After a hard year in 2020, the prices in the banana industry are starting to see some recovery. Throughout 2020, due to the pandemic, the market prices were low for the bananas. “It was a bad year in terms of price,” says Hugo Castro of Ecuador-based GinaFruit. “The closure of important sales channels, specifically in the wholesale, food and tourism industries, caused a problem in the entire distribution chain – there was excessive supply that dropped the prices,” he adds.
In addition to the slow demand and low prices, there were also some logistic problems because of the lockdowns in place due the pandemic. “There were delays for attaining import permits for certain markets, and some borders were closed, and ports were congested. Even now, we are seeing congestion at the main port of entry in China because Covid infected a few workers, and we’ve had to deviate our product to other ports. Some countries are still not issuing permits at the moment,” Castro explains.
Prices on the rise again
Despite the low prices throughout the last year, the prices have gone up again a bit in the past weeks. “Due to the hurricanes in Central America, a lot of the plantations in Honduras and Guatemala have been damaged. Their buyers are now looking for other sources of bananas to compensate the loss, which has strengthened the market and the prices were pushed higher than the average back in December. Currently, we’re seeing stable medium to high prices,” Castro shares, adding: “The recovery of those damaged plantations will take anywhere between 8-10 months, so this situation will likely hold for the next months.”
In addition to the increased demand due to the hurricane damages, the winter months are also positively contributing. “During the colder months, when a lot of the summer fruits aren’t on the market, people eat a lot more bananas. This time of year is considered our high season, though we still have to see the effects on the market due to the ongoing pandemic,” says Castro.
Outlook for 2021
While the challenges of the pandemic are expected to continue on for at least the first few months of this year, Castro has a positive outlook. “I don’t expect 2021 to be a year of profits, however I expect that the revenues will be enough to keep the business moving. In the past four to five years, the banana industry in Ecuador has grown substantially. It is seen as a good business to be in and as people started recognizing that, more and more people started to join the industry which led to a rapid and uncontrolled growth that then hurt the industry,” Castro explains.
In 2021, he believes that the industry’s landscape will change: “I believe that in 2021 we’ll see a restructuring of the industry, a reduction of players which will help regularize the markets. Those who made it through the pandemic will come out stronger, with really solid consolidated partnerships,” he concludes.