Banana Guide

According to preliminary data released by the FAO, the Philippines slipped from second to third place in the global banana export rankings in 2022 with a total export volume of 2.235 million mt, overtaken by Guatemala (2.467 million mt). Ecuador is the top producer with 6.216 million mt. 

Data published by the Philippine Statistics Authority indicate that 2022 saw a 6.5% year-on-year decrease in the country’s banana export volume to 2.273 million mt. This figures hit their lowest levels since 2016. 

There are 2 main factors that affected the industry’s performance namely, the continued spread of the fungal disease Fusarium wilt (Panama disease) and high production costs, including substantial expenses on fertilizers.

As estimated by the PBGEA, the total area affected by Fusarium wilt is between 15,000 and 36,000 hectares, corresponding to 17–40% of the 88,000 hectares planted with bananas nationwide. 

Another major difficulty for the agricultural sector, the increase cost of the agro input. The fertilizer prices have eased from their 2022 peak, although they remain relatively high.

Covid-19: 

Banana exports from the Philippines have been severely impacted by the pandemic. The country is expecting overseas shipments to drop and lack of harvesting due to social distancing measures and shortages in labor. Bananas in the Philippines are harvested on a regular basis, and due to lack of labor this year, a large number of bananas rotted and were subsequently thrown away.

The banana production in the Philippines is competitive compared other producing countries in the market. The Philippine's banana is competitive internationally that the cost of producing these domestically is also relatively much lower even if the yield (52.62 mt/ha) goes down by 58%. 

Shown below is the SWOT analysis for bananas in the Philippines.

The major points of entry of banana imports in Europe are Germany (Hamburg and Bremerhaven), Belgium (Antwerp) and the UK (Portsmouth), followed by, to a lesser extent, Italy (Salerno and Vado), France (Le Havre and Marseille), and the Netherlands (Rotterdam).

- From there, bananas are re-exported to the other European countries.

On the European and Mediterranean markets, customers (retailers, ripening operators and wholesalers) employ annual or multi-annual arrangements with flexible prices depending on the market conditions. Bananas are sold on a non-official weekly price listing, which frequently varies with the supply, seasonal consumption trends, transport cost, exchange rate and other factors.

 - The banana import markets in Northern European countries (e.g. in Belgium, Finland, Sweden, Denmark or Ireland) tend to be more concentrated around a few importers (usually 5 to 6) who  sell directly to retailers.

 - In Eastern and Southern Europe (e.g. in Italy and Poland), the market is more fragmented (between 8 and 12 leading actors) and banana importers mainly sell their bananas to wholesalers, who in turn distribute these volumes to retailers or outlets in the traditional retail channels (green groceries…)

 - France tends to have market that is somewhat an intermediate of the two above

Certain European operators, like Germany and the UK are starting to be supplied with bananas under a fixed price per box contract. These contracts generally include prices which are higher in the first half and lower in the second half, in accordance with the seasonal supply and demand trends - Long-term contracts are signed with the distribution sector

 - Germany sets up year long contracts at the beginning of the year for fixed price

 - The UK market is quite distinct because of the direct sourcing initiated by several supermarkets

           Buyers of fruit in the UK want unbruised bananas and so very high standards are set. (If the bananas do not meet these standards they are usually sold locally at a much lower price.)

In North America, 90% of banana volumes are sold under contract; the others are sold on the free market.

- These annual contracts have a fixed basic price per box, and also include variable surcharges based on fuel indexes, which are intended to offset changes in transport costs and other fuel-based costs.

*major importers in North America

The Cavendish Banana value chain involves growing, harvesting, packaging, transport, importing/wholesaling/ripening, distribution/retail, and consumption. From a vertically integrated structure stemming from control of multinational companies, the Philippines CARP (The Comprehensive Agrarian Reform Program) redistributed corporate-owned agricultural land to farmer-workers, from 1987.

Due to CARP, even the big multinational companies(MNC) have to buy from cooperatives since their previous lands were redistributed. Some suppliers are relatives, and there are some relationships between suppliers who are in many years in the business.

Very few suppliers export directly because of the strict accreditation requirements by the BPI(Bureau of Plant Industry), so Agents/brokers play a big role within the industry. Big farms and multinational exporters have their own packing facilities for their names and brand. There is a partial oligopoly in the supply chain as small and medium individual farmers have learned how to process and export on their own.

