sadp papaya report_111109

34
WORKING PAPER DEPARTMENT OF AGRICULTURE AND JAPAN INTERNATIONAL COOPERATION AGENCY Formulation Team on the Drafting of the Strategic Agribusiness Development Plan COMMODITY SITUATION REPORT: PAPAYA Prepared by JOSE ULYSSES J. LUSTRIA, ALDRIN NACIONAL, AND ACQUILYN E. MORILLO November 2009 ____________________ Mr. Lustria is OIC-Chief, Public Investment Program Division (PIPD), Planning Service, Department of Agriculture. Mr. Nacional and Ms. Morillo are Technical Assistants at the PIPD.

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Page 1: Sadp Papaya Report_111109

WORKING PAPER

DEPARTMENT OF AGRICULTURE AND

JAPAN INTERNATIONAL COOPERATION AGENCY

Formulation Team on the Drafting of the

Strategic Agribusiness Development Plan

COMMODITY SITUATION REPORT: PAPAYA

Prepared by

JOSE ULYSSES J. LUSTRIA, ALDRIN NACIONAL, AND

ACQUILYN E. MORILLO

November 2009

____________________

Mr. Lustria is OIC-Chief, Public Investment Program Division (PIPD), Planning Service,

Department of Agriculture. Mr. Nacional and Ms. Morillo are Technical Assistants at the

PIPD.

Page 2: Sadp Papaya Report_111109

ii

TABLE OF CONTENTS

I. OVERVIEW…………………………………………………..……….……………….. 1

A. Background………………………….…………………...……….………….…. 1

B. Contribution to the Economy………………………….……………….…..….... 1

II. SITUATIONAL ANALYSIS………………………….…………………….…..…..….... 2

A. Production………………………….……………………………….…..….….... 2

1 . World Production………………………….…………………..…..…..….…. 2

a. Major Producing Countries………………..………………….………... 2

b. Productivity and Competitiveness…………………….…..…………….. 3

2 . Domestic Production……………………………………………….………... 4

a. Major Producing Provinces………………..……………….…..…...….. 4

b. Volume, Area planted and Productivity…………………….…..…...….. 5

c. Value of Production………………………………...…….…..…………. 5

B. Supply and demand……………………………………………….…..…..…….. 7

1 . Supply ……………………………………………..………….…..….….…... 7

2 . Demand………………………….…………………………………...…....…. 8

a. World Demand(Exports) ………………………….……...……...…..…. 8

b. Domestic Demand………………………….……..………….…..…..…. 9

C. Value-Chain System………………………….……………………..….....…..… 12

1 . Input Supply Subsystem ………………………….…………………………..

12

a. Seeds and Seedlings, etc………………….…………………………….. 12

b. Fertilizer and Pesticide………………….……………………………... 12

c. Agricultural Machinery………………….……………………………... 13

d. Labor………………….……………………………………………….. 13

2 . Farm Production Subsystem……………………….………………………… 13

3 . Postharvest Subsystem.……………………………..…….…..……………… 14

4 . Processing Subsystem……….…………………………….…..…...………… 14

5 . Marketing Subsystem…….…………………………….…..…...……………. 14

D. Prices……………………………………………………………………..…...… 18

1 . World Prices………………………………………………………......…..…. 18

2 . Domestic Prices…………………………………………………....….…..…. 18

3 . Price Formation / Differentiation…………………………………….…..…. 20

E. SWOT Analysis………………………………………………………………..… 22

F. Problem Tree Analysis………………………………………………………….. 23

III. SUMMARY, ISSUES AND

RECOMMENDATIONS…………………………………………………....……....…. 24

IV. REFERENCES…………….…..….………………………………………………..…... 26

V. ANNEXES………………………….…………………………………………………… 27

Page 3: Sadp Papaya Report_111109

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LIST OF FIGURES

Figure Page

1 Percentage Share of Papaya to Total Value of Agricultural Crops and Gross Value

Output, 1998-2008.……………………………….........................................................

2

2

Papaya Top Producing Provinces (MT), 2008……………………………...................

4

3

Production (MT), Area (Ha) and Yield (MT/Ha) of Papaya,

Philippines 1998 – 2008………………………………….............................................

6

4

Value of Production (in Million Pesos) of Papaya,

at Constant prices, 1998-2008.……………………………………………..................

7

5

Philippine Share of Papaya to World Export Quantity (MT),

1998-2007…………...……............................................................................................

9

6

Philippine Share of Papaya to World Export Value (in ‘000 $),

1998-2007…………………………………………………………………...................

10

7

Philippines’ Top Export Markets of Fresh Papaya (MT),

1998-2008………………………………………………...............................................

10

8

Philippines’ Top Export Markets of Dried Papaya (MT),

1998-2006……………………………………………………………………………...

11

9

Papaya Agribusiness System………………………………………………….…….....

