cebu and Metro Manila (Briones et al., 2013). The
Philippines’ leading processors are Profood, M’Lhuillier Food Products, and
FPD Food International.

Advantages
The Philippines has three major advantages in the mango GVC:

Superior quality variety. The Philippines

has three major
The country’s main strength is its ability to sustain the growth of “carabao”, a
high-quality variety of mango that is considered one of the finest and sweetest advantages
in the world. in the mango
GVC: Superior
Ideal climate conditions.
quality variety;
The Philippines (in particular, Luzon) has the ideal climate condition for growing Ideal climate
mango. The relatively cool dry season with high heat accumulation during the conditions;
flowering and fruit development period is an extreme advantage since mango
production is highly sensitive to fungal diseases that result to production losses. and Strong
drive among
Strong drive among domestic processors. domestic
Lead processing firms in the country have exerted efforts to advance productivity processors.
increases and accomplish programs and initiatives through strong lobby
activities.

The Philippines in the Mango Global Value Chain 3

Challenges
To be able to benefit from the strengths highlighted above, the Philippines’
mango industry will also need to address some constraints faced at the
farm level, issues in postharvest and certifications, as well as strengthen the
coordination of value chain actors. Other challenges include:
The country
Lack of scale economies at the production level.
lacks the
Processors depend on small-scale, non-commercial producers to supply raw capacity to
materials. This makes it difficult to meet the scale economies needed to deliver comply with
to clients abroad as global buyers tend to favor suppliers that can consistently quality and
and reliably deliver on time, price, and quality.
SPS standards
Lack of modern production and harvesting techniques. because of
some flaws
The limited knowledge of available technologies, lack of formal training or
education, and lack of financing, compel farmers to continue producing mango in the cold
with outdated agricultural techniques and poor management. A study (Briones chain system,
et al., 2013) also notes that technology use in large-scale agribusiness firms is poor SPS
likewise below the level of competitor countries such as Mexico and Peru.
management
Poor Post-Harvest Management and SPS Control. and lack of
packing skills.
The country lacks the capacity to comply with quality and SPS standards because
of some flaws in the cold chain system, poor SPS management, and lack of
packing skills. Poor cold chain management across the agricultural sector is a
severe limitation for participation in exports, most especially for those farthest
from provincial capitals and centers.

Furthermore, there is a need for handling and packaging equipment as well as

trained graders in sorting and proper handling. As a result of poor post-harvest
management and SPS controls, post-harvest fruit damage and rejection rates
climbed up to 50% (Field Research, 2016).

Lack of coordination between industry stakeholders and high levels of

bureaucracy.

The lack of coordination is evident in the duplication of services among

multiple government agencies. In addition, the implementation of national
strategies is lopsided due to the ability of the local government to be selective
on recommended initiatives. Furthermore, the high cost of bureaucracy also
limits the access to information, training and financial resources (Field Research,
2016).

Upgrading: Lessons for the Philippines from Global Experiences

Despite the Philippines’ success in its participation in the processed mango
category, the rising global demand calls for a more competitive mango industry
that can withstand competition from the rising production and upgrading being
undertaken in countries such as Mexico, Peru and Thailand.

Process upgrading emerges as a dominant strategy in generating higher value

for products and ensuring a market position in the mango GVC. Process
upgrading involves the introduction of new technology and procedure to
enhance productivity and quality of products. This strategy not only increases
the yield but also helps in fulfilling the SPS standards imposed in key markets.

The potential upgrading trajectories of a country, however, highly depends on its

relative position in the value chain along with other factors such as infrastructure,
business environment, trade and investment policy, and governance structure
The Philippines in the Mango Global Value Chain 4
of the chain (Bamber et al., 2013, Gereffi et al., 2005). Hence, it is worthwhile
to consider looking into the upgrading paths pursued by other countries that are
at a similar level of development as the Philippines. Below are some examples
of successful upgrading in the mango GVC:

• Mexico engaged in process and product upgrading. It is the largest world Policy
producer of fresh and dried mango, and the leading provider to the US due intervention in
to its compliance with high SPS standards.
Mexico includes
Policy intervention in Mexico includes the adoption of modern agricultural the adoption
technique that allowed them to diversify the types of mangoes produced of modern
and at the same time, increase their productivity. The country also obtained
important certifications such as the GlobalGAP2 to facilitate the growth of agricultural
their exports and demonstrate the quality of their produce. technique that
allowed them
The Philippines can learn from Mexico’s experience in terms of adjusting
cultivation practices in order to meet market standards. The cultivation of to diversify
mangoes in consideration of the GAPs recommendation and meeting all the types
United States Department of Agriculture (USDA) requirements are major of mangoes
factors in Mexico’s competitiveness. The country is also performing well in
determining shifts in market demand. For instance, offering an upgraded
produced
product such as the organic mango that caters to the needs of health- and at the
conscious consumers. same time,
increase their
• India is the largest producer of mango in the world but is also constrained
by low productivity, similar with the Philippines. As a response, the country productivity.
pursued functional upgrading through government interventions and
financial assistance in post-harvest handling and research and development
with strong focus in its exports.

