WORKING PAPER

DEPARTMENT OF AGRICULTURE AND JAPAN INTERNATIONAL COOPERATION AGENCY

Formulation Team on the Drafting of the Strategic Agribusiness Development Plan

COMMODITY SITUATION REPORT: POMELO

Prepared by

JOSE ULYSSES J. LUSTRIA, ALDRIN G. 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.

TABLE OF CONTENTS I. OVERVIEW..... A. Background....... B. Contribution to the Economy........ SITUATIONAL ANALYSIS.......... A. Production......... 1 . World Production......... a. Major Producing Countries...... b. Productivity and Competitiveness..... Domestic Production.... a. Major Producing Provinces.......... b. c. 1 1 1 2 2 2 2 3 3 3

II.

B. 1 2

Volume, Area planted and Productivity........ 4 Value of Production....... 4 Supply and demand....... 6 . Supply .......... 7 . Demand......... 7 a. World Demand(Exports) .......... 7 b. Domestic Demand......... 7 Value-Chain System.......... 9 . Input Supply Subsystem ... 9 a. Seeds and Seedlings, etc... 9 b. Fertilizer and Pesticide.... 9 . Farm Production Subsystem. 9 . Postharvest Subsystem...... 9 . . Processing Subsystem....... 10 Marketing Subsystem........ 10 Prices..... 10 . World Prices......... 10 . Domestic Prices........ 10 . Price Formation / Differentiation.... 11

C. 1

2 3 4 5 D. 1 2 3

III. IV. V.

E. SWOT Analysis.. 11 F. Problem Tree Analysis.. 12 SUMMARY, ISSUES AND RECOMMENDATIONS......... 13 REFERENCES......... 15 ANNEXES......... 16

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LIST OF FIGURES Figure 1 Percentage Share of Pomelo to Total Value of Agricultural Crops and Gross Value Output, 1998-2008... Pomelo Top Producing Provinces (MT), 2008... Production (MT), Area (Ha) and Yield (Ha/MT) of Pomelo, 1998 2008...... Value of Production of Pomelo (in Million Pesos), at Constant Prices, 1998-2008.... Quantity of Philippines Pomelo Export (Kg), 1999-2007...... Quantity of Philippines Pomelo Import (Kg), 1998-2003.. Prices and Pice Ratio of pomelo (in Pesos), 1998-2008. Page

2 4

2 3

6 8 8 11

5 6 7

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LIST OF TABLES Table 1 2 World Production of Grapefruit (including pomelo) in MT, 2007. Supply and Utilization Account of Pomelo (MT), 1998-2008 Page 3 7

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LIST OF ANNEXES Annex 1 2 World Production of Grapefruit (including pomelo) in MT, 2007. Supply and Utilization Account of Pomelo (MT), 1998-2008 Page 15 16

I. OVERVIEW A. Background Pomelo (Citrus maxima or Citrus grandis), locally called suha, lukban, cabugao or bu-ongon is extensively grown in the country because it is widely adapted to local soil and climatic conditions. Some of the pomelo varieties grown in the country are the Amoy Mantan, Magallanes, Panacan, Mintal, Aroman, Sunwui Luk, and Siamese Selections (Loquias, 2006). Other names for pomelo include pummelo, pommelo, Chinese grapefruit, jabong, lusho fruit, pompelmous and shaddock. Pomelo is considered the biggest among the citrus fruits, 15-25 cm in diameter and usually weighing 1-2 kg. Its fruit is large, round to pear-shaped, and with a thick and spongy rind. It is usually pale green to yellow when ripe, with sweet white (or, more rarely, pink or red) flesh and very thick pudgy rind. The segments usually open at the sutures. The flesh is commonly firm with large vesicles and with low to high juice content. It usually matures from October to March, depending on climatic differences (PCARRD, 1982). The pomelo tastes like a sweet, mild grapefruit. It has very little or none of the common grapefruit's bitterness, but the membranes of the segments are bitter and usually discarded. It is consumed fresh but the fruit can be processed into flavoring products and juices (Loquias, 2006).

B. Contribution to the Economy Pomelos share to the economy is considerably small compare to the other fruits such as mango, banana, and pineapple. From 1998 to 2008, pomelo accounted an average of 0.046 percent to the value of agricultural crops and 0.022 percent to the gross value output of the country. In the same period, its contribution to the economy is declining (Figure 1). This calls for a greater consideration to tap the potentials of pomelo industry in the domestic and export market.

