Supplies of bananas coming into North America continue to be low and will likely stay that way until next month. “Stem counts are low so supplies are somewhere between 15-20 percent lower than they normally should be,” says Andy Thomas-Stivalet of Kavidac Produce.
Supplies have been low since November and by the end of December, they were particularly tight. “Everybody’s looking for fruit--things are much lower than they should be. This will probably stay tight until the beginning of March and then we should see some relief. Then, after Easter, it looks like it will go down again,” he says, noting close to Easter, growers often preharvest given labor is difficult to find that week. That is also the time of year when rain in some areas affects supplies.
There are a number of reasons why supplies are low out of multiple growing regions, including Mexico, Guatemala and Ecuador. Along with general supply chain issues, fertilizer costs have spiked dramatically so growers have cut back on new plantations and Thomas-Stivalet estimates the industry is down 5-6 million boxes of bananas throughout the Americas.
At the same time, this is when banana demand strengthens following healthy starts to the new year and children being back in school. “Everybody is looking for fruit. People who aren’t on year-long contracts are struggling to find fruit and even those with contracts aren’t getting them fulfilled,” he says.
Elevated pricing on bananas
Collectively, this means pricing is strong on bananas. “Prices have gone up almost double in Mexico. We were selling fruit in Mexico City for $17 when generally it’s $10-$11. Pricing in some markets in the United States was $24 for spot prices. Those prices still haven’t gone down,” says Thomas-Stivalet.
Annual contracts are also seeing stronger pricing. “The contracts in North America that we know of are all up about $1-$1.50. That always pushes up the spot market prices as well,” he says.
So what does this mean for the overall banana industry--is stronger pricing and slimmer supplies on a product that was sometimes thought of as a loss leader the new normal? Thomas-Stivalet thinks so. For a few years, there had been a global oversupply on bananas and this coupled with COVID, supply chain issues, inflation, the war on Ukraine and more all led to suppliers who were barely scraping by leaving the industry.
“Everybody who is sort of okay to really good, their supplies dropped just because of the fertilization issue and there are weather patterns impacting things,” he says. “This is where we’re going to be for at least the next 18-24 months. People need to plant more to bring up the supply and that takes a while. With the prices we’re seeing this year, maybe people will be interested in starting to plant more though we don’t know how everybody’s economic situation is. That may be hard for some people.”
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