“Exploring the Case of Banana Pole-Vaulting in Company A, At Davao Del Norte, Philippines”

“Exploring the Case of Banana Pole-Vaulting in Company A, At Davao Del Norte, Philippines”

Noelyn D. Bahian, PhD

University of Southeastern Philippines

DOI: https://dx.doi.org/10.47772/IJRISS.2025.907000445

Received: 14 July 2025; Accepted: 22 July 2025; Published: 22 August 2025

ABSTRACT

Davao del Norte is famously known as the Banana Capital of the Philippines due to its vast production and exportation of cavendish bananas, a high value variety of banana.

This case study investigates banana pole-vaulting in Company A at Davao del Norte, Philippines. Pole-vaulting is a locally dubbed-word for “side-selling”. It is an agency problem where a contract grower sells harvested-quality bananas to the non-contracting buyer other than the contracted exclusive buyer or company. The study examined and focused on the issues of cavendish banana pole-vaulting that affected the grower-buyer business relationship to determine the significant reasons that influence the pole-vaulting activity.

The study used qualitative method wherein sources of data were derived from key informant interview (KII) and focused group discussions (FGD) through purposive, snowball sampling and volunteerism participated by 16 key respondents from the growers and 9 key respondents from Company A. Data gathered were then processed and evaluated through Thematic Analysis. Descriptive method was utilized for detailed documentation and description of the participants’ profile were taken with highest ethical considerations.

Thematic analysis identified four reasons to pole-vaulting: (1) contract parties’ commitment to the contract farming agreement was unstable due to unforeseen economic considerations; (2) financial position as the common interest of both parties; (3) management control in a contract farming agreement is absolute to one party only; and, (4) the existence of communication problem due to the growing gaps between the parties. The results have brought up the importance of effective communication and the role of the government in establishing robust economic policies not only for grower, buyers and exporting companies but to the holistic economic sustainability of high-valued cavendish banana.

Keywords: cavendish banana; agency problem; contract growers; side-selling; banana pole-vaulting

INTRODUCTION

Bananas are vital in maintaining agricultural economic and food security in producing and exporting countries. There are around 15,000 small banana growers from Ecuador, Philippines, Colombia, Peru and Dominican Republic for export markets consumptions. Bananas are important source of potassium, Vitamin A and C (Voora et.al., 2023).

The cavendish banana is a high value crop and most widely cultivated in Davao Region which contributed significantly to the country’s export earnings from its major importing countries: Japan, China and South Korea with 1.17 million metric tons production as of June 2023, accounting for 51.5% of the total banana production for the entire country (PSA, 2023). Cavendish banana is known for its high nutritional value and for its durability to withstand long distance travels and remain fresh upon arrival in international market, making it a global demand (FAO UN).

Globally, cavendish banana industry has a complex supply chain having a grower/supplier-buyer contractual agreements as the vital legal notions and one of the structural blocks for social and economic life of both parties in the contract (Dagan, 2021). Normally, banana farmers and suppliers should sell exclusively their cavendish bananas to the contracted parties however, there is a never-ending incidence of pole-vaulting or side-selling practices among the cavendish banana growers (Mata et.al. 2020). In the context of Philippine Banana Industry, side selling is dubbed as pole-vaulting due to its literal concept: go to the other side.  Cavendish banana growers divert their produce away from the contracted channels and sell directly to other buyers or markets (FAO, 2020). This incidence causes significant challenges to the veracity of supply chain, contractual execution, and price stability within the banana industry (Mangarin, 2023).

