Banana industry struggling due to low production, FAO says
A recent report by the Food and Agriculture Organization of the United Nations (FAO) states that banana exports are showing a troubling tendency to decline.
The Market Review Preliminary Results study published by the entity said that during the first half of 2022 global export quantities decreased almost exponentially.
This showed a stark contrast to the fast-paced growth experienced in pre-pandemic years.
“Amid a difficult global operating environment, obstacles to global banana trade have seemingly been mainly present on the supply side, with demand in importing countries remaining relatively strong,” the report said.
Among the main issues faced by producers, FAO reported production shortages caused by adverse weather conditions and insufficient fertilizer application.
Higher input costs were also a factor, as well as a surge in transportation costs during the first and second quarters of the year.
Many banana exporting and importing countries also struggled with the significant appreciation of the U.S. dollar against local currencies.
The presence of plant diseases, especially Banana Fusarium Wilt Tropical Race 4, has also worried the industry, with big producers such as Ecuador warning about spreads.
Additionally, major markets have put in place more stringent limitations on maximum residue levels.
These challenges have hindered the ability of producers and exporters to supply bananas in adequate quantities and to the quality standards expected in export markets in all key regions.
Consequently, prices at all levels have accordingly been displaying a tendency to increase in leading import markets such as the EU and the U.S.
However, industry sources reported that producer prices have remained at very low levels, a situation caused by intense competition between banana suppliers, quality concerns experienced in many origins in 2022 as well as by the saturation in global markets during the early months of the Ukraine war.
“This has been exerting mounting pressure on producer margins and thereby severely limiting the present and future operability and sustainability of the banana industry,” the report stated.