Organic banana supplies have improved over this time last year.
“Last year, growing regions were hit by a devastating storm. Luckily Mother Nature has been kind so far this year and supply is much better compared to this time last year,” says Mayra Velazquez de León, president and CEO of San Diego, CA-based Organics Unlimited. She adds that the summer weather is ideal for banana growing and its farms in Colima, Mexico and its network of small growers all have a strong supply for the season.
Along with Mexico, Organics Unlimited’s organic Cavendish bananas come from Ecuador as well to ensure year-round reliable availability. At the same time, general organic banana production also comes from Peru and Colombia.
Meeting this healthy level of supply is also continued good demand for organic bananas. “Organic shows no signs of slowing down,” says Velazquez de León. “Today’s consumer is both health-conscious and socially conscious. We foresee demand for organic continuing to rise, with the differentiating factor coming down to socially responsible brands who can demonstrate to consumers that they are having a positive impact through their food purchases.”
Higher spot pricing
While Organics Unlimited’s bananas are contracted to help keep supplies and prices reliable for retailers and ensure stability for growers throughout the year’s ups and downs, spot pricing is higher than expected heading into the summer. “Normally during these months, we see supply skyrocket but with the increase in cost across all inputs from fertilizers to packaging due to the supply chain crisis, we’re not seeing the annual downtick, at least not yet,” says Velazquez de León.
Indeed those cost challenges remain for the organic banana industry–specifically where growers and shippers are absorbing many of the increased costs associated with banana production. “There has been no significant movement from bigger players in the space at the growing level. Unsurprisingly, it’s the independent, values-strong wholesalers, distributors and retailers who are leading the way,” says Velazquez de León. “We have several independent retail partners actively working to tell the story to consumers, increasing the price at retail and continuing to see steady demand for bananas which makes us optimistic.”
And those input costs on production also continue to rise–partly, says Velazquez de León, due to the trickling down of logistics issues into the cost of materials. It’s an issue that has been impacting all players across the supply chain since mid-2021, but one that also has a larger impact on the low-margin banana business.
“We do not know where current international unrest and inflation will take our world, but we are taking what we learned from last year to identify opportunities and drive efficiencies to best serve our clients as we move on in the coming years,” she says. “Increased inputs include dramatically higher costs on fertilizers and packaging materials which in turn has influenced organic banana pricing as well.”
* This article is excerpted from Fresh Plaza website, publication date: July 1st, 2022