There are more than five (5) multi-national companies of cavendish banana production and marketing operating in Davao del Norte, and one of these is the Company A (a pseudonym) with production areas located in the localities of Kapalong, Sto. Tomas, Asuncion, Tagum, Laak, Panabo, and Carmen. The areas it operates are in contract growers’ scheme, where Company A provides advances of farm inputs to the contracted growers and collects its advances during the delivery of fruits to its designated post-harvest and packaging facilities. Company A likewise offered cash advances to the growers to cover the labor expenses during the vegetative stage of their bananas. All advances (farm inputs and cash) are of no product price mark-ups and zero interest. However, the Company A cannot collect outright the advances due to pole-vaulting issues of their growers which bloated the company’s receivables from growers over the years of business operation and this negatively impacted the company’s internal control on cash management and liquidity difficulties (Patuan et.al. 2023). Pole-vaulting likewise affected their volume commitment to the market due to undelivered grower’s produced and resulted to a costly shipment operation. The cargo container should be shipped even if it is not fully utilized but would bear the same cost as that of fully loaded container. Pole-vaulting does not either give sustainable price for the growers which has been taken advantage by the banana consolidators or middle-men (Mangarin, 2023). Contract farming is one of the useful means towards market accessibility for the small and medium growers, but despite its contracting benefits, growers tend to deviate from the contract terms and conditions (Ruml et.al., 2021). According to Umar et.al. (2025), farmers are strongly motivated to incentives, timely payment, technical and farm inputs support from the contracting agency. However, over the years, the Company A, had gradually increased the buying price per box, developed marketing schemes on subsidy programs, and provided incentives for the completed delivery commitment, but pole-vaulting still exists.

Pole-vaulting is considered as one of the economic problems in banana industry (Loquias et.al., 2022). The continuing disagreements between Company A and its contracted growers, and the financial losses from both sides, had led to the following statements of the problem that aimed to determine the effective and efficient strategies against this industry problem:

What are the reasons for pole-vaulting?

What are the possible solutions to the pole-vaulting problem in cavendish banana industry?

Objectives of the Study

This study intends to develop a deeper understanding as to why pole-vaulting persists despite company efforts to curb this wrong-doing, and find possible solutions from the growers who engages in pole-vaulting. This study aims to the achievement of the following objectives:

(a) to determine the significant reasons that influence the pole-vaulting activity; and

(b) to recommend possible industry strategies that can counter the pole-vaulting activity while maintaining each party’s commitment to the cavendish banana farming agreement.

Significance of the Study

The result of this study is beneficial to:

(a) the business operations of Company A especially in the delivery of its commitment to the buying market;

(b) the grower-buyer upright business relationship by understanding better their role as business partners in the industry;

(c) and the government to aid in the policy formulation against banana pole-vaulting activities.

Theoretical Contribution

This research is anchored in Agency Theory, a principle used to describe the intricate bond between the principal (firm) and agent (growers) of the business (Moloi et.al., 2020). In this study, the Company A is the principal given the fact that it has extended its financial assistance (farm inputs and cash advances) to the contracted growers. This theory has an impact to the human behavior in the organization specifically on their decision-making and the entire dynamics of the business environment (Syafriadi et.al., 2023); gave the understanding that the problem of pole-vaulting in cavendish bananas contract farming agreement may have been caused by diverse goals of each party, each party’s level of risk preferences, and issues in contract reciprocity (Thiers, R. 2019). This theory likewise explains that differences in goals and preferences can potentially pose conflicts between the principal and the agent and would lead to increase in costs and lower the financial performance of the business (Aluchna, M. 2023); and this theory clarifies the gaps in relation to the disagreeable behaviors happening throughout the supply chain (Beal Partyka, 2022).

Based on the reviewed related literatures, pole-vaulting problem in banana industry is a result of each contracting party’s diverse goals, different level of risk preferences and issues on contract reciprocity, as illustrated and shown in Figure 1 presented below:

Figure 1. Conceptual Framework of Pole-vaulting as an Agency Problem

Company A and the grower are of different entity bounded with an exclusive farming agreement and interact with each other all throughout the life of the contract, having their own goals, preferred level of business risks, and concerns over the reciprocity of agreed contract.

Diverse Goals.

Both parties were bonded civilly by a contract farming agreement that should serve as their basic guidelines in doing business with each other, however, both differ in their goals. Company A’s main goal is focused on its corporate commitments and to produce high quality produce bananas at the lowest cost possible, while grower’s goal is focused on its own personal goals – to earn high by producing cavendish bananas.

Risk Preferences.

