Resilient Recovery: Spanish Banana Market Bounces Back After Volcano Eruption

The Spanish banana market has significantly shifted in recent years. The island of La Palma, a major producer of bananas in Spain, has recovered its banana production capacity, which had been affected by the Cumbre Vieja volcano eruption in 2021. The production of the Canary Islands had been reduced by 15% in 2022, reaching 347,019 metric tons (mt), but has now bounced back with an anticipated volume of 395,160 mt in 2023, bringing the market back into balance. Due to lower production in 2022, exports plummeted by 36.74% year-over-year (YoY) to 71,584 metric tons (mt). However, improved conditions in 2023 will undoubtedly make a significant change in trade,

Share of Export Destinations of Fresh Banana from Spain in 2022

Source: Tridge

Despite the recovery in production, Spain has seen a decrease in its banana exports in 2022. This is due to a combination of factors, including lower global volumes and increased prices worldwide. The volcano eruption in La Palma resulted in lower production from Spain, leading to lower exports. The export decrease is not necessarily a negative development for the Spanish banana market. The supply reduction caused by the volcano eruption resulted in a lack of supply that pushed prices up. This has allowed importers to benefit from higher prices, potentially increasing profits.

Share of Top Import Origins of Fresh Banana to Spain in 2022

Source: Tridge

Regarding imports, Costa Rica was the number one supplier to Spain in 2022, with a 38% market share and USD 100.42 million in value. The total import value of bananas in Spain was USD 264.4 million, and 387.8 million kilograms (kg) in volume in the previous year. In H1-23, Spanish imports amounted to USD 157.17 million, an increase of 22.21% compared to last year. In the same period, the import value of bananas from Costa Rica soared 43.06% up to USD 64.67 million. Some reasons for the increased import value of bananas are high inflation rates, rising interest rates, and currency fluctuations, which impact banana consumption, particularly among lower-income customers.

Despite the challenges, the Spanish banana market is showing resiliency. The production recovery in La Palma and the Canary Islands is a positive sign for the market's future. However, the price increase may pose challenges for the market in the upcoming period. Tridge expects that the Spanish banana market, which has shown signs of production improvement, will augment exports due to improved quantities of bananas. The Spanish market must adapt to changing global conditions to maintain its balance and ensure its future success.