The first quality check process is done at the packing plant where the worker will look for defects, bruises, and deformities. At the port of destination, the importer should inspect and identify SGRT(Surface Guided Radiation Therapy), yellowing, and other defects, if these go beyond 3%, the excess is claimable to the trader and then to the supplier. Government (BPI) checks every shipment for the presence of insects and pesticides before giving clearance for export.

3rd party inspection: commonly used by the importers to have a thorough inspection of shipment for the appropriate claim. The importer pays for it. When suppliers do not have their own personnel at the port of destination, the importer/buyer can just take pictures and videos of the rejects and send them to us, which we send to the supplier for claims. Ultimately, the supplier takes responsibility for problems with quality but there is an industry practice that gives a cap of 3% defects/rejects. Beyond that, the buyer should claim. 

Guatemala banana's global Export Value is 1.0B (2020), and is 5th largest exporter in the world, hold 8.7% of the global export market. Guatemala is exporting about 40 million boxes per year.

The Philippines is the top producer and exporter of bananas in South East Asia and the second largest in the world. 

The country's main producing varieties include Cavendish, Saba, and Lakatan. In 2018, 84% of Cavendish bananas were produced in the islands of Mindanao, the southernmost islands of the Philippines. The top three producing regions in Mindanao are Davao, Northern Mindanao, and Socsargen. 

As for the Saba variety, the largest production regions are Davao, Socsargen, Northern Mindanao on the island of Mindanao, and Cagayan Valley. 

The main production region for Lakatan bananas is Soccskargen, Davao, and Northern Mindanao. Until Q2 of 2021, the total production volume of the Philippines has increased by 1.3% compared to the previous year of the same months (Q2). Out of the 3 varieties, Cavendish bananas dominated national production accounting to 52% of the total production. The country is set to expand its share of global banana export volume from 15.6% to 18.6% by 2029, further consolidating its position as the second leading supplier of bananas globally behind Ecuador.

Banana is a tropical plant that grows in all regions in the Philippines. It is not seasonal and bears fruit at any time of the year

Los Ríos (37.14%) is the province with the highest banana production. Then follows the province of Guayas (32.25%) and in the third position El Oro (24,12%). (Source: MAGAP Ecuador, Map of estimated banana cultivation area 2021 in mainland Ecuador). 

Similar numbers reveal the “Situational analysis of banana crops from the MAGAP” where it appears the same top three the provinces with highest banana production (Source: Agricultural Public Information System of Ecuador, SIPA).

If we look at the number of growers, the ranking reveals a very different outcome in 2021. Therefore, considering the number of Agricultural Production Units (UPA), banana growers are mainly located in El Oro (14.68 % UPA) and in smaller numbers in Los Ríos (12.09 %) and Guayas (11.18%).

This difference between the distribution of production and the number of farms is because El Oro has the largest number of small banana growers. On the other hand, in Guayas and Los Ríos are located the big growers. Therefore, in 2021 the yield per hectare is smaller in El Oro than in the two other regions.

The global seasonality of bananas reaches the highest in December with 89% of known varieties and regions are in season. The countries that are in the high season in December are Australia, Indonesia, the Philippines, Malaysia, Thailand, India, Argentina, Mexico, and Colombia. It is followed by January and August until November with the same amount of 84% of known varieties and regions are in season.

Main importing countries include the USA, Canada, the Netherlands, Germany, and Italy.

Main Importer Table (2016-2020)

As of 2021, the main destinations for Costa Rican banana were the EU (43% of exported value), the US (35% of exported value), the UK (10% of exported value), Turkey (3% of exported value) and others amounting to 9% of the total exported value. 

1. US

Second-largest import market, but is heavily dominated and monopolized by large players such as Dole, Del Monte, and Fyffes.

 2. Europe

-UK, Spain, France, Germany, Netherlands, Belgium (small market, organic)

-Biggest market for organic bananas

-Scandinavia is a niche market for organic bananas that is growing every year. 

3. Russia 

-Largest import market.

-Stable importer. Usually engaged with small or medium-sized exporters (growers).

4. Asia

- S. Korea, Japan, China: premium prices around USD 8-9 FOB per box

-S. Korea operates on a fixed program (contract).

-Chinese demand is extremely unstable. Prices will rise substantially or decrease to as low as USD 2 per box if there is good production from the Philippines. 

Banana, subgroup Musa AAA Cavendish, clonal varieties Gran Enano, Williams, and Valery, are all produced in Costa Rica.

The fruit has an intense green color at harvest time. Afterward, it goes through various colors, including yellow-green, until it becomes bright yellow.

Physical and chemical characteristics: High carbohydrate and nutrient content (especially iron and potassium), as well as vitamins and phenolic compounds.