Both parties have different level of business risks, wherein, Company A is focused on the quality and cost as stipulated in the farming agreement contract, while growers would risk a good business relationship for the achievement of their own goals such as earning more than the contracted price.

Contract Reciprocity.

There is also an issue on contract reciprocity, wherein the contract farming agreement might be unilateral, thereby creating a conflict between the contracting parties. The banana farming agreement signed by both parties (company and grower) stipulated the following major terms and conditions:

Technical support and the provisions for Good Manufacturing Practices (GMP)

Purchase Price

Sanctions are imposed to the production of the growers if major technical advises are being violated such as stoppage orders of banana, where company will not buy the fruits from the growers for a certain period like around two to three months; violation such us but not limited to using of the prohibited chemical labels. Chemical usage is being analyzed; hence types of chemicals can definitely be detected. This sanction greatly affects the grower’s financial standing with the company. Their payables arising from the advances given by the company would bloat and the moment sanction is rescinded, the banana production proceeds will be eaten up by payment to previous advances (i.e. farm inputs).

Purchase price stipulated in the contract is fixed and specific for every type of packaging and classifications. This is being exploited by the on-the-spot buyers, these are cavendish banana buyers that lure growers to sell their harvests to them at a higher purchase price which commonly happens during the peak period of market demand. Then these on-the-spot buyers would lay-low during the lean period of cavendish market demand. During the pole-vaulting time, growers who sold their bananas to on-the-spot buyers can get higher sales than delivering to company. Grower’s payables on advances from company would also bloat which likewise affects their finances. Company will collect all the advances to the growers the moment bananas are being delivered to them.

METHODOLOGY

This study used qualitative research approach, commonly utilized for research studies in social sciences and humanities to address research questions with in-depth analysis (Dzogovic et.al., (2023); qualitative research aids to understand the insider’s actions, enthusiasms, and outlooks (Bazen et.al., 2021) employing specifically the case study research technique, a typically approach in qualitative research (Priya, 2021).

Descriptive method was likewise used for ‘detailed documentation’ and description of the participants’ characteristics and profile (Remler et.al., 2021).

Sources of data were from the key informant interview (KII) and focused-grouped discussion (FGD) from both parties: 16 key respondents from growers and 9 key respondents from Company A using the researcher’s made open-ended questionnaire instrument with strict implementation on ethical considerations of this study, and which survey tool had passed through the rigid reliability, validity and pilot testing. The survey questionnaire is focused on the following dimensions derived from the related literatures: diverse goals, risk preferences and contract reciprocity.

Participants for data gathering were considered to correspond to the nature and purpose of the study hence, purposive sampling, snowball sampling, and volunteerism strategies were utilized (Hiratsuka, 2025).

Data treatment and analysis of the gathered data was done through a thematic analysis, a ‘useful, flexible’ and commonly used in qualitative analytic method that seek out the development of ‘patterns’ (themes, categories) across cases (Braun et.al., 2021).

Triangulation method is likewise utilized, it is ‘a review of sociological approach’ to ‘validate, deepen and widen the understanding’ for this study. This helps in attaining higher-quality research and reducing the margin of error (Dzwigol, 2022).

 Sources of Data

Table 1 and Table 2 below, are the participants’ profile and engagement with Company A:

Table 1. Growers Key Respondent’s profile and engagement with Company A

Most of the growers’ participants were the second generation in banana farming business, for their parents were the prime generation and most of them were already at old age and no longer in full capacity to manage their own banana farms. Table 1 shows data collection techniques used and the number of participants, the grower respondent’s general profile in terms of age, years of engagement as contract grower of the company, the number of hectares they engaged with the company and the company assistance the grower had avail.

Table 1 also shows that banana farmers with 12 hectares above opted not to avail any cash advances offered by the company and those with 10 hectares below opted to avail the cash advances from the company. The company provided a free technical support to ensure the compliance to agricultural Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP) as required by the global market on food safety protocols (Knowles, 2023). Inputs advances include fertilizers and regular aerial sigatoka spray, a fungicide application for black sigatoka and should be sprayed on a proper timing (Esguera, 2024).

