As one of the UK’s most popular and, along with apples, most widely stocked fruit lines, there is always stiff competition among suppliers in the banana category. But extenuating circumstances this year have made traditionally tight winter supplies even harder to come by, with a 15 per cent reduction in product arriving in the UK throughout February and into March.
As ever, the Central American and Caribbean regions continue to dominate the UK market, with Belize particularly strong in UK exports, with volumes of around 80,000 tonnes. This reflects the English-speaking country’s strength on these shores since its multi-million dollar, EU-funded cash injection several years ago.
The weather has added to an already volatile market in the last quarter, with floods in Costa Rica in November proving to be of particular concern. Although November traditionally brings heavy rain, this season’s precipitation was of an unprecedented level, affecting the regions of Limon, Cartago, Heredia and San José worse than usual. And with communication and bridges affected, as well as 10,000 hectares of bananas, it is estimated that around 20 per cent of the country’s production was hit by the flooding.
According to one insider, the effects are ongoing. He said: “Costa Rica is such an important source for us and for a while the quality was quite poor.
“The trouble is it has a knock-on effect. There were condition problems as some of the plants had been under stress. This manifests itself in the ripening as it is erratic and uneven so, of course, when it comes to the packhouse there are further problems.
“When the bananas enter the packhouse, they go into a huge flotation tank first and the fruit from some of the plants that have been under stress goes in with fruit that is of good quality.
“The stressed fruit will get weeded out, but that means waste levels go up and then demand obviously goes up. The floods themselves meant short supply so demand became even tighter. It is tough.”
Costa Rica has not been the only country to suffer poor weather conditions, however, as a cold front ran through Central America and the Caribbean in January, slowing volume levels and causing further shortages in the UK and mainland Europe. “The trouble is,” says one insider, “that with bananas being so universally popular, you need to be constantly monitoring the situation if supplies are tight - it is unlike certain luxury fruit, where consumers seem to drift in and out of buying it. People always want bananas on every level of the supply chain, so tight supplies can really hurt the industry and individual companies when you have to continue to supply the retailers.”
Short supply has left prices at an all-time high of €18-19 (£16-17) for a standard 18.14kg box of loose bananas - astonishing when compared to equivalent prices of €14-15 last year and regular summer prices of €12-13.
Another insider believes the banana industry has been one of the worst affected by the volatile exchange rate, which has led to upward spiralling prices on imports into the UK due to the sterling’s weakness against the euro and the dollar.
“At the moment, sterling is at around $1.40, so it is having a tremendously big effect on all areas of the industry. It simply makes a nonsense of the whole imports and exports business as there is no room to manoeuvre,” he says.
“It seems illogical to me that retail prices have actually gone down on bananas even though the exchange rate means that we are paying upwards of 25 per cent more for product when there are increased costs for everybody.”
Another insider reports: “We can’t ignore these costs - it is simply becoming unmanageable as we have upward pressure from below with our exporters and pressure from above from retailers who are doing everything they can to cut costs.
“We just have to deal with the hand that’s dealt to us and it would be a foolish man who would try to predict where the markets will go next. We just hope the sterling can pick up.”
One option that suppliers are considering is turning to the French outposts of Martinique and Guadeloupe in the eastern Caribbean Sea which, as part of the Republic of France, deal in euros. This provides an option for those on the continent, although it is less attractive for UK suppliers due to the sterling’s current position. However, this option has been a problem due to widespread industrial action across the regions, meaning exporters have not been able to capitalise on this during February and March.
The latest approximate banana figures for imports into the UK make interesting reading, with South America, the Caribbean and Central America continuing to benefit from a slow reduction in tariffs into the EU in their favour, enabling them to increase volumes. Ecuador and Colombia are estimated to account for 100,000t respectively of volumes into the UK’s 875,000t-market.