Approximate chemical profile when green: pH 4.67, total sugar 29.6%, °Brix 10.3%, total carbohydrates 92.1%, ash 2.93%, dietary fiber 8.1%, total fat 0.12%, protein 4.8%, moisture 3.4%.

Approximate chemical profile when ripe: pH 4.9, total sugar 76.4%, °Brix 20.3%, total carbohydrates 91.8%, ash 3.13%, dietary fiber 6.5%, total fat 0.12%, protein 4.9%, moisture 76.0%.

Conventional and organic bananas are produced for export to international markets.

The local transportation is well-established, it takes around 3 hours from the major producing region to the port but it is not that costly. Mainly transferred by sea freight, and the main port is Davao International Container Terminal. 

Despite the distance, logistics to Asia are cheaper than nearby destinations such as Canada or USA. The reason is that logistics work on both sides (import/export) lowering the logistics operations costs.

Although longer transit time is the main obstacle for fresh produce exporters to penetrate Asian countries, there are some pineapple and banana exporters that have managed to prepare the fruit to endure longer transit time without sacrificing quality. The fastest route is to South Korea with 24 days transit time while China is the longest with 30-40 days transit time. Shipping costs range between $3,500-$5,000 (RFR 40 FCL).

Airfreights to Asia may vary from $4-7/kgs for 500+ kg/weight, transit time 3-4 days.

Industry norm packaging is 13 kg per carton.

Fruit category: Class I, Class II, Premium

Box weight: 

• 18.14 KG (at the supermarket)
• 18.86 KG (min. gross weight at packing house)
• 18.50 KG (in destination)

Age at harvest: between 11-13 weeks after the flower appears (physiological age)

Total boxes per container (not palletized): 1200 not palletized

Total boxes per container (palletized): 1098 (20 pallets of 54 boxes, 1 small pallet of 18 boxes)

Temperature of transport on delivery: 14°C

Class Premium

• Banana “finger” length measurement (min.): 8”
• Package grade (range): 8-18 
• Bananas per box (range): 110
• Clusters per box (max.): 18
• Box weight (range): 18.14 KG
• Fingers per cluster (max.): 8
• Fingers per cluster (min.): 4

Class I

• Banana “finger” length measurement (min.): 7”
• Package grade (range): 7-17
• Bananas per box (range): 120
• Clusters per box (max.): 20
• Box weight (range): 18.14 KG
• Fingers per cluster (max.): 9
• Fingers per cluster (min.): 3

Banana is packed in boxes of 18.14 kg. Each box can have 150 units of bananas. Nevertheless, it also can be packed inside bags within the box. Moreover, it can be exported in bulk.

The top importer of bananas in 2020 is the United States with 16.6% of the global import share and a value of USD 2.55B. Followed by Belgium with 7.3% of global import share and value of USD 1.12B, Russia with 7.3% of global import share and value of USD 1.11B, Germany with 6.6% of global import share and value of USD 1.01B, and Japan with 6.4% of global import share and value of USD 987M.

Bananas that are shipped take about 10-20 days to reach the EU, about 7-10 days to reach the US, 55 days to reach the Middle East

  - For Asia and Africa – transit time takes a week longer than in South America.

Export is controlled by two entities – multinational corporations or a banana family

  - There are currently three families that will do direct export outside of the multinationals

Sanitary inspection for food and raw materials certification issued by the Instituto Nacional de Vigilancia de Medicamentos y Alimentos and ICA certification issued by Instituto Colombiano Agropecuario are the required certification for export. 

The Bananas must be inspected in the Philippines under the direction and supervision of BPI- NPQSD inspectors before exportation. A sample equivalent to 5% of the total number of boxes from each consignment shall be randomly selected by BPI-NPQSD for inspection for quarantine pests

The key players in the export process are:

1. Licensed Producer-Exporter

2. Licensed Trader-Exporter 

3. Licensed Packing Facilities 

4. Registered Growers 

Unique codes is assigned to every licensed exporter & packing facilities, and registered farmers/growers 

Bananas should be carefully handled at all stages of the harvesting and packing process. Rough handling can result in damage that does not become evident until the carton is opened at the markets after the ripening process. In very hot weather, bananas should be harvested during the coolest part of the day. Once packed, bananas should be cool stored at 13°C 

Bananas are packed as whole hands, part hands or clusters in cardboard cartons with plastic liners. Plastic slip-sheets are used between full hands and absorbent paper is placed in the bottom of the carton. Cartons are staked onto pallets for ease of pickup and delivery for transport. 

