Weekly product updates

W39: Banana Update

Fresh Banana
Market & Price Trends
Published Oct 6, 2023

In W39 in the banana landscape, the banana sector has confronted challenges over the past three years, including escalating maritime freight rates post-pandemic and increased costs for fertilizers, construction materials, and agricultural inputs due to the Russia-Ukraine conflict. However, it has shown resilience, particularly Ecuadorian banana exports, even with additional challenges posed by El Niño. Exports to the European Union (EU) have surged by 22%, marking a positive trend in the banana industry. Although production volume faced a minor decrease of 0.47% in April, overall international shipments increased by 7.17% compared to 2022. From Jan-23 to Aug-23, out of a total production of 247.96 million boxes, the EU emerged as the primary market, accounting for 30% of Ecuadorian banana exports. Russia followed closely with a 21% share.

Furthermore, exports to the United States (US) experienced a modest 5% growth during the same timeframe due to production problems in other supplier countries, such as Peru and the Dominican Republic, establishing it as the second-largest destination for Ecuadorian bananas in 2023.

Brazil ranks as one of the world's major banana producers, with key production areas in the Northeast, North, and Southeast regions, particularly in states like São Paulo, Minas Gerais, Bahia, and Santa Catarina. São Paulo stands out as the largest banana producer in Brazil, accounting for 26% of the nation's total production. The Institute of Agricultural Economics (IEA–Apta) projects a harvest of over 1 million tons for the 2022/23 season, cultivated across 1.9 thousand hectares (ha) in the state. The Vale do Ribeira region in São Paulo is a prominent hub for banana production, featuring varieties such as silver, dwarf, apple, gold, and terra.

Brazil is recognized as the fourth-largest banana producer globally, trailing only India, China, and Indonesia, as per data from the Brazilian Institute of Geography and Statistics (IBGE). The 2021/22 harvest reached approximately 7 million tons, covering an area of 453.27 thousand ha. This sector contributes over USD 2.68 billion (BRL 13.8 billion) to the national economy annually. A substantial portion of Brazil's banana production is for international markets. In 2022, 83 thousand tons were exported, generating USD 37 million in revenue, with major importers including the EU and Mercosur member countries.

In W38, Peruvian banana exports showed signs of recovery, with shipments totaling 3.08 thousand tons, a 12% increase compared to the previous week. However, this figure remains 6% lower than the same week in 2022, leaving the 2023/24 season 12% below the previous one. The Netherlands was the leading destination with a 30% share, followed by Panama with 21%, and Italy with 12%.

The Spanish banana market is rebounding after a setback caused by the Cumbre Vieja volcano eruption in 2021. Production in the Canary Islands, particularly La Palma, has recovered, with an expected volume of 395.16 thousand metric tons (mt) in 2023. In 2022, exports fell by 36.74% due to reduced production, global factors, and higher prices. While this export decline may seem negative, it increased prices, benefiting importers. Costa Rica was the top supplier in 2022, with a 38% market share. Despite inflation and currency fluctuations, the Spanish banana market is resilient and expected to rebound with improved quantities and exports.

Lastly, according to the Department of Trade and Industry (DTI) of the Philippines, the tariffs on processed banana and pineapple exports to South Korea would gradually decrease after signing a free trade agreement (FTA). Philippine bananas and processed pineapple exports are currently subject to a 30% and 36% tariff, respectively. The FTA aims to correct the tariff disadvantages of major Philippine exports to Korea. The agreement was made possible by securing a concession from South Korea to remove tariffs on Philippine bananas for five years. The tariffs on banana exports from the Philippines will be lower in five equal installments until they become zero. Meanwhile, South Korea will eliminate the 36% tariff on processed Philippine pineapple exports within seven years.

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