12

10

On-farm Cost of Papaya Production (in Percent),

1998-2008………………………..……………………………………………..……...

13

11

Geographic Flow and Marketing Channels of Papaya in

Misamis Oriental, 2001………………………………………………...……………..

15

12

Geographic Flow and Marketing Channels of Papaya

in Cavite, 2001………………………………………………………………....……...

16

13

Geographic Flow and Marketing Channels of Papaya

in Aklan, 2001………………………………...…………………………….....……...

17

14

Prices of Hawaiian Papaya, 1998-2008…………………………………….......……..

19

15

Farmgate Price of Other varieties of Papaya, 1998-2008……………………....…….

19

16

Price Ratios of Hawaiian Papaya (in Percent), 1998-2008………………….....……..

20

17

Problem Tree Analysis…………………..……………………………………………..

23

Page 4: Sadp Papaya Report_111109

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LIST OF TABLES

Table Page

1 World Production of Papaya (MT) by Top Producing

Countries, 1998-2007………………………………………………………..

3

2

Yield of Papaya by Top Producing Countries (Hg/Ha), 2007………………

3

3

Volume of Papaya Production (MT), by Top Producing Provinces,

1998-2008…………………………………………………………………..

5

4

Supply and Utilization of Papaya (in MT), 1998-2008……………………...

8

5

Producers’ Price of Papaya of Top Producing Countries (US$/MT),

1998-2006……………………………………………………………………

18

6

Issues/Gaps and Recommendations for Input Supply and Farm Production

Subsystem of Papaya Industry……………………………………………….

24

7

Issues/Gaps and Recommendations for Postharvest, Processing Subsystem,

Marketing, and Support Subsystem of Papaya Indusry……………………..

25

Page 5: Sadp Papaya Report_111109

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LIST OF ANNEXES

Table Page

1 Value of Production in Agriculture by Type of Valuation,

Sub-sector, 1998 – 2008……………………………………………………..

27

2

Updated average production costs and returns of papaya

(in pesos per hectare), Philippines 1998-2008……………………………...

28

Page 6: Sadp Papaya Report_111109

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I. OVERVIEW

A. Background

Papaya (Carica papaya) is one of the very popular tropical fruits belonging to the

cactus group of plants. It is a large tree-like plant, the single stem growing from 5 to 10

meters tall, with spirally arranged leaves confined to the top of the trunk. The lower trunk is

conspicuously scarred where leaves and fruit were borne. The leaves are large, 50-70 cm

diameter, deeply palmately lobed with seven lobes. The fruit is cylindrically long, pear

shaped or round, it is orange-to-orange-red, sweet and juicy when ripe (BPI, 2009).

Grown almost throughout the country, papaya serves as a backyard and a plantation

crop. It is also grown under the multiple cropping system, usually with coffee, coconut, and

pineapple. Several varieties of papaya are grown in the country. These are Solo, Cavite

special, Legaspi special, Morado, and the Sinta hybrid. The varieties of papaya are

distinguished through their contrasting characteristics such as short (dwarf) versus tall stature,

green versus purple petiole, yellow versus red flesh, and small versus large

fruits (PCARRD, 1984) .

Papaya has wide variety of uses. Ripe papaya is eaten fresh as breakfast and dessert

fruit. It is made into fruit salad or juice and can be processed as jelly, marmalade, candies,

and crystallized fruits. Green fruits are pickled or cooked as vegetable. Flowers and young

leaves may also be eaten. Papain extracted from green mature fruits has industrial uses (for

beer industry, as meat tenderizer, for certain drug preparations, silk degumming, and

softening wool). Seeds may be used to expel intestinal worms and to induce

abortion (Rivera, 2005).

B. Contribution to the Economy

Generally, papaya‟s economic contribution is gradually increasing. Its shares to the

total value of agricultural crop and agricultural output are increasing at an average of 2

percent (Figure 1). This shows the papaya‟s potential of becoming a major fruit like mango,

banana, and pineapple.

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Figure 1. Percentage share of papaya to total value of agricultural crops and agricultural

output, 1998-2008.

(Source: BAS, 2009)

II. SITUATIONAL ANALYSIS

A. Production

1. World Production

a) Major producing countries. In 2007, the Philippines is the 10th

major

producer of papaya in the world, contributing 1.78 percent (164,234 MT) to the world‟s total

production. While the country is 10th

producer of papaya in 2007, historical data revealed that

the country‟s average production is much higher than Guatemala during 1998-2006 (Table 1).

An impressive increase in Guatemala‟s production in 2007 has put the country one notch

behind it.

Page 8: Sadp Papaya Report_111109

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Table 1. World production of papaya (MT) by top producing countries, 1998-2007.