The Philippines can mirror the top-down policy approach of India that
heavily focuses on productivity improvement through the reduction of
crop losses, and investing in research and development. Given the limited

Source: Piñata Farm

Source: Upinde Cordero

Source: trending.ph

2
GlobalGAP is one of the most widely adopted standards. This standard was first developed in
Europe in 1997 by an association of European fresh produce importers and retailers, and prin-
cipally concerns pesticides and chemical use as well as the environmental impact of farming
systems. US retailers began to adopt this standard for fresh produce in 2008 (GlobalGAP, 2008)
The Philippines in the Mango Global Value Chain 5
 resources at the farm level, the Indian government has established research
institutions that can lead the production of plant materials, introduction of
new technologies, rejuvenation of mango orchards and conduct trainings
for farmers. Moreover, India is also aiming to achieve functional upgrading
by providing a favorable investment environment for processors.

Potential Upgrading Trajectories

The Philippines can continue to increase its participation in the global mango
industry by capitalizing on the prominence of its mango products. However, it
is crucial for the country to undertake the following upgrading trajectories:

Short to Medium Term: Product and Process Upgrading (agriculture).

Mango productivity is declining in the country; hence, process upgrading will

help improve yields and production. Poor economies of scale and inability
to implement good agricultural practices limit the country’s ability to remain
competitive.

Good agricultural practices, trained farmers and modern agricultural techniques

are needed in order to meet global standards. In the case of local companies, it
is necessary to have access to enough raw materials to meet all their commercial
obligations. This type of upgrading will require improved coordination among
farmers and processors, to have a consistent supply of materials and continue
the expansion of mango products. Further, the country should invest in
research and development (R&D) to improve the variety of mangoes, increase
productivity and extend their seasonality.

Short to Medium Term: Product Upgrading (agriculture).

The Philippines has an opportunity to expand the exports of fresh mango in

both regional markets and developed country markets. However, the products
should be free from pests and diseases and have low chemical levels. Such
changes should be implemented in the short term as it would take at least three Along with
years to free orchards from traces of chemicals and be classified under organic improving
production. Organic mangoes earn twice the price as conventional mangoes;
these have the potential to increase export revenues. the country’s
productivity
Medium Term: Functional Upgrading (packing, cold storage, SPS controls). and output,
Along with improving the country’s productivity and output, there is likewise
there is likewise
a need to strengthen the capabilities in the packing and cold storage stage of a need to
the chain. This step will entail major improvements in terms of skills, capital strengthen the
investments in cold storage equipment and coordination with firms offering the capabilities in
necessary treatments such as Hot Water Treatment (HWT) to enter major export
markets. the packaging
and cold
storage stage of
the chain.

The Philippines in the Mango Global Value Chain 6

Reference
Bamber, Penny, Karina Fernandez-Stark, Gary Gereffi, and Andrew Guinn.
(2013). Connecting Local Producers in Developing Countries to Regional
and Global Value Chains. Paris: Organisation for Economic Co-operation and
Development.

Briones, Roehlano M., Peter Anthony S. Turingan and Manitra A. Rakotoarisoa.

(2013). Market Structure and Distribution of Benefits from Agricultural Exports:
The Case of The Phillippine Mango Industry Food and Agriculture Organization
of the United Nations.

FAO. (2016). Mango Production, Production Area, and Yield by All Reporters,
1961-2014 (based on Mangoes, Mangosteens, Guavas). Retrieved October 21,
2016, from Food and Agriculture Organization of the United Nations.

Field Research. (2016). Philippines Field Research. Personal communication

with K. F.-S. D. H. J. Daly.

Gereffi, Gary, John Humphrey and Timothy Sturgeon. (2005). “The Governance
of Global Value Chains.” Review of International Political Economy: 78-104.

GlobalGAP (2008). Private Food Standards Gain Favor - Walmart, McDonald’s

Adopt European Safety Guidelines (March 11). Retrived September 2010, from
http://globalgap.org/cms/front_content.php?idcat=44&idart=377

National Mango Board. (2015). Mango Performance Benchmark Report.

PCARRD-DOST. (2011). Reaping the Sweet Promises of the Philippine Mango
Industry: PCARRDDOST.

Philippine Statistics Authority (PSA). (2007-2014). Firm-Level Data. Manila:

Philippine Statistics Authority (PSA)

UN Comtrade. (2016). World Mango Exports by All Reporters and Partners,

2005-2015 (based on HS80540). Retrieved October 25, 2016, from United
Nations Statistics Division (UNSD)

The Philippines in the Mango Global Value Chain 7

 This Policy Brief is a condensed version of the “The
DEPARTMENT OF TRADE AND INDUSTRY
Philippines in the Mango Global Value Chain” prepared

Policy
by the Duke University Center on Globalization,
Governance and Competitiveness (Duke CGGC) on
behalf of the USAID/Philippines, through the Science,

Briefs
Technology, Research and Innovation for Development
(STRIDE) Program. The full study, submitted to the
Department of Trade and Industry and published in
April 2017, may be downloaded at
Series No. 2018-02 www. industry.gov.ph

The views and opinions expressed in this policy brief

are of the author/s and do not necessarily reflect
Philippine government policy.

The DTI Policy Briefs is a series publication by the

Department of Trade and Industry – Bureau of Trade
and Industrial Policy Research (BTIPR), with email
address at [email protected].