Figure 1. Percentage share of pomelo to total value of agricultural crops and gross value output, 1998-2008. (Source: BAS, 2009)

II. SITUATIONAL ANALYSIS

A. Production

1. World Production a) Major Producing Countries. FAO aggregated the pomelo data with grapefruit. In 2007, the Philippines is the 20th major producer of grapefruit (including pomelo) in the world, producing 38,345 MT. In the same year, the countrys pomelo production was 36,686 MT (BAS, 2009). Thus, in 2007, 96 percent of the Philippines recorded data under this category was attributed to pomelo production (36,686 MT). From 1998 to 2007, the countrys average production was 43,323 MT. This is higher than the average production of other top producer countries such as Bangladesh, Spain and Jamaica (Annex 1). Note however that this figure is based on the grapefruit (including pomelo) data.

Table 1. World production of grapefruit (including pomelo) in MT, 2007. Country 1. United States of America 2. China 3. South Africa 4. Mexico 5. Syrian Arab Republic 6. Israel 7. India 8. Argentina 9.Turkey 10. Cuba 11. Brazil 12. Tunisia 13. Sudan 14. Belize 15. Bangladesh 16. Iran, Islamic Republic of 17. Spain 18. Jamaica 19. Paraguay 20. Philippines Others World (Source: FAO, 2009) 2007 1,580,000 540,546 386,494 313,497 290,000 261,037 178,000 176,000 162,621 140,000 72,000 72,000 68,000 57,015 54,190 54,000 50,000 43,500 39,000 38,345 401,073 4,977,318

b) Productivity and competitiveness . As mentioned earlier, comparison of the productivity of major producing countries cannot be ascertained since pomelo data is aggregated with grapefruit.

2. Domestic Production

a) Major producing provinces. In 2008, Davao City (12, 372 MT), which is the top producer of pomelo in the country, contributed 34.5 percent to the Philippine pomelo production. Isabela (6, 917 MT) ranked as the 2nd major producer of pomelo in the country. Historical data (Annex 2) revealed that from 1998 to 2002, Isabela has been a consistent top producer of pomelo, followed by Davao City. In 2003, however, Isabela has experienced a sudden decrease in its production, making Davao City the countrys top producer of pomelo since then. Furthermore, Davao Oriental has also shown a steady production of pomelo while Nueva Vizcaya has recorded a fluctuating production trend. 3

Figure 2. Pomelo top producing provinces (MT), 2008. (Source: BAS, 2009)

b) Volume, area planted and productivity. Figure 3 illustrates that volume of production and area has shown an opposing trend. It is interesting to note that while area planted to pomelo is increasing at an average of 1 percent, its volume of production has recorded a negative average growth (-2 percent) from 1998 to 2008. The expansion of area planted accompanied by decreasing volume of production have greatly affected the productivity of pomelo. This is reflected on the declining trend of its yield.

c) Value of production. Value of production is also much affected by its declining production. As shown in Figure 4, its value of production from 1998 to 2008 is decreasing at an average of 2 percent.

Figure 3. Production (MT), area (Ha) and yield (Ha/MT) of pomelo, 1998 2008. (Source: BAS, 2009)

Figure 4. Value of production of pomelo (in Million Pesos), at constant prices, 1998-2008 (Source: BAS, 209)

B. Supply and Demand

1. Supply In some particular years during 1998-2003, the country is importing pomelo. Ironic as it is, the country is exporting pomelo in the same period. However, exports on the said years are less than one metric ton (Table 2). Further, from 2004 to 2008, the country is no longer importing pomelo. Declining domestic demand for pomelo might have greatly influence this phenomenon. As mentioned earlier, production is decreasing at an average of 2 percent. Thus, affecting the gross supply as well.

Table 2. Supply and utilization of pomelo (MT), 1998-2008.

(Source: BAS, 2009)

2. Demand a) World demand (Exports). The countrys export market for fresh and dried pomelo is not yet established. For instance, in 1999 and 2001, the country has exported fresh pomelo in Singapore (Figure 5). However, it failed to sustain such export market in the succeeding years. Data revealed that much are to be done in pomelo industry to enter and compete in the world market.

b) Domestic Demand. From 1998 to 2003, the country was importing pomelo from countries like China, USA, Thailand, Hong Kong and Singapore (Figure 6). AS discussed earlier, there were no imports from 2004 to 2008. Note that in the previous years (1999 and 2001), the Philippines was exporting pomelo to Singapore. However, in 2003, the country has imported 14,450 Kg of fresh pomelo from Singapore. Further, as shown in the supply and utilization account (Table 2), domestic demand for pomelo is decreasing at an average rate of 2 percent.

