India the New Supplier of Bananas to Canada amid Low Prices

Published 2022년 4월 27일

Market access has recently been granted to India’s banana and baby corn in the Canadian market. While there is an approval to export fresh bananas with immediate effect, the outbound shipment of baby corn will begin on May-22. For Canada, the approval means having broader access to both fresh crops, while for India, the approval will immediately benefit Indian farmers of these crops and also enhance India’s export earnings. The access, however, comes at a time when banana prices in the Canadian market are low, following a global market trend.

Based on the technical information provided by the Indian government for fresh bananas, Canada has approved bananas for immediate entry. Although India is not one of the top banana exporters, it is one of the world's leading producers, with a share of around 25% of the global output. Access to the Canadian market is part of the Indian government's strategy to increase exports both in volume and value.

India's Banana Export Development

As the production of bananas has decreased in major exporting regions of Latin America and Southeast Asia due to the spread of diseases, the demand for Indian bananas has substantially increased. In fact, in the past three years, the banana export volume from India has almost doubled. For the 2020/21 campaign, the banana export value increased by 33% YoY, reaching a record high value of USD 103.3M, while the export quantity saw an 18% YoY for another record high volume of 212.8K mt. Indian bananas have started finding a place mainly in Middle Eastern markets, with Iran as its primary buyer taking 39% of the export share, followed by the United Arab Emirates with 20%.

India's banana export has been rising sharply because of the adoption of farm practices per global standards. As a result, Indian bananas have increased in price value over the last years. According to the Indian Ministry of Commerce and Industry, the average export price for Indian bananas has increased from USD 0.20/kg in 2016 to USD 0.50/kg in 2021.

In 2022, when Indian bananas began exporting to the Canadian market, the price of bananas from India registered a substantial YoY increase. According to Tridge’s Price Index, the wholesale price of bananas in India rose by 55.92% YoY in W3 of March-22, when the price stood at USD 0.59/kg. Unseasonal rain disrupted the production and led to low supply. As a result, Indian banana prices surged in Mar-22, remaining over USD 0.60/kg all through Apr-22.

Decreasing Prices for a Steady Canadian Banana Market

Canadian imports of fresh bananas have moderately increased over the past years, attesting to steady demand from the market. In 2021, Canada imported USD 458.7M of fresh bananas, a 2% YoY increase with a volume of 612K mt. Imports into Canada are dominated by Guatemala, which accounts for 42.3% of the import share, followed by Costa Rica with 18%, and then by Ecuador and Colombia with 13% each. Although banana imports into Canada have remained steady during the past couple of years throughout its various Latin American suppliers, this year, these suppliers are facing numerous challenges that are negatively affecting banana exports.

For Q1-22, the Latin American banana exporters faced increased production and freight costs due to increased prices in fertilizer, packing materials, gasoline, and containers. Additionally, banana prices have been low due to the oversupply caused by the Russia-Ukraine war. The global downward trend in banana prices was also noted in the Canadian wholesale market.

According to Tridge’s Price index, the price of the Costa Rica-origin bananas in the Montreal wholesale market in W1 of Apr-22 stood at USD 1.17/kg, recording a 26% MoM decline from the previous month when it stood at USD 1.58/kg.

Tridge’s Price Index has also reported that the price for Ecuador-origin bananas in the Toronto wholesale market has remained steady since the end of 2021. However, prices declined by 16% YoY compared to last year, as the price in W3 of March-22 stood at USD 1.05/kg while the price during the same week of last year at USD 1.25/kg.

Additionally, the price of Guatemalan bananas has also reportedly decreased this year. According to data from the Central Bank of Guatemala, the average export price for Guatemalan bananas in Jan-22 was USD 0.32/kg, a decrease of 16% YoY compared to USD 0.39/kg during the same month in 2021.