(Source: FAO, 2009)

b) Productivity and competitiveness. The country‟s yield has shown a strong

edge among the other top producing countries such as Nigeria, India, and the Democratic

Republic of Congo. In 2007, the Philippines is seventh among the major producing countries

with the highest yield or average land productivity. However, it should be noted that the

country‟s productivity could be further improved.

According to the Philippine Agriculture 2020 report (NAST, 2008), papaya is also price

competitive under export trade scenario because export parity price ratio is greater than 1. It is

also cost competitive because resource cost ratio for export is less than 1.

Table 2. Yield of papaya by top producing countries (Hg/Ha), 2007.

Country 2007

1. Indonesia 887,891

2. Guatemala 527,228

3. Brazil 520,871

4. Mexico 438,950

5. Colombia 378,463

6. Ethiopia 208,000

7. Philippines 179,982

8. Congo, Democratic Republic of 169,107

9. India 87,500

10. Nigeria 82,702

(Source: FAO, 2009)

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2. Domestic Production

a) Major Producing Provinces. Papaya Hawaiian or solo papaya is the major

variety produced in the country. In 2008, 2 percent (48,792 MT) of papaya‟s national

production is produced in South Cotabato, the major producer in the country. This is 7

percent higher than the production of the next major producer, Misamis

Oriental (35,727 MT). In the same year, other major producing provinces such as Davao del

Sur, North Cotabato, and Quezon has contributed 7.6 percent, 4.5 percent, and 3.2 percent,

respectively, to the country‟s papaya production.

Figure 2. Papaya top producing provinces (MT), 2008.

(Source: DA-BAS, 2009)

It is interesting to note that South Cotabato‟s production has shown a remarkable

growth from 1998 to 2008. In the previous years, its production was relatively lower that of

Misamis Oriental (1998-2005). However, from 2005 to 2008, South Cotabato‟s production

has shown tremendous growth that toppled the latter province from being the number one

producer of papaya in the country.

While North Cotabato has recorded an increasing production trend (1998-2008),

Quezon province has experienced a sudden decline in its production (2006-2008). On the

other hand, the years 2004-2006 had shown a gradual cut in Davao del Sur‟s production.

However, the province was able to bounce back in 2007 and 2008.

Page 10: Sadp Papaya Report_111109

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Table 3. Volume of papaya production (MT), by top producing provinces, 1998-2008.

(Source: BAS, 2009)

b) Volume, area planted and productivity. The gradual increase in area planted

to papaya is accompanied by a significant growth in its production and yield (Figure 3). A

closer look on the average growth rate of production and yield (6 percent and 4 percent,

respectively) vis-à-vis the average growth rate of area (2 percent), exhibits a greater value

and opportunity to improve the sector‟s level of productivity and competitiveness, especially

through area expansion.

c) Value of production. As discussed earlier, papaya industry shows very

promising potentials. Increasing area, production volume, and yield has also equated to an

upward behavior of production value. From 1998 to 2008, it is increasing at an average of 6

percent.

Page 11: Sadp Papaya Report_111109

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Figure 3. Production (MT), area (Ha) and yield (MT/Ha) of papaya, Philippines 1998 – 2008.

(Source: DA-BAS, 2009)

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Figure 4. Value of production (in Million Pesos) of papaya, at constant prices, 1998-2008.

(Source: BAS, 2009)

B. Supply and Demand

1. Supply

The total production of papaya makes up the gross supply, which is available for

exports, feeds and waste, and food consumption. As noted earlier, production is increasing at

an average of 6 percent (Table 4). It is also noticeable that the country has no imports of

papaya from 1998 to 2008. This implies that total production is more than enough to meet the

domestic demand. In fact, the country is also supplying fresh papaya to other countries.

Page 13: Sadp Papaya Report_111109

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Table 4. Supply and utilization of papaya (in MT), 1998-2008.

Note: SU- Supply Utilization UT – Utilization

(Source: BAS, 2009)

1. Demand

a) World demand (Exports). From 1998 to 2008, an average of 2 percent of

gross supply is exported. While papaya production is consistently increasing (except in

2002), papaya export has shown a fluctuating trend. Nonetheless, export sector of fresh

papaya has still posted an average growth of 17 percent (Table 4).

The country‟s shares in world export quantity and value showed an impressive trend

during 1998-2001. However, in 2002, the Philippines shares to world export quantity and

value was cut by 0.07 percent and 1 percent, respectively (Figure 5 and 6). Shares in 2003

decreased dramatically when papaya ringspot (PRS) hit Mindanao region, where major

producers are highly concentrated. The PRS was observed in South Cotabato and some parts

of General Santos City, Davao del Sur, and Davao del Norte. (Herradura, 2003). However,

the country was able to augment its shares in 2004-2007 at an average of 2 percent (export

quantity) and 3 percent (export value). This might have been the results of the efforts in

coming up with management strategies before the disease completely spoiled the papaya

industry in the country.