Figure 5. Quantity of Philippines pomelo export (Kg), 1999-2007. (Source: BAS, 2009)

Figure 6. Quantity of Philippines pomelo import (Kg), 1998-2003. (Source: BAS, 2009)

C. Value-Chain System 1. Input Supply Subsystem a) Seeds and seedlings, etc. Mature fruits that are free from abnormalities are selected as source of seeds. Extracted seeds are washed several times to remove the slimy material. Small undeveloped seeds that float are discarded. Seeds are spread thinly in absorbent materials and allowed to air dry. After drying, the seeds are treated with fungicides by mixing the powder with the seed thoroughly until each seed is uniformly coated. The seeds should be sown as soon as possible. If they are to be shipped or cannot be sown right away, they should be packed in an airtight container wrapped in a plastic bag and kept in a cool place, preferably under refrigerated condition (PCARRD, 1982). b) Fertilizer and pesticide. A month after transplanting, a nitrogenous fertilizer, such as urea, is applied evenly by hand to each plant at the rate of 50 -100 g. The rate is increased to 200 -300 g for every plant in the second year. The said amounts should be distributed on three applications during the rainy season. Minor fertilizer elements could be applied directly to soil or by foliar spraying (PCARRD, 1982).

2. Farm Production Subsystem Aside from fertilization and spraying, PCARRD (1982) also emphasized the importance of trimming, pruning, and weeding in growing pomelo. Usually, young trees are trimmed to have only a single trunk with three or four well-distributed primary branches. Cultural practices for a bearing grove are also designed to obtain high yields satisfactory quality at commercially competitive costs. Such practices include covercropping, proper irrigation, pruning, spraying of chemicals and pesticides, and propping and establishment of windbreaks.

3. Postharvest Subsystem Proper handling of pomelo is as important as picking the fruit at the right stage maturity. Fruits intended for distant transport are bought from the field to a packing shed for sorting and packaging. Sorting is also done to separate fruits into similar sizes, color, and rind qualities. Usually, pomelos are packed in wooden crates. These containers, although relatively more expensive than kaings, offer better protection, more stability, and sufficient ventilation. The higher cost, however, may be compensated by lesser postharvest losses and a premium price in the market. Appropriate container size is also important for subsequent and repeated manual handling operations during transport. Harvesting and packaging operation is followed immediately by prompt transport.

Other postharvest treatments for pomelo include fungicide application and waxing. Waxing, although not traditionally practiced in local handling of pomelo, can greatly minimize shriveling of fruits especially under the tropical climate (PCARRD, 1982).

4. Processing Subsystem Pomelo can be processed into several products. It can be made into beverage, syrup, concentrate, puree, preserves, marmalades, candies, dehydrated products, and cordials. It only shows that opportunities abound the processing industry of pomelo providing greater value and incentive to increase production.

5. Marketing Subsystem In Davao City, the major production areas of pomelo are barangays in the Toril and Calinan districts. There are also fruit coming from Panabo and Mawab in Davao del Norte which are being supplied by large orchard owners such as Dizon Farms and TADECO. Large orchard owners/shippers do not only operate big plantations but also own stalls in the city proper, which serve as outlets for their produce. Aside from shipping the fruits to Manila and Cebu, they also sell to assembler/distributor/shippers, transient traders, retailers, and consumers in the market center. Shippers, distributors, and retailers in the trading and market center buy fruits from medium orchard owners. For small orchard owners, their buyers include shippers and retailers in the trading center and distributors at the assembly and distribution areas. At the assembly and distribution levels, assembler/distributors sell to the same set of buyers, which include transient traders, retailers, and consumers based at their respective areas of operation. Shippers in the trading center have only two options where to sell their fruits - Manila buyers and consumers. On the other hand, shippers based at the market center not only ship pomelos to Cebu and Manila, but also sell to transient traders coming to the city to procure supplies, and retailers, and consumers in the city proper (BAS, 1992).

D. Prices

1. World Prices As mentioned earlier, pomelos data are aggregated with grapefurit. Thus, comparison of prices among top producing countries cannot be done.

2. Domestic Prices Farmgate and wholesale prices (1998-2008) are fluctuating (Figure 7). It is interesting to note that farmgate is higher than wholesale price. According to BAS, such occurrence is possible in as much as only few provinces are reporting their wholesale price compared to the provinces that are reporting farmgate price. Hence, in getting the average prices, there is 10

always a probability that average wholesale price is lower than the farmgate, especially if the reporting provinces are the main supplier/top producer.

Figure 7. Prices and price ratio of pomelo (in Pesos), 1998-2008. (Source: BAS, 2009)

3. Price Formation/Differentiation For shippers of the commodity, the distributors in Manila who inform them of the price trend in Manila do pricing. Proper pricing is usually achieved after the first shipment. Other traders base their pricing on size, quality, and variety of fruits being traded. Some traders claim that local consumer prefer the standard-sized pomelos which weigh from 300500 grams (BAS, 1992).

