The prospect of a price war has been looming over the banana sector for some time now, with retailers offering produce for knockdown prices. In England, bananas have been subject to long-term price reductions by supermarkets for over a decade, resulting in bargain-level prices and reduced profit margins for producers. The UK Fairtrade Foundation recently published a report which examined the effects of the price war. According to the organization, the banana is in danger of disappearing from shelves altogether.
Fairtrade banana
Peter d'Angremond of Max Havelaar and Hans Willem van de Waal of Agrofair, while expressing their concerns, don’t believe the developments will seriously affect the Fairtrade banana. "Our banana trade is European," says Hans Willem, importer of Fairtrade bananas. "The Netherlands is a small market, so we’re not likely to notice anything. The banana war in England has been going on for years, and yes, it has been affecting the sector. But Fairtrade bananas have a guaranteed minimum price. Even over in England, those retailers offering Fairtrade produce for discount prices have to make up the difference themselves.”
Still, a minimum price doesn’t guarantee sales for producers in developing countries. Fairtrade bananas, after all, still have to be sold. “If the free-market bananas continue to sell for low prices, it will have repercussions on the consumer’s willingness to pay premium for Fairtrade produce,” says Peter d’Angremond. “Making sure that producers receive a fair share, as well as convincing supermarkets to display Fairtrade bananas, will become a lot harder. What's important is that the growers get income security. Many studies show that growers increase investments, and that leads to more development and economic recovery.”
Value of bananas
Importer Hans Willem believes, minimum prices notwithstanding, that the free market will provide a solution to the falling prices. "Either the growers will stop producing, thus reducing supply and increasing the price, or they will move their business elsewhere. There are upcoming markets in China and the Middle East, where people are willing to pay more for bananas. It all follows the logic of the market."
Although both men concede that a free market means retailers can determine their own prices, Hans Willem does wonder whether the consumer still knows how much a banana is actually worth.
More information:
Agrofair Benelux
Hans Willem van de Waal
More information:
Agrofair Benelux
Hans Willem van de Waal