Market Structure and Distribution of Benefits from Agricultural Exports: the Case of the Philippine Mango Industry

To illuminate the role of agro-export industry in inclusive growth, this case study on Philippine mango focuses on the role of market structure in the distribution of export benefits. It is based on review of industry trends and related studies, open-ended interviews of key informants, and structured interviews of respondents situated along the value chain.The distribution of trade benefits is hypothesized to depend on both vertical and horizontal market structure. The former implies that a contracting relationship or vertical integration is a mechanism to elevate product quality to export grade. The latter implies that economies of scale are a factor in mango exporting at the marketing and processing stages. It is noteworthy that there are no discernible economies of scale at the primary level, which accounts for the prevalence of smallholder growing at the production stage.Quantitative analysis confirms that vertical linkages are an important factor in raising mango quality to export grade. Moreover, enterprise size is an important factor in producing or procuring export grade mango. This in turn accounts for the prominence of horizontal market structure in the export sector. However, the importance of scale economies in the industry should not be overstated. Investment requirements do rule out small-scale operations, but are perfectly within reach of medium-size firms. Considerably, more entry is possible with adequate and stable supply of quality raw material at reasonable cost. In fact entry has been recorded in both fresh and processed exports, though exits are also frequent; the largest firms, especially among processors, tend to be the longest lived.To facilitate entry, encourage diversity, and widen distribution of benefits from exporting, concerned stakeholders must focus on relieving the key constraint, which is availability of stable and affordable supply of fresh mango of export grade for either fresh or processed sectors. This requires regulatory reforms, reliable database of mango growers, investments in R&D, and improvements in the extension system to offer technical assistance and technology transfer.