E. SWOT Analysis

The strengths, weaknesses, opportunities, and threats follows (Loquias, 2006).

in pomelo industry are as

Strengths Known for quality and high acceptability Widely adapted to local soil and climatic conditions Wide variety selection( Amoy Mantan, Magallanes, Panacan, Mintal, Aroman, Sunwui Luk, and Siamese Selections) Weaknesses Poor Insect and pest management 11

Inefficient marketing system Lack of established agribusiness system Underplantation of pomelo Susceptible to patch canker and rind borers

Opportunities High potential for postharvest processing (flavoring products and juices) High potential for export trade (possible with increase in production)

Threats Competition from other ASEAN countries. Susceptible to pests such as rind borer, citrus mites and citrus scale. Presence of diseases caused by Phytophthora parasitica, Xanthomonas, Elsinoe fawcetti.

III. PROBLEM TREE ANALYSIS

Figure 8. Problem tree analysis of pomelo.

The issues identified in SWOT were used in the problem tree analysis. Apparently, existence of pest and diseases greatly affects the production of pomelo. Due to limited information regarding good insect and pest management, pomelo becomes more susceptible 12

to pests and diseases. This results in infestation of plants and fruits. Plants that are infested would hardly bear good quality fruits. Likewise, fruits that are infested would barely grow into the desire quality. Such instance will greatly influence the yield of pomelo. On the other hand, low yield is not only attributed to pest and diseases. Areas that are not maximized for pomelo planting (underplantation) reduce the chance of increasing the production. While there are issues prevailing in the farm level production, pomelo industry is also facing constraints in marketing the produce. Efficient marketing system has been identified as one of the problems that are needed to be addressed. This issue, a prerequisite in establishing a good agribusiness system, limits the market of the commodity. These prevailing issues have hindered the expansion and development of pomelo industry both in the domestic and export market.

IV. SUMMARY, ISSUES AND RECOMMENDATIONS Philippine pomelo industry is beset with problems. From 1998 to 2008, volume of production and yield of pomelo were declining despite of the increasing trend of area planted to pomelo. Further, domestic demand for pomelo has shown a decreasing trend. Statistics also revealed that the export market of pomelo is not yet fully established. However, there are alternatives which can greatly develop the industry. Contract buying is very common in the pomelo industry. This involves the sale of the expected produce long before the expected harvest time. The buyer gets lower buying prices to account for risks assumed. Although contract buyers perform production and marketing services that are normally done by producers, the risk they incur by buying fruit before harvest are more than compensated by the substantial margin in transaction. To address such problem, it is recommended to provide extension of liberal loans to farmers to finance not only the production but also post production expenses. Just like the other commodities, marketing system and transaction in pomelo industry are often complicated by the presence of different types of middlemen and operations such as retailers to retailers, contract buyers to financier-wholesaler and others. This results in lower in-flow for the producers or high prices for the consumers, or both. Thus, it is highly recommended to encourage the creation of farmers organization to strengthen their bargaining power and minimize the layers of middlemen. They could then deal with major wholesalers operating within their area. Farmers are also in disadvantaged position due to poor handling and grading methods. Poor handling of pomelo results in losses during transit and storage. On the other hand, lack of standards and inconsistent method of sorting are problems encountered by the farmers on the postproduction stage. The present practice of sorting is done by producers and retailers. A less costly method would be grading done at the producers level based on buyers preference. This would result in premium prices for higher grades. Further, conduct of trainings for the farmers will be of great help in increasing their knowledge and skills in this area. Moreover, one of the considerations in providing a strong base for an industry is the price. The grower must be able to sell his product at a price that is within the purchasing 13

power of the largest population segment possible. This will reverse the decreasing demand of consumers for pomelo. Only when production is based on a wide market demand can a sound industry grow and survive. The problems and difficulties beset by the Philippine pomelo industry calls for a greater attention to tap the potentials of the industry in the domestic and export markets (PCARRD, 1982).

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V. REFERENCES

Bureau of Agricultural Statistics, Department of Agriculture (2009). Countrystat. Retrieved on September 2009 from www.countrystat.bas.gov.ph. Bureau of Agricultural Statistics, Department of Agriculture (1992). Marketing and Information Needs Assessment for Davao City. Technical Report. Food and Agriculture Organization of the United Nations (2008). Retrieved on October 2008 from www.faostat.fao.org. Loquias, V. L. (2006), Good Agricultural Practices in Pummelo Production. Bureau of Plant Industry - Davao National Crop Research and Development Center. Manuel, M.V. (1980). Pomelo Marketing: Oriental Mindoro and Davao Del Sur. Special Studies. Volume 2. Philippine Council for Agriculture, Forestry and Natural Resources Research and Development. (1982). The Philippines Recommends for Citrus. PCARRD Technical Bulletin Series 42.

