Disease adds to stormy banana price outlook

Banana prices were relatively subdued in the second half of 2011 due to global overproduction and low EU demand, but retailers and consumers alike should brace themselves for higher prices this year as supplies face a number of serious threats - including crop disease.

Supply of bananas to the EU comes predominantly from Ecuador, Costa Rica, Colombia, the Caribbean and other parts of Latin America. Ecuador is the world’s largest banana exporter and its banana exports increased by 1.7% in 2011 compared with 2010.

Although banana prices in the EU have been relatively weak over the past six months - due to the normal seasonal peak in production seen in the latter half of the year - the dynamics between supply and demand are starting to change.

Heavy winds across the Atlantic have caused some docking disruption in EU ports, and recent rises in fuel and shipping costs, as well as several instances of disease, have piled further pressure on supply. Combined with the start of the seasonal decline in supply, these factors have caused a slight upward trend in prices.

In Ecuador, concerns are rising about the spread of Black Sigatoka disease - the disease can cause a 50% reduction in fruit yield. Production in the Dominican Republic and St Lucia has been particularly hard hit already, and has led to a national crisis in St Lucia.

Although Costa Rica exported one million more boxes in 2011 than in 2010, a rise of 5%, this growth rate is not expected to be matched in 2012 as changes in prices of agricultural supplies, cost of labour and the dollar exchange rate start to bite.

Production in Colombia fell 15% in 2011 as crops were hit by the Moko bacterial disease. The disease was particularly virulent in 2011 as floods aided its rapid spread.

The disease has been on the rise since 2000, and little improvement is expected in 2012.