The organic banana market is currently experiencing very high demand with no signs of slowdown like some other organic produce varieties are feeling. “Demand is in line with what we are typically seeing this time of year,” says Mayra Velazquez de León, President and CEO of Organics Unlimited. “This is the time of year when demand is the highest and supply is typically low. That’s why it is so important for retailers to prepare by securing contracts to insulate themselves from spot pricing,” Velazquez de León added.
It's normal for supplies to be at their lowest point this time of year, but the supply situation is worse than normal this season. “At the end of last year, Organics Unlimited’s Mexican growing region was affected more than usual by the seasonal uptick in sigatoka,” shared Velazquez de León. “Coupled with cold weather these early months of the year, the region has experienced outputs down as much as 30 percent.” This has resulted in spot prices tripling compared to late 2022 prices. “This is a challenge everyone is facing and while it has been a high-adrenaline season, our diversified sources have allowed us to meet our contract customers’ needs.”
During times like these, it helps to be vertically integrated as it provides the ability to better control means of production. “In a time of increasing costs, it’s important to make contracts like we have with our clients and our network of small family growers. This will allow us to provide stable pricing, which is a win-win for both retailers and growers and eliminates the need for spot market pricing.” Currently, some are finding out the hard way that reliance on spot market pricing can be very erratic and quite expensive.
Volume growth despite higher sales price
Does that mean prices for organic bananas will go up? “Bananas are traditionally a loss leader and organic banana prices have been artificially lowered over the past 10 years,” shared Velazquez de León. Not only are they the cheapest organic fruit offered, they are also cheaper than other conventional fruits sold in stores. Growing organic is a completely different practice from conventional with a much higher cost structure due to the need to use certified organic inputs, non-chemical solutions, and sustainable farming practices. Having said that, in 2021 and 2022, the organic banana industry fought fiercely for breaking beyond the forbidden $1 threshold at retail and the results are promising. “Our independent retailers are always the first to rally alongside us and those who have increased their price per pound to $1.29 have still seen year-over-year volume growth and a 30 percent increase in sales revenue.” It is only a matter of time before larger retailers will see that this is possible and they will follow suit, allowing for fairer compensation throughout the supply chain.
For more information:
Mayra Velazquez de León
Tel: (+1) 619-710-0658