The packaging must clearly marked to show the name & license code of the exporter, packing facilities, registered code of the growers, date of packing, destination, and any other information that may required by the importing country. 

Costa Rica is the only banana-exporting country with a geographic origin denomination, called “Banano of Costa Rica”. This Geographical Indication (GI) allows producers to inform consumers about the origins of their product, its distinctive quality, and reputation as well as the strict social and environmental production standards they employ. With a GI, Costa Rican bananas are differentiated from other producer countries.

The regulatory body responsible for promoting and ensuring the quality of the GI Banana de Costa Rica is CORBANA. Its role is to establish standards for sustainable banana production and to monitor the environmental performance of banana plantations in Costa Rica.

Banano de Costa Rica farmers are audited regularly to ensure compliance with established environmental management practices, in particular with respect to waste management and pesticide use. All producers of Banano de Costa Rica are tied to a common set of production rules given by GI’s product specifications. GI is an important vehicle to encourage sustainable practices through the adoption of voluntary environmental standards that are often higher than national laws governing food production and trade.

Required Documents:

- Check destination countries in the query data system.

- Registration (exporters and exporting producers in MAG, Banana Unit).

- Registration in the GUÍA system. (ONLY EXPORTERS)

- Have a fruit contract between the producer and exporter.

The exporter hires a Customs Agency, delivers the commercial invoice, and it will be in charge of preparing the necessary requirements to send the merchandise. The Customs of Jurisdiction issues the authorization for export. The transport company of the merchandise is contracted.

The Cameroonian State, through the Ministry of Agriculture (MINADER), has a right of scrutiny over the activities of the sector in the sense that it allows it to resolve the important issue of unemployment which is rampant among the Cameroonian population. Its intervention, therefore, consists essentially in the establishment of favorable conditions capable of ensuring the sustainability of the sector. In short, a sort of win-win partnership between investors in this agricultural activity and the State of Cameroon for the well-being of the beneficiary populations. MINADER plays the facilitating role in terms of the administrative, financial, political, economic, and strategic support necessary for the proper functioning of the Cameroonian banana production.

Source: ASSOBOCAM

The quality standard for the fresh Banana product is referring to The Philippine National Standard for Banana, PNS/BAFPS 64:2008 by the Bureau of Agriculture and Fisheries Product Standards (BAFPS) of the Philippines and  

According to the standard, the fresh Bananas are classified in 3 classes:

Extra class – Banana in this class must be of superior quality. It must have all the typical characteristics and color of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed and free of decay, split fingers, loose fingers, bruises, blemishes and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Very slight superficial defects are allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package.

Class I – Banana in this class must be of good quality. It must have all the typical characteristics and color of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed and free of decay, split fingers, loose fingers, bruises, blemishes and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Slight defects of the fingers, however, may be allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package:

- slight defects in shape and color

- slight defects on the skin due to rubbing and other defects such sunburns and

- blemishes not exceeding 5 % of the total surface area.

The defects must not, in any case, affect the flesh of the fruit.

Class II – This class includes banana which do not qualify for inclusion in higher classes but satisfy the minimum requirements specified in Section 5 of the standard document. The following defects, however, may be allowed, provided the banana retain their essential characteristics as regards the quality, the keeping quality and presentation in the package:

- defects in shape and color;

- defects on the skin due to rubbing and other defects such as sunburn and

- blemishes not exceeding 10 % of the total surface area.

The defects must not, in any case, affect the flesh of the fruit. 

There are 3 groups of the sizing; Large-sized fruits, Medium size and Small sizes. The size classification is determined either by length or diameter. The length is measured based on the middle finger in the outer row from the blossom end to the base of the pedicel where the edible flesh ends and maximum diameter of the equatorial section of the fruit. The size tolerance, for all classes, is 10%  by number or weight of banana corresponding to the size immediately above or below that indicated on the package. 

The Bureau of Agriculture and Fisheries Standards (BAFS) also published the Philippine National Standards (PNS) Fresh Fruit - Saba & Cardaba Bananas - Specification (PNS/BAFPS 08:2004). These variety is mainly for cooking. 

In the Philippines, the certifications for MNC, corporate growers and cooperative growers include PhilGAP, JAS, GlobalGap, ISO, ECOCERT, and Rainforest Alliance.

Extra Class

-Bananas in this class must be of superior quality. They must be characteristic of the variety and/or commercial type. The fingers must be free of defects, with the exception of very slight superficial defects, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package.

