Glut of bananas in Europe makes for low prices

A large quantity of bananas in Europe has depressed prices on the continent. While it's still uncert…

A large quantity of bananas in Europe has depressed prices on the continent. While it's still uncertain what effect El Nino will have on South American production, current supplies suggest a market that will not get better until at least next year.

“The European banana market has suffered a lot,” said Bart Szatkowski of Quiza. “An unfavorable exchange rate and an increase in the supply of local produce, combined with an undisrupted supply of bananas to Europe, caused a lot of trouble to importers.” Uncertain markets in Russia and China did not stimulate prices like some expected, so many importers took big losses. Quiza is based in Poland, which is one of the most competitive European markets. Each year, the country's 10 importers handle shipments worth 2.44 billion Euro.

“The Polish market focuses on bananas from Ecuador, Colombia and Costa Rica,” said Szatkowski. “Without a reduction in supply, it will be very difficult to stabilize the situation as many importers continue high import levels.” The average Polish citizen consumes seven kilograms of bananas per year, but that rate of consumption is not enough to absorb the large amount of fruit coming into the country and the continent.

“We do not expect revolutionary changes in the market until the end of 2015,” said Szatkowski. “It will be a very interesting 2016, and many operators will have to reorganize their philosophy and optimize their business in order to stay afloat.”

A lack of major setbacks in banana-growing countries has contributed to the current oversupply. But El Nino weather this winter could put a dent in production. The last time El Nino rolled into South America, Ecuador, the largest banana grower, suffered significant losses. Though it's uncertain what impact the weather phenomenon will have this time around, some man-made issues have managed to slow down trade with the country.

“Administrative restrictions on Ecuadorian exporters have made Ecuador a less popular origin for bananas, though it is still the largest supplier to the European Union,” said Szatkowski. “The European retail market requires cost optimization, but Ecuador still remains the best solution for bringing large quantities of bananas to Europe in the easiest way.” Other markets continue to open up, but it will take time before they can make a large impact.

Organic and fair trade bananas have offered competition to sellers of conventional fruit, but Szatkowski explained that the latter kind of fruit is not likely to overtake the former in sales.

“Poland is a price-oriented market, so organic and fair trade bananas are niche products,” he said. “Conventional bananas are healthy, monitored for pesticide residue and are safe. We also all support fair trade and an ethics code in business, but, at the end, the market requires low prices. It's challenging to offer a very expensive product to a Central European consumer who is not ready to pay three times as much for fair trade fruit.”