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VI. ANNEXES

Annex 1. World production of grapefruit (including pomelo) in MT, by top producing countries, 1998-2007.
Country 1. United States of America 2. China 3. South Africa 4. Mexico 5. Israel 6. Cuba 7. Argentina 8. India 9. Turkey 10. Brazil 11. Sudan 12. Tunisia 13. Syrian Arab Republic 14. Belize 15. Paraguay 16. Iran, Islamic Republic of 17. Philippines 18. Jamaica 19. Spain 20. Bangladesh Others World 1998 2,352,000 253,646 196,037 168,282 377,475 338,300 216,073 110,000 100,000 65,000 64,500 50,000 0 44,954 59,952 47,262 46,868 42,000 26,016 14,895 445,357 5,018,617 1999 2,279,760 310,310 212,181 211,498 372,200 260,676 205,270 124,000 140,000 65,000 65,000 50,000 0 52,953 59,790 47,310 48,052 42,000 22,623 15,000 455,671 5,039,294 2000 2,505,640 268,128 322,834 263,126 246,000 443,705 217,905 130,000 130,000 66,000 66,000 50,000 0 49,766 47,869 42,128 46,326 42,000 22,965 16,000 423,282 5,399,674 2001 2,233,490 323,296 310,967 319,793 329,500 302,487 199,489 130,000 135,000 66,000 67,000 66,000 0 53,001 47,967 36,625 43,413 42,000 26,472 17,000 408,268 5,157,768 2002 2,199,020 356,786 286,495 297,638 251,900 137,312 204,751 140,000 125,000 67,000 67,500 72,000 0 44,762 46,663 36,000 45,291 42,000 30,855 17,000 415,573 4,883,546 2003 1,871,523 400,840 312,004 361,494 255,900 227,800 184,162 142,000 135,000 67,000 68,000 72,000 0 39,205 41,327 37,000 43,128 42,000 24,738 18,000 434,936 4,778,057 2004 1,964,056 433,126 288,372 408,953 235,500 225,000 177,210 145,000 135,000 67,500 68,000 72,000 0 55,966 40,290 49,644 41,481 43,500 29,771 18,000 425,345 4,923,714 2005 923,510 444,280 362,981 350,199 263,540 134,090 272,704 148,000 150,000 68,000 68,000 72,000 0 55,440 38,200 53,922 40,751 43,500 32,727 66,000 420,926 4,008,770 2006 1,117,650 495,178 415,212 387,339 266,003 169,556 175,000 158,000 179,988 71,000 68,000 72,000 290,000 62,807 38,015 54,000 38,662 43,500 42,467 54,195 410,180 4,608,752 2007 1,580,000 540,546 386,494 313,497 261,037 140,000 176,000 178,000 162,621 72,000 68,000 72,000 290,000 57,015 39,000 54,000 38,345 43,500 50,000 54,190 401,073 4,977,318 Average 1,902,665 382,614 309,358 308,182 285,906 237,893 202,856 140,500 139,261 67,450 67,000 64,800 58,000 51,587 45,907 45,789 43,232 42,600 30,863 29,028 424,061 4,879,551

(Source: FAO, 2009) 16

Annex 2. Volume of pomelo production (MT), by top producing provinces, 1998-2008. Province Davao City Isabela Cagayan Nueva Vizcaya Davao Oriental Others Philippines 1998 9,130 20,327 3,181 1,064 971 12,194 46,868 1999 10,196 20,316 3,267 1,896 792 11,584 48,052 2000 10,454 17,927 4,648 847 744 11,705 46,326 2001 11,418 14,545 4,177 1,100 753 11,422 43,413 2002 12,743 14,322 4,886 900 755 11,685 45,291 2003 13,510 11,888 3,880 898 1,064 11,918 43,159 2004 13,763 9,692 4,040 861 1,061 12,065 41,481 2005 14,022 8,383 3,986 809 1,266 12,285 40,751 2006 14,062 7,150 4,300 870 1,271 11,010 38,662 2007 12,621 8,478 4,429 902 1,271 10,644 38,345 2008 12,672 6,917 4,094 1,494 1,229 10,280 36,686 Average 12,236 12,722 4,081 1,058 1,016 437,921 469,034

(Source: BAS, 2009)

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