-Five percent by number or weight of bananas not satisfying the requirements of the class, but meeting those of Class I or, exceptionally, coming within the tolerances of that class.

Class I

-Bananas in this class must be of good quality. They must be characteristic of the variety. The following slight defects of the fingers, however, may be allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package:

-Slight defects in shape and color;

-Slight skin defects due to rubbing and other superficial defects not exceeding 2 cm^2 of the total surface area.

-The defects must not, in any case, affect the flesh of the fruit

-Ten percent by number or weight of bananas not satisfying the requirements of the class, but meeting those of Class II or, exceptionally, coming within the tolerances of that class.

Class II

-This class includes bananas which do not qualify for inclusion in the higher classes, but satisfy the minimum requirements specified in Section 2.1 above. The following defects, however, may be allowed, provided the bananas retain their essential characteristics as regards the quality, the keeping quality and presentation

-Defects in shape and colour, provided the product retains the normal characteristics of bananas

-Skin defects due to scraping, scabs, rubbing, blemishes or other causes not exceeding 4 cm^2 of the total surface area.

-The defects must not, in any case, affect the flesh of the fruit.

-Ten percent by number or weight of bananas satisfying neither the requirements of the class nor the minimum requirements, with the exception of produce affected by rotting, major imperfections or any other deterioration rendering it unfit for consumption

Size 

- The minimum length should not be less than 14.0 cm and the minimum grade not less than 2.7 cm

UNECE Classification for Bananas

• Extra Class – Bananas in this class must be of superior quality. It must have all the typical characteristics and colors of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed, and free of decay, split fingers, loose fingers, bruises, blemishes, and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Very slight superficial defects are allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality, and the presentation in the package.
  

• Class I – Bananas in this class must be of good quality. It must have all the typical characteristics and colors of the variety and/or commercial type. It must be mature, clean, well-formed, well-trimmed, and free of decay, split fingers, loose fingers, bruises, blemishes, and discoloration caused by diseases, insects, molds, latex burn, and mechanical damage. Slight defects of the fingers, however, may be allowed, provided these do not affect the general appearance of the produce, the quality, the keeping quality, and presentation in the package:
  

        - Slight defects in shape and color;

        - Slight defects on the skin due to rubbing and other defects such as sunburns and blemishes not exceeding 5% of the total surface area.

The defects must not, in any case, affect the flesh of the fruit.

• Class II – This class includes bananas that do not qualify for inclusion in higher classes but satisfy the minimum requirements. The following defects, however, may be allowed, provided the banana retains its essential characteristics as regards the quality, the keeping quality, and presentation in the package:
  

        - Defects in shape and color;

        - Defects on the skin due to rubbing and other defects such as sunburn and blemishes not exceeding 10% of the total surface area.

The defects must not, in any case, affect the flesh of the fruit.

According to the Trade Map statistics and applying the HS code 080390 related to fresh or dried bananas (excluding plantains), Ecuador, and the Philippines are above Costa Rica as global leaders in banana exports with exports share of 24% and 15% respectively, while Costa Rica ranks in the third position with an export share of 8%, followed by Colombia with 7% and Guatemala 6% export share. United States, Belgium, and the Netherlands are not producers. They are traders - their imports are destined for domestics consumption and exports to other markets. Colombia represents the most critical competitor for Costa Rica. 

The United States is the leading banana buyer with an import share of 17%, followed by Russia and China with an import share of 7% each.

Production

-During the first half of the year, volume is higher, but overall productivity is lower. During the second half, it shows lower volume but higher productivity.

     FOB prices first half: Carton(18.5kg): USD 8.5 – 8.9 🡺 USD 0.46-0.48/kg

     FOB prices second half: Carton(18.5kg): USD 6.5 – 7.5 🡺 USD 0.35-0.40/kg

-Exporters tend to have an aggressive contract with growers after forecasting the volume for the next season's first semester. In order to secure enough volume, international buyers should   start engaging with exporters(growers) latest September

-Multinational companies procure 60% of volume from their own farms(vertically integrated), and collect the rest 40% from independent growers

Production Outlook

Despite high demand, overall production has been increasing due to pandemic, causing labor shortage and supply chain disruption – production volume for the 2021/22 season is expected to remain stable showing a slightly decreasing trend.

There are some key factors that determine the prices of bananas:

• Types of banana varieties
• Good quality based on their classification and size
• Matured fruits with excellent eating quality
• Physical appearance and absence of damages or blemishes
• Time of harvest