By Rolando Dy
Executive Director Center for Food and Agri Business UA&P
[Part1]
The world’s leading food companies brag about their billion dollar brands. Nestle, the world’s leading food company, has 28 brands with sales of almost $1 billion a year. Nestle brands are either No.1 or No.2 in the market: Nescafe, Maggi, Kit Kat, Milo, Nido, Nesquik, Pure Life, Nespresso, and Purina.
Pepsico has 19 mega brands with retail sales of over $1 billion a year: Pepsi Cola, Mountain Dew, Lay Potato Chips, Gatorade, Tropicana, Seven Up, Doritos, Lipton Teas, Quaker Foods, Cheetos Cheese, and Mirinda.
Kraft Foods has 11 brands with annual sales of over $1 billion: Kraft, Cadbury, Oreo, Nabisco, Maxwell House, Philadelphia , Jacobs, Lu, Trident and Milka.
Mars, the world’s leading confectionery company, has M&M’s, Snickers, Dove, Mars, Extra and Orbit.
The large presence of global brands is a sign of sustained competitiveness of the product lines of these companies. They must invest heavily in making their brands grow and sustain their ranking in the market place.
What about countries? How does the Philippines compare with peers: Indonesia , Malaysia , Thailand and Vietnam?
Why is the rural poverty rate of these countries lower than that of the Philippines? In this article we shall also argue that food export is a sound strategy for increasing farm incomes and reducing poverty?
How competitive is Phl?
How does a country improve its exports and at the same time develop agriculture competitiveness and increase farmers’ incomes?
By selling to the domestic market and by tapping opportunities overseas. Countries, like companies, must sell outside their domestic market to grow. The domestic market is not always adequate to absorb excess supply. They are either short of population and buying power, or both. For many countries, agriculture export is also an instrument of rural poverty reduction as exports expand sales territories.
In 2008, the Philippines earned only $4 billion from the export of agriculture and food products.
Is this good? The answer is in the numbers. Thai exports were eight times those of the Philippines, Indonesia almost eight times, Malaysia seven times, and Vietnam, almost three times.
There was only one product cluster that the Philippines earned over $1 billion a year: coconut products. Malaysia had three such clusters, Indonesia and Vietnam five each, and Thailand six.
On a unit farm land basis at $340 per hectare of export, the Philippines heavily trail its peers; Indonesia 2x, Malaysia 10x, Thailand 6x; and Vietnam 3x.
A look at the product list shows the export diversity of other ASEAN peers. The Philippines has only two products earning over $500 million: coconut, and fruits (banana and pineapple). Malaysia has five (palm oil, rubber, cocoa products, cereal/milk products and seafood). Indonesia has six (palm oil, rubber, seafood, coffee and tea, cocoa products, and processed seafood). Vietnam has six (seafood, rice, coffee, rubber, cashew nuts and processed seafood. Thailand has 12 (rubber, rice, seafood, shrimps, fruits, sugar, processed food, feed ingredients, vegetable oils, cereals/milk products, and milling products.
On seafood export, the poor record of the Philippines is highly unfortunate as it has the world’s second longest coastline after Indonesia . Mariculture needs more support. [To be continued]