Japan is the largest export market of the country‟s fresh papaya. In fact, in 2008, 72

percent (2,060 MT) of the total exported fresh papaya is shipped to Japan. In addition, Japan

is the only country where the Philippines has uninterrupted exports from 1998 to 2007. In the

same period, the country is also exporting fresh papaya to New Zealand (with interrupted

supply in 1998 and 2002), South Korea (1999-2007), Singapore (2003-2007), and Taiwan

(2003-2007).

Page 14: Sadp Papaya Report_111109

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Meanwhile, data of the export market for dried papaya in 2007 and 2008 is not

available. Figure 8 shows the top export market for dried papaya from 1998 to 2006. In 2006,

53 percent of the total exported dried papaya was shipped to Hongkong. It is also notable

that the country has uninterrupted exports of dried papaya in Australia during 1998-2006.

b) Domestic demand. As mentioned earlier, total production is more than

enough to meet the domestic demand. Based on the supply and utilization account (Table 4),

an average of 92 percent of the gross supply (1998-2008) is available for food consumption.

In addition, per capita consumption is increasing at an average of 4 percent. This implies an

increasing demand for papaya due to the shift of people to a more modern yet healthy

lifestyle.

Figure 5. Philippine share of papaya to world export quantity (MT), 1998-2007.

(Source: FAO, 2009)

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Figure 6. Philippine share of papaya to world export value (in „000 $), 1998-2007.

(Source: FAO, 2009)

Figure 7. Philippines‟ top export markets of fresh papaya (MT), 1998-2008.

(Source: BAS, 2009)

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Figure 8. Philippines‟ top export markets of dried papaya (MT), 1998-2006.

(Source: DA-BAS, 2009)

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C. Value-Chain System

The papaya industry involves many players. A brief overview of its value chain

system is shown in Figure 9.

Figure 9. Papaya agribusiness system.

(Source: Papaya Strategic Action Plan, March 2002)

1. Input Supply Subsystem

a) Seeds and Seedlings, etc. Small-scale growers usually produce their own

seeds or buy planting materials from local nurseries. Some companies enter into contract-

growing arrangements with selected individual producers using their preferred cultivars. For

instance, Del Monte Philippines has contract-growing arrangements with papaya farmers in

Misamis Oriental and Bukidnon. They also produce their own seed stocks and supply

contract growers with planting materials. In some cases, they supply all the required inputs

while producers complement with land, labor, and management.

b) Fertilizer and Pesticide. From 1998 to 2008, an average of 22 percent of

all production costs is accounted to inorganic fertilizer, one of the major cost drivers. Note

that its cost of share is also increasing at an average of 6 percent. The soaring prices of

inorganic fertilizer have greatly influence such increase. On the other hand, pesticide has an

average share of 6 percent of all costs.

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c) Agricultural Machinery. Machine, tools, and equipment rentals have

minimal share (an average of 1 percent) to all production costs. Further, from 1998 to 2008,

its share is gradually decreasing at an average of 5 percent (Annex 2).

d) Labor. Hired labor and operator/family labor are also major cost drivers.

Their average shares to the production cost are 24 percent and 6 percent, respectively. Even

so, their shares are also gradually cut at an average of 0.6 (hired labor) and 0.2

(operator/family labor) percentages (Figure 10).

2. Farm Production Subsystem

The Philippine papaya production, except for the export variety Solo, is widely

dispersed and mostly run on a backyard scale. The cultural requirements include land

preparation, planting, water management, weed control, fertilization, and pest and disease

management (PCARRD, 1984).

Figure 10. On-farm cost of papaya production (in percentage), 1998-2008.

(Source: BAS, 2009)

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3. Postharvest Subsystem

Papaya generally starts to flower after 5 months from seedling and the first harvest is

obtained 4 to 5 months later. The productive lifespan of papaya gradually ends on the 3rd

or

4th

year. As the tree matures, production also slackens. The yield of well-managed papaya

plantation is 35 to 40 tons per hectare (BPI, __).

a) Packing. A good method of packing is to place the fruits in single layer in

a rectangular wood container lined with dried banana leaves or shredded newsprint to protect

the fruit against the normal hazards of transport and handling.

b) Storing. Ripe papayas may be stored at 8.3C and partially ripe ones at

11.9C. At these temperatures, the fruit can be kept for 3 weeks. To avoid chilling injury,

which is manifested by impaired ripening, do not store less mature fruit below 7.1C.

4. Processing Subsystem. The major forms of processed papaya in the

Philippines are dried papaya and canned tropical mixed fruit cocktail containing papaya

cubes, pineapple, nata de coco and palm, among others. There are three major companies

engaged in canned fruit cocktails- Dole Philippines Inc., Del Monte Philippines, Inc., and

T‟Boli Agro Industrial, Inc. (TADI). These companies enter in contract growing or marketing

arrangements of papaya with selected producers using preferred cultivars of the companies.