Table 2. Company A’s Key Respondent’s employment profile

Table 2 shows the data collection techniques and the number of participants, the participant’s years of engagement with company, the number of years they are directly handling the growers’ area and their work position in the company. The nine (9) participants from Company A were purposively chosen, composed of employees who directly deal and interact with the growers and have the years of exposure ranging from 2 to 24 years and with the position of supervisor, department head, manager and finance director.

KIIs and FGDs were conducted on the preferred schedule and venue of the participants. Most growers’ participants preferred to be interviewed at the packing plant nearest to them and a few preferred to be at their house. Company A’s participants were likewise interviewed based on their preferred schedule but all of them were interviewed at the Company A’s premises.

Prior to data gathering, an Informed Consent Form was sought from the participants to strictly upheld the Data Privacy Law and maintain the highest ethical standards of the conducted research (Renuka et.al., 2025). Questions were written in English terminologies but were asked by the researcher in local dialect to ensure unified understanding of the questions being asked.

Gathered responses from FGD and KII were transcribed in original way the questions were answered by the participants, then translated into English transcriptions. Significant statements were chosen and coded with the class of participants (G for growers and C for Company A) followed by statement serial number (G1) and FGD number and or KII number (e.g. G1. KII2 and C1. KII1). Themes were formulated by highlighting key words in the English translations the (i) basic themes and main idea from the original transcriptions and English translation, the lowest order of themes. Then, the main ideas were grouped from several basic themes to create (ii) organizing themes for the purpose of enhancement of the meaning and significance of the texts to a broader theme; and lastly, clustering all organizing themes with the same thoughts or ideas to have the concluding principle or the (iii) global themes, (Christou, 2022).

RESULTS AND DISCUSSION

The gathered data from the participants that were transcribed and thematically analyzed had resulted to the determination of the four (4) global themes that explained the cavendish banana pole-vaulting. These are: (1) contract party’s commitment; (2) financial position; (3); management control; and (4) communication problem, as shown in Figure 2:

Figure 2. Reasons of Cavendish Banana Pole-Vaulting.

Figure 2 explains in detail the diverse goals and contract reciprocity in the contract parties’ commitment theme, while risk preferences are explained in financial position and management control themes. Communication problem emerges as an additional reason to the conduct of pole-vaulting.

Contract Party’s Commitment. Legal contract is meant to protect both parties in the contract and the terms and conditions had mutually bind themselves to a commitment are highly expected to faithfully deliver and fulfill the commitment for each other (Singh et.al., 2021). Contract has its own life, where both parties had agreed but there are always uncertainties along the way that would affect their agreed commitment. All contract transactions in Company A were legally bonded, however, uncertainties happened that led to the banana pole-vaulting. These are the (i) delayed or incomplete delivery of contract parties’ obligations, and (ii) dissatisfaction from contract price.

On the other hand, Company A, as the exclusive buyer of the growers’ banana produce, claimed to have supported the growers based on what has been agreed in the contract, and provided further assistance needed by the growers during the calamities, hence, their standpoint, each party has the (i) compliance to contract obligations and (ii) the company had given additional support to the growers.

Figure 3 illustrates the interaction of both parties in the execution of their contract commitment for each other.

Figure 3. Contract Parties’ Commitment.

Each party was legally bonded with their obligation for each other and must civilly and diligently abide with it. However, due to economic situations or preferences (Thiers, 2019) to gain more than the company had committed to provide, pole-vaulting occurred. The intention to side-sell rooted from the party’s dissatisfaction on the terms and conditions of the contract (Ruml et.al., (2020), affecting the supposedly loyalty of the party to the other party of the contract where, loyalty of the business partner is one of the best advantages of the company in a competitive condition of the industry (Arslan, 2020).

