The Peruvian organic banana advantage
Northern Peru has been traditionally been associated with mangoes, while a move to table grapes has attracted a great deal of attention in recent years, but another fruit has also been staking its claim - organic bananas. The fruit notched US$69.2 million in exports last year but barely existed more than a decade ago, so how did this come about? At www.freshfruitportal.com we catch up with consultant Odilo Duarte who gives his perspective on this profitable business.
Duarte says Peru's organic banana sector has grown from virtually nothing to 4,000ha in the last 14-15 years, and could reach 8,000ha if planting continues with growing demand in international markets.
He notes there is probably double that hectareage in conventional banana production scattered around the country's jungle regions, but without technical management it is not significant for exports.
"Peru practically doesn't export any bananas that aren't organic, so you're looking at something like 99% of bananas that are organically grown, and they're almost all on the north coast in Tumbes, Piura which accounts for 75%, and Lambayeque," says Duarte.
"Our organic banana production is around 100,000 (metric) tons and the amount traded worldwide is around 500,000 (metric) tons, so Peru produces around 20% of the world's organic bananas."
He says the low level of global production means that international prices are fairly uniform and tend to be above conventional banana prices, while the economic equation of costs and revenues is attractive compared to other crops in northern Peru
"Prices for organic bananas are very good, better than what conventional bananas get, and better than what mango growers get as the zone can be a bit saturated; part of the issue with with mangoes is the problem of association and years when there’s too much competition with other countries in the international market.
"There haven’t been any large plantations of mangoes in recent years; we could say mango planting has been fairly static.
"In recent years grape production has also grown because of the advantages Peru has in October and November in the market ,as it doesn't clash with Chile; the issue with bananas though is that 12-13 months after planting you can be at full production, whereas with grapes that can take two or three years."
It is not just the crop's attractiveness against other fruit that has helped it thrive in Peru. Duarte says there are several reasons why organic banana production is more effective in Peru than other countries, whiech has helped it get an edge in the international market
"One of the advantages is that the investment isn’t so large and in the north of Peru you don’t need as much drainage, just the minimum; in normal years there isn’t so much rain, and in other countries drainage on banana farms can be a very large cost.
"The big advantage for Peru and that’s why we’re organic, is that the worst banana disease Black Sigatoka isn’t here. Sometimes it appears in the rainy months of February and March, but after that we don’t have rain and wet weather is the condition that helps Sigatoka develop.
"In Tumbes close to Ecuador you get a little bit of Black Sigatoka there, but we can’t say that it disturbs the sector in any way. Piura, the main growing area, doesn't get a lot of rain so when Sigatoka appears there it’s not important either."
He says the disease obliges growers to spend large amounts of money on chemical fungicides or organic fertilizers in other countries, but Peru simply bypasses that cost. The only large challenge is getting enough nitrogen into the bananas so they can grow healthily.
"Our big issue with costs is that we have to apply green manure so that the bananas can get their nitrogen source; we can't use urea which conventional growers use, which has a high percentage of nitrogen, as this chemical compound is prohibited in organic banana production.
"So we have to replace urea somehow with cow manure, or chicken manure, and that’s probably the biggest challenge we have with organic bananas.
"But, being organic means we get better prices and don’t have to pay for all the fungicides used against Sigatoka, so we have a business that is profitable."
In terms of the industry's development, Duarte says there are still growers that are behind the quality standard due to a lack of technical knowledge, so for this reason he applauds the non-profit work of the Peruvian Agri Institute, which seeks to raise the level of technical expertise in rural communities.
In June he will be conducting a course with the institute in Piura to assist growers in understanding how to best grow organic bananas. He says the two drawbacks for the Peruvian banana industry are the uninformed choice of seeding crops and irrigation issues.
"One important point to note is that there are people who are starting with plant material propagation that isn’t always totally superior," he says.
"There’s a need to produce plants of quality, but sometimes growers are buying trees from Ecuador without exactly knowing the quality of the mother tree.
"The other challenge is irrigation as some people don’t realize bananas need a lot of water and in some cases bananas are not given the water they need; they are giant herbs after all."
International influence and outlook
Duarte says that Dole has done well in Peru with its organic banana industry, accounting for 20% of purchases, but it is now meeting more competition.
"Dole realized the potential and came here 15 years ago to start working with producers, providing technical expertise; they didn’t buy the land but sourced from small farmers," he says.
"I imagine it must have been difficult to work with more than 1,000 small properties.
He adds that neither Del Monte, nor his former employer Chiquita has yet made inroads in the country's organic banana production.
Duarte points to the Netherlands as the largest buyer of Peruvian organic bananas at rates between 55-58%, followed by the U.S. at around 20% and Japan at 8%.
"The competition lies in how many people are willing to pay more for an organic banana, and that market is growing - for example, Peru’s exports of organic bananas grew by 24% in 2011."
He expects the recent U.S.-E.U. organic trade certification deal will have a positive impact on Peruvian organic banana growers.
"That agreement will facilitate our growers as we can go under one certification standard.
"Everyone's speaking the same language now so I think it’s a good thing, although Japan isn’t a part of that."