Dried papaya is also processed and marketed by large and medium size companies including

T‟Boli Agro and Orient Food Inc., among others.

When exporting to Japan, South Korea, and New Zealand markets, companies follow

established quarantine protocol for fresh papaya, which requires a phytosanitary certificate

and a vapor heat treatment (VHT). In the Philippines, one of the VHT plants is located in

Panabo, Davao del Norte. It is being operated by Dole Philippines, Inc. to facilitate fresh

papaya and mango exports. For other markets such as Hongkong and the Middle East,

exporters accomplish phytosanitary certificate only (PCARRD, 2004).

5. Marketing Subsystem. Markets of papaya are domestic, export and processing

plants. There are fruit traders and consolidators who buy from farmers and transport them to

the cities for retailers. Some big fruit processors and exporters enter into growers marketing

contract. Other growers have their own market outlets or suki.

While papaya has a big export demand, only a few exporting companies have access

to these markets because of the stringent requirements and big capital outlay. Government

agencies like D.A. and DTI with their commercial and agricultural attaches assigned abroad

can greatly help develop export market for papaya and other fruit commodities produced in

the Philippines.

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Figure 11, 12 and 13 show the geographical flow and market channels for papaya in

Misamis Oriental, Cavite, and Aklan.

Supplies of papaya in Misamis Oriental came mainly from the municipality of

Tagoloan and barangays Talusan, Poblacion, Lubia, Claveria, Linggangao and San Isidro of

Balingasag. Major outlets were Balingasag, Agora and Carmen markets in Cagayan de Oro

City. Papayas were sold to Bugo and Tagoloan in Cagayan de Oro City. Other outlets

included Iloilo, Cebu, Bacolod and Metro Manila cities

The outlets of papaya farmers in Misamis Oriental were interregional assembler-large

distributors, processors and other farmers. The fruits were distributed further by large

distributors to processors, buyers outside the province and to retailers.

Figure 11. Geographic flow and marketing channels of papaya in Misamis Oriental, 2001.

(Source: BAS, June 2003)

The municipalities of Amadeo, Silang, Alfonso, Mendez, Indang and Tagaytay City

were the sources of papaya in Cavite. There were no supplies of papaya coming from outside

the province. From the farms, papayas were brought mostly to the markets located in the

supply municipalities. Papayas from Cavite were distributed to demand areas in Manila,

Quezon City, Laguna, Pampanga, Bulacan and Baguio City.

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The farmers sold papaya to the agent and/or buyers outside the province (BOP) at the

supply area and to the assembler-distributors in the trading centers. The agent distributed the

collected/procured fruits to assembler-distributors, institutional buyers and BOP. Traders‟

outlets were processors, BOP and co-traders. Retailers sourced their products from small

distributors.

Figure 12. Geographic flow and marketing channels of papaya in Cavite, 2001.

(Source: BAS, June 2003)

Papayas in Aklan were sourced from Capiz, Banga, Malinao and Numancia. Sources

outside the province were Capiz, Romblon and Iloilo. There were also shipments of papaya

from Manila for the demand of the famous beaches in the province. The bulk of supply went

to the markets within the identified source municipalities. From the market, papayas were

distributed to consumers from the same municipality while others were sold to other towns

particularly in Kalibo and Ibajay, Aklan.

The flow is relatively simple wherein the traders procured papaya from the farmers.

The retailers sourced their fruits from traders or from suppliers outside Aklan. They

distributed the same directly to consumers.

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Figure 13. Geographic flow and marketing channels of papaya in Aklan, 2001.

(Source: BAS, June 2003)

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D. Prices

1. World Prices

The Philippines is one of the top producing countries with low producer price. From

1998-2006, the average producer‟s price was US$132.72. This is lower than the top 3

producing countries such as Brazil, Mexico and Nigeria. If the production will continuously

increase, the lower producer price could be one of the advantages of the country to expand its

export market.

Table 5. Producers‟ price of papaya of top producing countries (US$/MT), 1998-2006.

(Source: FAO, 2009)

2. Domestic Prices

Figure 14 shows that the retail price and wholesale price of Papaya Hawaiian is

increasing at the average rate of 2 percent and 1 percent, respectively. Papaya Hawaiian‟s

farmgate price, however, is decreasing at an average rate of 7 percent. Other varieties of

papaya such as native, sinta and solo exhibit a positive average growth on their farmgate

prices; 2.14 percent, 17.23 percent, 2.6 percent, respectively (Figure 15).

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Figure 14. Prices of hawaiian papaya, 1998-2008.

(Source: BAS, 2009)

Figure 15. Farmgate Price of other varieties of papaya, 1998-2008.

