In recent times, shortages of supply have been far from the main issue in a banana market that has more than its fair share of challenges to deal with.
Sales have been reasonably promising over the last year, Kantar Worldpanel figures show, with 3.2 per cent value and 1.7 per cent volume growth. But recent months have seen significant supply issues affecting the market.
Flooding in the Urabá region in northwestern Colombia in the first three months of the year has severely damaged 10 per cent of its plantations and their output.
Meanwhile, production problems in Ecuador have further tightened supplies, although one supplier tells FPJ that growing conditions in the other major Latin American supplier, Costa Rica, are “extremely good”.
Ecuadorian supplies were further hit this quarter by the “short term” introduction of fines for those who do not respect the official minimum banana price per box. Ecuadorean president Rafael Correa is right behind the move and even threatened those attempting to undercut rivals with imprisonment.
Banana supplies from West Africa were also affected as intense fighting in the Ivory Coast hit the country’s fruit industry.
The civil war created a virtual shutdown of the country’s port and logistics network, preventing fresh produce exports including pineapples, bananas and papayas from leaving the country in early April.
Access to the country’s main port of Abidjan was suspended indefinitely, with reefer vessels unable to dock and collect fruit. However, this has since resumed.
And in the Canary Islands, a new study from Spain’s ministry of agriculture has found that the banana export sector on the island of La Palma would be making
€60 million in losses every year if it did not receive support from the Spanish government.
The research, which was carried out for the ministry by consultancy Capgemini, found that every kilo of bananas produced on the island cost between €0.83 and €1.09 to produce and export, but went on to generate losses of between €0.34 and €0.61.
“The banana market has been difficult,” says one importer. “But generally people in the industry are cautiously bullish for May and June. “Obviously, we are approaching a difficult time of the year for bananas with lots of competition in the market with summer fruits coming on stream, kids away from school and 20 per cent of the population going on holiday in the coming months.”
Oil prices fell back to €119 a barrel this week after sustained high prices were brought down by a lack of demand during the warmer weather.
And supplies were boosted by news from the Windward Islands that fruit from the region will begin to reappear on UK shelves in June after being wiped out last October.
The multinationals enjoyed varied performances this quarter. Last week, Dole Food Company announced that net income fell 91 per cent through the first quarter of 2011, down to $2m from $23m last year, impacted by the refinancing of the company’s yen-cross currency swap. Fresh fruit revenues benefited from higher sales of bananas in North America and Asia, but were partially offset by planned lower volumes of bananas sold in Europe.
Fresh Del Monte reported year-on-year increases in both net income and company sales for the first quarter of 2011. For the period ended 1 April, net sales increased by three per cent to $974m, compared with $943.1m last year, with growth attributed to higher selling prices in the company’s banana business.
Chiquita also enjoyed an improved performance as net income bounced back through the first quarter of the year, up to $24m from a loss of $9m the previous year.
Net sales climbed as the result of a stronger performance in the group’s banana sector. According to Chiquita, European market prices for bananas reflected improved consumer demand, while North American pricing included force majeure surcharges that began in late January to recover higher sourcing costs that have continued since late 2010.
Finally, Fyffes reported a small annual rise in adjusted pre-tax profit to €21.3m during the year, in its annual report for 2010.
Overall, the banana sector is in a period of flux with challenging sourcing conditions creating a more turbulent market.
It remains to be seen whether the category can hold its own over the summer but many will be watching closely.
BANANA RIPENING: THERE IS SOMETHING IN THE ATMOSPHERE
With increasingly detailed specifications emanating from the retailers, getting a banana ripening room right has become a tricky task. Alex Lawson speaks to experts MTX Contracts and BG Door about creating the perfect atmosphere.
It’s no secret that the banana sector in the UK is a small and tough market. Considerable consolidation combined with an international market dominated by a small number of major players have left add-on services a difficult game.
But, argues MTX Contracts managing director Ged Hartley, creating a point of difference is key. “I’m proud of what we have achieved over the years,” he says. “We are positive about our position in the market - we are not necessarily the cheapest but have led the way in innovation and development over many years in this sector. We pride ourselves in producing a reliable, quality product.”
MTX can be traced back to 1983, when Hartley set up its predecessor Multiplex Contracts Ltd. As well as fresh produce, it also specialises in healthcare, and recently completed a £6 million project at its local hospital, Stepping Hill in Stockport.
With an average turnover of £7m-7.5m and 20 staff, the family business is growing and recently refurbished its offices in High Lane, gaining ISO9001 and Investors in People accreditation.
The firm has worked with some of the biggest names in the business - SH Pratt, Grapes Direct, Winfresh Bananas, AG Thames and Worldwide Fruit among them - and was the company behind Fyffes’ landmark banana ripening plant in Coventry.
The £5m project on the 3,750sqm facility took eight months, concluding in February 2009. The 36 ripening rooms, able to contain 60 pallets, are complemented by a loading bay, packing areas and two chill stores. The phased construction programme and co-ordination between the core project team allowed Fyffes to double its ripening capabilities in 36 weeks while maintaining all existing ripening and production commitments.
The ripening facility also has a state-of-the-art Ripening Management System, which allows secure remote access to the entire facility.
The average ripening room will have a holding temperature of 12-13°C while the ripening temperature can be up to 20°C - the higher the ripening temperature, the lower the quality in most cases, with 16°C seen as the ideal ripening temperature.
So what are ripeners looking for? “Different retailers want different levels of ripeness when bananas arrive in store,” explains Hartley. “We have to be flexible. We have created our own system of pressurised forced air ripening and also created chilled water systems that just circulate the amount of air and water needed at any one time, thus saving considerably energy.
“Specifications and settings can really depend on what state the supermarket wants the fruit in but you have to adapt to your market.”
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