Fourteenth International Conference on Interdisciplinary Social Sciences

Abstract

Institutions play a crucial factor to understand the current performance of the Philippine banana industry. When laws are properly enforced, economic actors would have incentives to invest their time, resources, and energy in knowledge and skills in order to improve their status. In their absence, then there is no incentive to change the system. Worst, these economic actors could exploit the weakness of the system due to the absence of rules and regulations. Using the problem-driven framework for applied political economy analysis by Daniel Harris (2013), this study argues that many institutional constraints have contributed to the deteriorating performance of the Philippine banana industry. One of this is the limited capacity of agrarian reform cooperatives such as the Davao Fruits Banana Growers Agrarian Reform Cooperative (DFBGARC) to enter into agribusiness contract with private corporations. Most of them, including the Board of Directors (BOD), do not have the legal, financial and technical skills to be able to negotiate for fairer contracts. The Department of Agrarian Reform’s weak regulatory capacity further exacerbates the implementation of Agribusiness Venture Arrangement (AVA) policy. DFBGARC had entered into a 15-year agreement with Sumifru in 2008. During this year of contract negotiation, there was no DAR personnel present to translate the contract and provide farmers with legal advice on their responsibilities and entitlements. Hence, when DFBGARC entered into agribusiness arrangement with Sumifru, they were unfamiliar on the terms and conditions of their contract. The members failed to realize the implications of some provisions in the contract.