The market for Fairtrade bananas has grown rapidly in recent years, and because of that, competition has also increased. Due to the structurally low price for conventional bananas in supermarkets, the price for these fair bananas is under more pressure. Fairtrasa has reorganised its banana sector to guarantee quality on a changing market.
“We’re working on professionalising,” says Ben Huyghe from Fairtrasa. “This year is a transition year in which we will work on a new structure. This way, we can market Fairtrasa banana 2.0.” Due to the growth of the Fairtrade assortment and the increased competition, it was necessary to make this change. “This allows us more control over origins, volumes and quality of the bananas. On the one hand we’re looking at the possibilities of our own production to reinforce our position in origin, on the other, Fairtrasa will always continue to work with small farmers. In the end, that’s our company philosophy: guiding small farmers, bringing quality to a higher level, and generating impact with a sustainable long-term relationship.”
End of the era of high margins
“In the past, our responses to opportunities on the market were too ad hoc. We now have to professionalise,” Ben continues. “We’ve been working with this new method for a few months now, and customers respond positively. They’re seeing a quality improvement in the bananas.” Fairtrasa’s method is unchanged in that. The goal will continue to be helping small growers to meet quality requirements of the European market, and to set up an export flow. “It happens that growers start exporting independently. We can’t force them to continue to do business with us,” Ben says. “Loyalty has to be earned, and it’s my experience that if we do our job well, that loyalty will be returned.”
The low prices in supermarkets for conventional bananas also affect the Fairtrade supply. “It’s difficult to ask 1.50 euro per kilogram for organic Fairtrade bananas when conventional ones don’t even cost one euro per kilogram. The low prices for conventional bananas has put much pressure on the concept of Fairtrade in the Netherlands.” Across the border, the market looks better, and growth is possible in part thanks to the improving economic situation. “In other countries we’ve seen the combination of organic and Fairtrade growing quickly, but it continues to be a competitive market. The era of high margins is over.” Due to that increasing demand for organic Fairtrade bananas, more parties are becoming interested in this market and competition is increasing. “We’ve seen organic Fairtrade bananas gradually becoming a standard product in the permanent supply. By shortening the supply chain and working efficiently, we can add value.”
Dominican Republic and Peru largest organic growers
Organic bananas require a specific climate. While Ecuador is lord and master when it comes to being the largest producer on the conventional market, Peru and the Dominican Republic take up that position for organic bananas. That has everything to do with the climate in those countries. “The Dominican Republic has a clear divide between a wet and a dry season. That affects the organic cycle of moulds, diseases and insects,” Ben explains. “Besides, the country has a low atmospheric humidity, so that diseases such as Sigatoka can develop less well.” In recent years, a shift in these seasons could be seen. The dry period lasts longer and the rainy season is more intense. “This year in January, when the dry season normally starts, more rain fell compared to last year,” Ben exemplifies.
Growers are therefore forced to use more pesticides. This is the case for both conventional and for organic growers. “It’s more difficult to keep Sigatoka under control, so that more organic means have to be used. That results in higher costs.”
Peru has a desert climate and agriculture is dependent on rainwater from the Andes that is collected behind the Poechos Dam. “It’s a dry environment, but an irrigation systems runs from this basin to the fields in the valley,” Ben explains. “In recent years the reservoir has started silting up, and buffer capacity is declining. After the rainy period, a long dry period follows, which causes problems.” Besides, the ecosystem in the valley is very fragile. Because there’s no drainage, it can occur that plantations are flooded after heavy rain. “A banana plant with wet feet isn’t good. The moulds and diseases in the air are also activated due to the higher atmospheric humidity. That caused serious problems last year.”
Ecuador is the third country Fairtrasa imports bananas from. “Growers there are responding to the growth on the organic market,” Ben continues. “Conventional growers are switching to organic production, but they sometimes continue thinking conventionally too much. They use organic means, but the mindset of some is too reactive.” The organic growers guided by Fairtrasa are trained to work proactively, and to protect the plants against diseases such as Sigatoka, rather than responding after the plant has been infected.
The other threat in banana production, TR4, also continues to be topical. “People are becoming more knowledgeable, and that can only be good. For too long, the sector thought: it’s not in Latin America yet, so it’s not a problem,” Ben says. “A solution can only truly be found when the sector starts implementing a coherent policy.” Other varieties are often mentioned as a solution to the problem, but Ben has seen different problems arising because of that. “The margins are so low hardly anyone in the sector invests in R&D. A new variety that’s just as successful as Cavendish is difficult, the other varieties all have restrictions.” He illustrates this with baby bananas and red bananas, two alternative varieties. “The red banana only grows a bunch of bananas after 18 months. Besides, plants are higher and the trunk is thinner, so there’s a higher chance of storm damages. A Cavendish plant grows its first bunch after just ten months, and the second follows six months later.” If TR4 gains ground in Latin America, one thing will become certain, Ben predicts: “It’ll be the end of the cheap bananas.”
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