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 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.