(Source: BAS, 2009)

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As depicted in Papaya Hawaiian price ratios (Figure 16), wholesalers have greater

advantage over the farmers and retailers.

Figure 16. Price ratios of hawaiian papaya (in percent), 1998-2008.

(Source: BAS, 2009)

3. Price Formation/Differentiation

Below is a brief description of papaya‟s price formation from the supply area to the

wholesale and retail markets (BAS, ___).

Supply Area

Prices for ripe, overripe, and three-to-five-day-old papayas are generally lower than

green-mature and half-ripe form because they have shorter storage life and more susceptible

to transport damage.

Metro Manila traders (assemblers) usually go to provinces to source their commodity.

As such, wholesale buying price is formed in the trading center or in the farm, where these

traders (assemblers) do the transaction.

Prior to visiting the supply area or the provinces, it is customary for the traders to

canvass the prevailing price in the wholesale market where they are based (i.e. Divisoria,

Balintawak, Pasig, etc.). Generally, the quoted wholesale price is estimated based on the

Page 26: Sadp Papaya Report_111109

21

prevailing price plus mark-up, and all other costs such as transportation, food, etc. Depending

on the supply levels of the producing provinces, where trading occurs, the quoted price may

vary. On the day of the trader‟s procurement of stocks, this price will be the benchmark of the

buying prices in the provincial trading center or farm.

Note however, that wholesale buying price of papaya may tend to lower due to the

availability of substitute of competitor fruits. Metro Manila traders, who also go to the trading

center or production area, sell some of these substitutes.

Wholesale Market

Provincial assembler. Price of papaya in wholesale market tends to have minimal

variation. In fact, medium distributors, medium to small distributors, and traders from

provinces, who are sourcing their commodity from the same trading center or production

area, tend to have similar wholesale selling prices. In addition, traders who are based in the

same market may have procured papaya stocks together since they are relatives of friends

(kumpadre).

Although sizes of sorted papaya vary, traders who are transacting with their regular

buyers (suki) may tend to give discounts other than the prevailing price.

Retail Market

Retail price covers the transport cost and overhead expense. It is also dependent on

the buying price. Most often than not, viajeros offered lower selling price that can be taken

advantage by retailers who are buying in bulk. To avoid spoilage losses and to dispose the

old stocks, retailers quote lower price for overripe papaya.

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22

E. SWOT Analysis

SWOT identified for the papaya industry is as follows (NAFC-DA, 2002):

Strengths

• Suitable agro-climatic conditions for production

• Fast growing crop and year round production

• Versatile crop with varied uses

• Advantageous geographical position of the Philippines relative to export markets like

Japan, Korea, Taiwan, Hong Kong and China. The transit time for fresh papaya to reach

these markets is shirt, hence, facilitating its distribution at the shorttes possible tinme in

its fresh state.

Weaknesses

• Diseases and pest, especially the ringspot virus (RSVP) that limit the productivity of

papaya plants

• Poor adoption of technologies that would otherwise enhance the productivity of plants

and quality of fruits

• Inefficiency of distribution system brought about by poor infrastructure, inefficient

information system and lack of postharvest facilties

Opportunities

• High demand for fresh and processed products in domestic and foreign markets

• Expanding product lines (processed nutriceuticals, papain, functional food)

• Biotechnology tools available to improve quality and shelf-life of papaya

• Establishment of Phytosanitary procedures to meet requirements of major importing

countries like Japan, South Korea and New Zealand

Threats

• Fruit importation and substitution which limits the local demand for papaya

• Sanitary and Phytosanitary barriers to trade

• Typhoons

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F. Problem Tree Analysis

Figure 17. Problem tree analysis of papaya industry.

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III. SUMMARY, ISSUES AND RECOMMENDATIONS

The industry trends have shown that papaya production is increasing both in quantity

(6%) and area (2%) from 1998 to 2008. It is interesting to note that a gradual increase in the

area is accompanied by a significant growth in yield (4%). Aside from the strong edge of the

industry‟s productivity, it has also been one of the top producing countries with a low

producer price. This gives a greater opportunity for the industry to expand its potential

markets abroad.

Summary of constraints and required actions for each subsystem of papaya industry

are presented in the following tables.

Table 6. Issues/gaps and recommendations for input supply and farm production subsystem

of papaya industry.

