Looking Back at 2020 and Thinking…
We teased it on Tuesday, but bananas truly had a bonkers 2020.
Rewind: Supplies tightened due to late-2020 hurricanes that hit Guatemala and Honduras, wiping out 27% of Honduras’ production alone. The $19 million financial hit had global implications as both countries sit within the top three U.S. banana suppliers.
An initial 15-20% dip in weekly supply to the U.S. could not have come at a worse time. Even while foodservice demand died down due to the pandemic, retail was strong, continuing to use bananas as a loss leader to get folks to the grocery.
Strong demand. Lower volumes. You know where this is going. Banana prices were going bananas.
Increased costs for inputs like carton boxes and freight rates driven by the pandemic were the cherry on top of the whole banana system’s price predicament.
But wait, there’s more. Since then, producers have seen spot market pricing that is 50-55% over last year. You would think more bang for their bananas would make a fruit farmer happy, but the price peaks have discouraged banana purchases and created severe volatility in the market, which is a hard peel to swallow.
Crop recovery in Guatemala and Honduras could take at least a year or more with multimillion-dollar investments needed to replant the farms devastated by flooding and wind damage.
Looking ahead: For the near future, banana buyers will continue looking to Costa Rica, Ecuador, Colombia, and Mexico to fill their orders.