Financial Position. Both parties are looking after their financial position to be at the stable state, where, each of them desires to have their own economic development, manage the business risks, and be resilient in various economic turbulence that greatly affects their personal needs. Based on the gathered data, growers’ decision-making to pole-vault is greatly affected by (i) their financial independence from the company, (ii) during their lowest financial point or at times of financial crisis, (iii) the availability of other sources of income from the farm, that had somehow, in one way or the other, affected the financial position of the Company A. Both parties are entwined by a common goal – to have their own stable financial position however, both of them have differ in achieving this common goal, as shown in Figure 4:

Figure 4. Financial Position of Growers and Company A

In this situation, both the company and grower had cost each other’s good business relationship and raised business tension and conflict.

Management Control. Management control particularly in farm management, highlights the significance of competent resource application, cost control, and production maximization (Mishra et.al., 2023). Company A and the grower are two separate individuals being merged by their partnership and contributed capital share towards a common interest in the business, that is to gain from all their efforts and investments, but differs in their own management control strategies. In the growers’ farm management control, data gathered showed that the organized growers’ cooperative has the (i) stringent internal policy control including the best farm practices implementation; however, all other individual growers including its members have the (ii) absolute control over their own farm management; and (iii) the company has control over the distribution of farm inputs and delivery of the technical support but no control over the grower’s farm. Therefore, due to absolute control, pole-vaulting is easily managed to do so. The management control between two parties is simplified and illustrated in Figure 5.

Figure 5. Management Control in Contract Farming Agreement

Communication Problem. Effective communication is vital to the achievement of organization’s goals (Olivia, 2023). Communication, in its simplest meaning, is the sending and receiving of either verbal or non-verbal messages, however, common understanding of the message being relayed must be present (Fatimayin, 2018). It may be hindered and refracted by various circumstances such as dissimilarities in insights and interpretations, environmental condition, emotional state, inclination to verbal skill, or the shape of the receiver to understand the delivered message (Zahid et.al., 2021).

Aside from the three reasons of pole-vaulting pre-identified from the literatures, the gathered data found out that communication problem is also an important factor in contract farming agreement that when left and neglected would result to pole-vaulting. Growers’ statements revealed that (i) lack of growers’ and company’s convergence, and (ii) lack of visibility of company’s representative, also pushed them to eventually pole-vault.

Parties to the contract farming have a binding agreement they both agreed on, and an open connection to a constructive communication is important. Effective communication plays a vital role in people’s lives, and the absence of it would mean chaos and would lead to guesswork, inaccuracy, inference of motives, game-playing behavior and defensiveness (Zahid et.al., 2021). Figure 6 illustrates the communication problem of the Growers and Company A.

Figure 6. Communication Problem of the Growers and Company A

As stated in the collected statements, the growers and the Company A used to have regular meetings, formal and informal. They also used to have authorized company representatives who personally deliver the company’s messages especially on the technical aspect of banana farming. Both parties used to converge in a venue to discuss issues and concerns and these authorized company representatives could be easily reached or approached with, therefore, issues and concerns of both parties were immediately discussed and had created an open avenue of communication for both parties. However, communication gaps prevented both parties to maintain the good business relationship, leading to tensions and conflicts to both parties involved.

CONCLUSIONS

On the basis of the findings of this study, it can be assumed that these four global themes—contract parties’ commitment, financial position, management control, and communication problem—are the major reasons of doing pole-vaulting in the banana farms. Due to these reasons, the following conclusions are also drawn:

The party’s commitment to the contract farming agreement signed by both parties is poorly executed due to the future economic conditions of both parties. These conditions were not anticipated during the contract drafting and signing.

Better financial position or financial stability, on the other hand, is the common interest of both parties that can only be obtained through a reciprocated high yield and production recoveries. Higher prices offered by the outside buyers became the most convenient and easiest way for the growers to obtain a better financial position. However, the investment of the company to the grower’s farm was neglected and affected the financial position of the company.

Management control over the farm has divided both parties wherein the growers have the most advantage in farm management control being the owner of their farms while the company is just a contracted buyer and an investor to the grower’s production process.

Lastly, effective communication is indeed a very important aspect in every transaction. The absence of effective communication often leads to chaos and misunderstanding and weakens relationship (Zahid et.al., 2021).

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