Input Supply

Issues/Gaps Recommendation

Certified Seeds and seedlings are not readily

accessible to growers due to limited availability and

high price

Prospective growers do not have adequate

knowledge in raising seedlings

Intensify seed production. Train

farmers on how to do it properly

Conduct training on seedling

production

LGU to operate model nurseries to

meet seedling requirement of

every municipality

Dissemination of recommended technologies is not

effective

Limited adoption of production technologies due to

high cost of inputs and lack of financial resources

Establishment and operation of

model papaya orchards in strategic

areas

Conduct farmers training on

improved production technologies

Farm Production

Existing varieties are susceptible to Papaya Ringspot

Virus

“Sinta” and Taiwan-bred varieties are moderately

tolerant to PRSV but grown primarily for domestic

market and are not allowed in PRSV-free provinces

in Mindanao and Visayas

Existence of pests and diseases other than PRSV are

also threat to papaya industry

Research and development on

varietal improvement

Breeding for PRSV-resistant

variety

Strict quarantine regulation to

prevent spread of PRSV. AN

intensified information campaign

about the threat of disease

R, D and extension program aimed

at developing an effective and

efficient Integrated Pest

Management (IPM) Strategies

Lack of information on optimum fertilizer and water

requirement

Efficient irrigation method has not been thoroughly

evaluated

R, D and extension Program on the

development of an effective and

efficient fertilization and irrigation

technologies of papaya

(Source: NAFC-DA, 2002)

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Table 7. Issues/gaps and recommendations for post harvest, processing subsystem of papaya

industry, marketing, and support subsystem.

Post harvest

Issues/Gaps Recommendation

Poor access and adoption of improved, advanced

packages of postharvest technologies

Low awareness on proper postharvest handling

Conduct massive training on

postharvest handling technologies

Establish post harvest clinic to

address postharvest-related

concerns in the area

Conduct capability building

Processing

Poor quality of planting material due to anthracnose

and stem end rot infestation causing reduced

recovery rate

High cost of sugar compared to other countries

High cost of fuel/electricity incurred during

syruping

High cost of packaging materials

Lack of awareness of importing country standards

Limited access to product testing and quality/safety

system certification services

Conduct extensive IPM training

Tariff reduction to levels

comparable with other Asian

countries

Compilation/Updating of

importing country standards and

dissemination of these information

to processors

Supplement FDC testing services

available only in Manila. Upgrade

DOST regional testing

laboratories to conform with the

Codex guidelines for the

assessment of the competencies of

food testing laboratories

Marketing

Issues/Gaps Recommendation

High percentage of unmarketable fruits due to

bruises, misshapen, unripe etc

Development and implementation

good agricultural practice (GAP)

plan to reduce percentage of

misshapen, extremely small and

insect-infested fruits

High air and sea shipment cost Government intervention to reduce

cost of distribtuion

Support

Lack of fincancing Provision of more accessible low

–interest production loan

(Source: NAFC-DA, 2002)

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IV. REFERENCES

Bureau of Agricultural Statistics, Department of Agriculture (1992). Marketing and

Information Needs Assessment for Davao City. Technical Report. Bureau of Agricultural Statistics, Department of Agriculture (2003). Marketing Costs

Structure for Papaya. Series No. 4. Bureau of Agricultural Statistics, Department of Agriculture ( ). Bureau of Plant Industry, Department of Agriculture. Production Guide on Papaya.

Retrieved on August 2009 from www.bpi.da.gov.ph. Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC), Department of

Agriculture. A Guide to Papaya growing and Marketing. Retrieved on September 2009 from www.hvcc.da,gov.ph.

Herradura, L.E. Management of papaya ringspot virus (PRSV) in Southern Mindanao. Bago-

Oshiro, Davao City: Department of Agriculture-Bureau of Plant Industry/Davao

NationalCrops R&D Center, 2003. – (PCARRD-funded; completed). National Agriculture and Fishery Council, Department of Agriculture (2002). Strategic

Action Planning: Other Fruits – Papaya. National Academy of Science and Technology, Department of Science and Technology. (2008).

Philippine Agriculture 2020: A Strategy for Poverty Reduction, Food Security,

Competitiveness, Sustainability, Justice and Peace. Main report. January 2008.

Philippine Council for Agriculture, Forestry and Natural Resources Research and

Development. (1984). The Philippines Recommends for Papaya. PCARRD Technical

Bulletin Series 27-A.

Philippine Council for Agriculture, Forestry and Natural Resources Research and

Development. (2004). R & D Status and Directions (2000 and Beyond): Papaya.

Food and Agriculture Organization of the United Nations (2009). Retrieved on October 2009 from

www.faostat.fao.org.

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V. ANNEXES

Annex 1. Value of Production in Agriculture by Type of Valuation, Sub-sector, 1998 – 2008.

Value of production 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Average

Papaya 144 151 163 171 171 175 179 196 211 220 245 184

Agricultural crops 110,733 129,268 120,249 124,047 126,035 129,250 136,181 137,305 143,699 151,560 157,543 133,261

Total agricultural ouput 224,172 245,874 242,318 253,131 262,788 272,011 286,245 292,581 304,000 318,068 330,396 275,599

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Annex 2. Updated average production costs and returns of papaya (in pesos per hectare), Philippines 1998-2008.

