First quarter of 2019

Bananas from the Canary Islands recover production and marketing levels

Bananas are by far the most important food and consumer product produced in the Canary Islands, with the largest presence in the Peninsula, where they are regularly consumed in more than 16 million homes and are recognized as a product of differentiated quality, highly valued by consumers.

This achievement, which is often ignored in the Canary Islands, is the result of the daily and constant work of the sector, which is continually faced with the uncertainty inherent in agricultural production and the fierce competition in banana prices from third countries and the increasingly concentrated distribution and sales channels.

The first half of 2019 has been marked by the low production which persisted throughout the first quarter of the year and which maintained the dynamics of the previous year with a shortage of supply and an upward trend in prices.

Until the end of March, the deficit in the supply of bananas from the Canary Islands in the peninsular market was -19,203,805 kg accumulated with respect to the previous year, which led to minimum market shares of between 57% and 59% and to price differentials at the point of sale of between 80% and 90%. The green price was then a faithful reflection of the shortage of production to stand on average at 1.10 € / kg.

However, in the second quarter of the year there was a radical change in the evolution of supply with respect to the previous year, going from a significant supply deficit to a market saturation that affected prices.

This has led to an increase in the sales figures for bananas from the Canary Islands outside the islands, which in the first 7 months of the year has exceeded 226 million kg, 4 million more than in the same period last year.

Under these circumstances, at the end of June the market share stood at 62.1%, in terms of purchasing levels, 32.8% of households bought exclusively Canarian bananas, compared to 9.3% who bought other bananas and the average purchase of Canarian produce stood at 18.8 kg, with a frequency of 20.6 acts of buying bananas.

When analysing the banana market it must be borne in mind that the evolution of an agricultural product is unconditionally linked to its production, so that the evolution of variables such as market shares and price are often insufficient to determine the health status of the product on the market. All the more so when it is essential that minimum profitability reaches all producers throughout the year, as in the case of bananas.

In recent years banana production has been growing at an average of 18,000 t annually (2016, 2017), but this trend suffered an unexpected drop of 9% in mid 2018 which lasted until the first quarter of 2019. Until that date, Plátano de Canarias, had boosted the consumption of banana and plantain in the Peninsula with a growth of +2% in annual volume in the years 2016 and 2017. This coincided with a drop in the volume of fruit consumption of -2% annually in Spain.

The loss of production due to climatic causes in mid 2018 led to an inevitable loss of market share for bananas, but also put a brake on the growth of the whole banana and banana category. Banana production fell by 8.5% and the average market share by volume rose from 71.1% in 2017 to 63.3% for the same period in 2018.

Although the lost levels of market share were relatively significant, the fact is that the demand for the product increased the profitability of the crop and this, with quota levels that are within the reach of very few products.

Therefore, the factors that determine the health status of the banana in the long-term market are the level of exclusive consumers of the Canary Islands banana on the Peninsula. These indicators reflect the strength or otherwise of the product in the long term and therefore constitute variables that the sector follows quarterly through ASPROCAN and form the basis of the effectiveness indicators of its communication actions.

Over the years, Plátano de Canarias has proven to be an example of sectorial structuring within Spanish agriculture. Its marketing and communication campaigns, based on a product of high perceived quality, have made it indispensable on the shelves of any supermarket. This advertising investment is coordinated and executed by the Association of Banana Producers' Organisations of the Canary Islands (ASPROCAN), an organisation which builds the Plátano de Canarias brand, ensuring the solidarity contributions of more than 8,000 producers. This unity of action, unique in the Spanish agrifood sector, and a management organised in a private and agile way, allows it to adapt to the needs and continuous unforeseen market events generated by the daily sale of more than one million kilograms of bananas throughout the year.

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