Costa Rica remains dominant, with producers’ association Corbana reporting very positive exports despite the floods and also a period of drought in early 2008. Almost 50 per cent of the country’s exports go to the US - however, the UK is one of a number of European countries to receive Costa Rican bananas, with volumes of 300,000t. Cameroon and the Ivory Coast produce around 100,000t for the UK, and the Dominican Republic the same figure, while the Windward Islands are set to deliver 75,000-80,000t.
There has been considerable UK interest in bananas in the past month, with Fairtrade Fortnight bringing an annual focus on the fruit. A regular sales spike, which does little to help tight supplies, was added to this year thanks to a world record attempt that saw more than 370,000 people consume Fairtrade bananas. One insider cast his views on the subject: “Fairtrade is definitely good for bananas and its trade, but we have to remember it doesn’t mean that the rest of the bananas in store are not fairly traded. I have seen plenty of non-Fairtrade farms that treat their workers better, although obviously it is a great initiative.
“Fairtrade is a brand - and actually one of the biggest we have across the whole of fresh produce now - and it will continue to account for more and more of the UK banana market, because people know what it stands for so it continues to be attractive,” he added.
DAABON COMMITTED TO ORGANIC
Back In 1990, Daabon Group focused on becoming a world leader in the production of organic agricultural products, says UK senior account executive Astrid Duque.
Since then, we have progressively committed our human and economic resources to ensure that our activities are socially, economically and environmentally sustainable.
We strive to improve the living standards and working conditions of our 380-strong banana-growing workforce and of the communities in the Santa Marta region, a key factor for the future growth and success of Colombia.
Santa Marta benefits from an abundant water supply but relatively dry growing conditions, which reduces pressure from pests and disease. It is a region where it is therefore relatively easy to implement organic agriculture systems. Another important benefit of this area is its excellent light levels and long periods of daylight. Our banana-growing philosophy is to create a sustainable, organic environment. We don’t view this as a challenge, but rather as the right thing to do, as well as a competitive advantage.
Daabon Organic is increasing its production this year to 1,000 hectares. Our biggest banana markets in Europe are the UK, Germany, Italy and France. We also supply the US and Japanese markets. The Japanese market for organic bananas is growing massively. There is no talk of a credit crunch there - on the contrary, consumers are increasingly consuming more organic bananas. This is why we are optimistic - at the moment, our sales to the UK are not growing, although they are steady, but we are increasing our containers to Japan. Daabon looks to spread its resources and maintain various markets - we do not want to put all our eggs into one basket.
Of course, the news that some shoppers are turning their backs on organic food is a wake-up call for us. Although our sales to the UK and the rest of the EU are steady, we genuinely feel that it is time to act as an industry to overcome this economic cycle and protect the organics category, which year on year has been one of the most dynamic within the food retailing industry.
There is no doubt that the current economic conditions have raised the stakes for the organic market but, as a banana grower, we are ready to take on the challenge and work together with our client base. We are not in denial, but we feel that we have overcome many challenges and we ought to continue our commitment to organics, because organic consumers trust us.We are on the process of joining the Organic Trade Board, www.organictradeboard.co.uk, which is actively campaigning for this in the UK.
More than ever, we are taking our role seriously. Each process, each decision and each activity we undertake has a great impact on people and their natural habitat. We are increasing our production capacity and will be fully certified organic, with accreditation from the Rainforest Alliance, SA 8000 and Fairtrade Ecocert EFT. There has been a real interest from companies in the EU to include us in their supply base, to minimise the risk that other banana origins may have. We are located in an area that does not suffer from extreme weather or hurricanes and we see this as a competitive advantage.
Daabon’s two charitable foundations make a huge difference to the lives of our workers. Our revenue is invested in different projects for our employees and their children - there are water, electricity and housing initiatives. Healthcare and education are also vital for Daabon. At the moment, we are setting up a project called Banana University, which aims to train the Santa Marta locals in the art of growing bananas.
Beyond organic agriculture, social responsibility and sustainability certifications, we are aiming to make our whole organisation carbon neutral by 2013. It will take time, but it will set a new standard that will soon be demanded by consumers around the world.
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