ITEM 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007R 2008P

CASH COST 41,846 50,948 53,406 57,295 57,951 64,016 73,797 84,335 86,124 89,416 103,537

Fertilizer

Organic 82 74 80 95 94 117 158 196 195 207 371

Inorganic 9,593 11,144 11,995 14,286 14,090 17,609 23,827 29,637 29,440 31,240 39,701

Foliar 1,521 1,365 1,468 1,748 1,725 2,155 2,917 3,627 3,604 3,824 6,862

Soil ameliorants 7 6 6 7 7 9 12 15 15 16 29

Pesticides 4,329 4,837 4,981 5,187 5,261 5,272 5,292 5,280 5,035 4,790 4,615

Solid 2,245 2,508 2,582 2,689 2,727 2,733 2,743 2,737 2,610 2,483 2,392

Liquid 2,084 2,329 2,399 2,498 2,534 2,539 2,549 2,543 2,425 2,307 2,223

Other material inputs 3 3 3 6 6 7 9 11 11 12 22

Hired labor 12,179 19,542 19,762 19,770 20,379 21,400 22,316 23,614 24,609 25,578 25,895

Land tax 261 264 267 270 273 276 279 282 285 288 291

Rentals:

Land 3,208 2,305 2,217 2,183 1,978 2,091 2,317 2,737 2,274 1,956 1,688

Machine, tools, equipment 679 729 736 736 760 787 821 869 906 942 954

Fuel and oil 3,081 3,347 3,910 4,297 4,301 4,731 5,360 6,302 6,857 7,083 8,289

Transport of inputs 2,105 2,247 2,580 2,879 2,908 3,009 3,391 4,013 4,523 4,546 5,031

Irrigation fee 78 56 54 53 48 51 57 67 56 48 41

Interest on crop loan 2,128 2,341 2,575 2,833 3,116 3,428 3,771 4,148 4,563 5,019 5,521

Food expenses 912 953 967 1,012 1,033 1,056 1,122 1,195 1,262 1,303 1,480

Repairs 731 745 774 819 831 837 900 968 1,020 1,053 1,138

Landlord's share 37 27 26 26 24 25 28 33 27 23 20

Wages for overseer 69 74 75 75 77 80 83 88 92 96 97

Electric bill 208 216 230 265 270 279 293 344 383 398 403

Others (straw twine, sacks, bamboo 635 673 700 748 770 797 844 909 967 994 1,089

poles, nylon strings)

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ITEM 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007R 2008P

NON-CASH COST 199 167 165 165 152 160 176 205 183 167 155

Hired labor (paid in kind) 21 34 34 34 35 36 38 40 42 44 45

Landlord's share 136 98 94 93 84 89 99 117 97 83 72

Harvester's share 42 35 37 38 33 35 39 48 44 40 38

IMPUTED COST 13,641 16,922 17,523 18,392 18,978 20,676 22,955 25,522 26,250 27,508 30,154

Operator/family labor 3,177 5,274 5,324 5,326 5,499 5,775 6,022 6,373 6,641 6,903 6,988

Depreciation 3,673 4,040 4,444 4,888 5,377 5,915 6,507 7,158 7,874 8,661 9,527

Interest on operating capital 4,434 5,915 6,127 6,576 6,650 7,451 8,725 9,981 10,065 10,507 12,399

Rental value of owned land 2,357 1,693 1,628 1,602 1,452 1,535 1,701 2,010 1,670 1,437 1,240

ALL COSTS 55,686 68,037 71,094 75,852 77,081 84,852 96,928 110,062 112,557 117,091 133,846

GROSS RETURNS 97,481 82,265 90,262 93,769 81,614 87,267 97,921 120,133 109,036 99,709 95,289

RETURNS ABOVE CASH COSTS 55,635 31,317 36,856 36,474 23,663 23,251 24,124 35,798 22,912 10,293 (8,248)

RETURNS ABOVE CASH &

NON--CASH COSTS 55,436 31,150 36,691 36,309 23,511 23,091 23,948 35,593 22,729 10,126 (8,403)

NET RETURNS 41,795 14,228 19,168 17,917 4,533 2,415 993 10,071 (3,521) (17,382) (38,557)

NET PROFIT- COST RATIO 0.75 0.21 0.27 0.24 0.06 0.03 0.01 0.09 (0.03) (0.15) (0.29)

Cost per kilogram (P) 5.19 5.40 4.95 5.00 5.29 5.76 6.49 7.10 6.65 6.51 6.71

Yield per hectare(kg) 10,724 12,598 14,373 15,173 14,574 14,741 14,927 15,501 16,931 17,998 19,935

Farmgate price (peso/kg) 9.09 6.53 6.28 6.18 5.60 5.92 6.56 7.75 6.44 5.54 4.78

R-revised Estimates

P-Preliminary Estimates

(Source: BAS, 2009)