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World popular banana production

- Banana Production
- Banana Exports
- Banana Imports
- Banana Trade Patterns
- Growth of Organic and Fair Trade Banana Markets

Bananas are the main fruit in international trade and the most popular one in the world. In terms of volume they are the first exported fruit, while they rank second after citrus fruit in terms of value. Banana is a very delicate commodity on economic, social, environmental and political grounds. According to the Food and Agriculture Organization of the United Nations (FAO) Statistics estimations, world total exports of banana accounted for 16,8 million tonnes in 2006. Bananas are also a very important staple commodity for many developing countries, together with wheat, rice or corn, hence the relevance of bananas for food security. Some of the main banana producing countries, such as India or Brazil, are hardly involved in international trade. In fact, only about one fifth of total banana production is internationally traded . Nevertheless, the share of banana trade in world banana production increased slightly in the last decades (from around 18% in the sixties and seventies to over 22% in the 1990s and 2000s). The international banana market shows a highly regional character.

The banana industry is a very important source of income, employment and export earnings for major banana exporting countries, mainly developing countries in Latin America and the Caribbean, as well as in Asia and Africa. According to FAO statistics, world banana exports are valued a total of US$5,8 billion in 2006, making them clearly a vital source of earnings to many countries. A strong bond exists between banana-generated income and household food security. Export volume or price changes bring about income changes for those directly employed in banana production, both as smallholder farmers and as wage earners on banana plantations. In addition, secondary and tertiary industries and their employees also feel the impacts of those changes".

Evolution or world production and international trade in bananas in thousands of tons (1961-2006)

Source: UNCTAD Secretariat from FAO statistics

Banana Production

As it is the case for most tropical products, due to the special climatic conditions needed to grow bananas, they are mainly produced in developing countries. Around 98% of world production is grown in developing countries. Developed countries are the usual destination for export bananas. In 2007, around 130 countries produced bananas. However, production, as well as exports and imports of bananas, are highly concentrated in a few countries. The 10 major banana producing countries accounted for more than 75% of total banana production in 2007. Furthermore, India, China, the Philippines, Brazil and Ecuador alone produced more than 60% of total world banana production. This concentration of banana production has increased over time although showing a different regional distribution. While America accounted for more than 50% of the world production in the 1970s, against 34% for Asia, the share of Asia began to increase in the course of the 1990s and the 2000s to finally reach 58% in 2007, against 31% the same year for America. The share of the African continent in the world production is remained relatively unchanged from the 1970s (13%) to the 2000s (11%).

Distribution of the world banana production by continent

Source: UNCTAD Secretariat from FAO statistics

Distribution of the world banana production by main actors
Average on the 2003-2007 period

Source: UNCTAD Secretariat from FAO statistics

Banana Exports

World exports of bananas also show a high level of concentration, with developing countries accounting for the bulk of exports. Only Latin America and the Caribbean supplied about 70% of world exports in 2006. The four leading banana exporting countries in 2006 (Ecuador, Costa Rica, Philippines and Colombia) accounted for 64% of world exports with Ecuador alone provided more than 30% of global banana exports.

The share of the American region (South, Central America and the Caribbean) has been decreasing from 80% on average over the 1970-1980 decades to 70% in the 2000s. Within this region, the share of each sub-region has also fluctuated. For instance, the share of the Carribean region has fallen from 8% in the 1970s to less than 2% in the 2000s. Furthermore, the share of Central America has decreased from 42% of world exports in the 1970s to 26% in 2006 while in the same time, South America increased from 28% to 40% over the same period.

Distribution of the world Banana exports
Average on the 2002-2006 period

Source: UNCTAD Secretariat from FAO statistics

The analysis of export income dependence on bananas provides also interesting results. For major exporting countries like Ecuador or Costa Rica, exports of bananas represented 9.3% and 7.7% of the total value of exports in 2006. The highest levels of dependence on banana exports can be found in the Windward Islands countries: Saint Lucia, St. Vincent and Grenadines and Dominica.

Examples of dependency rates of producing/exporting countries in 2006:
- Saint Vincent and the Grenadines: 22.3%
- Saint Lucia: 19.7%
- Dominica: 18.1%
- Panama: 10%
- Ecuador : 9.3%
- Costa Rica : 7.7%
- Honduras : 6.8%
- Dominican Republic: 6.8%
- Guatemala: 5.9%
Source: UNCTAD Secretariat from FAO statistics

Banana Imports

From an historical perspective, banana imports are relatively concentrated. The main importing areas are the European Union, the United States of America and Japan, which together accounted for more than 70% of world total imports in 2006, while the first ten banana importing countries represented more than 80% of total imports (considering the EU as a whole).

Distribution of the world Banana imports
Average on the 2002 - 2006 period

Source: UNCTAD Secretariat from FAO statistics

Banana Trade Patterns

Concerning the direction of trade in bananas, it is important to note that, due to the importance of the different banana import regimes in the consuming countries, the banana world trade has a clear regional character. They have led to a differentiation among preferential markets and open markets for bananas, although this picture has been changing somehow in the nineties. Transportation costs and time in banana distribution also play a role in the regional fragmentation of the market. North American banana imports come mainly from Central and South America on an open market basis, that is, with no tariff or quantitative restrictions.

Geographical distribution of USA banana imports, 1990-2007

Source: UNCTAD Secretariat from COMTRADE statistics

Traditionally, banana imports to the EU have been originated from three different sources: first, national production from Spain (Canary Islands), France (Guadeloupe and Martinique), Greece and Portugal; secondly, ACP (African, Caribbean and Pacific) countries exports, which have been granted preferential access to the European market under the Lomé Convention and later the Cotonou Agreement; and Central American and South American bananas which provided mainly free (or open) market countries such as Germany. However, during the nineties the EU pattern of trade for bananas has suffered from the uncertainties arising from the introduction of the EU Banana Regime and the different modifications that resulted from the banana dispute at the World Trade Organisation (WTO).

Geographical distribution of bananas imported in the European Union, 1990-2007

Source: UNCTAD Secretariat from COMTRADE statistics

Finally, as for Japan, the third largest import market, Philippines is the major provider of bananas far above Ecuador, the second source of Japanese banana imports. Comparatively, the Japanese banana import market is highly concentrated, with two countries providing roughly 95% of bananas to Japan over the 1990-2007 period.

Geographical distribution of Japanese banana imports, 1990-2007

Source: UNCTAD Secretariat from COMTRADE statistics

The situation of the international banana market in the late nineties was defined by an oversupply of bananas, mainly due to the higher availability of export bananas from Ecuador and some other exporting countries. However, the main cause may be found in the expectations that had been generated by the liberalization in the European Union market following the establishment of the EU Banana Regime market. In the late eighties and beginning of the nineties, banana marketing companies followed a strategy of expanding their capacities in order to maximize their market shares in the profitable EU market. Actually, during the nineties the international banana market has been extremely influenced by the developments of the EU Banana Regime and the following dispute and agreement at the WTO, which have filled the market with uncertainties and limited the actions of the different banana market operators. In addition, demand from the emerging markets of Asia, particularly China, and The Russian Federation and Eastern Europe was also considered to have a great potential, although the economic situation in the Russian Federation, as well as the financial crisis in Asia did not allow for achieving it. All these circumstances, together with the sluggish growth of demand in saturated developed markets in USA and the EU did not allow for the expected levels of banana consumption to be materialized. This situation resulted in lower banana prices and an increasing competitiveness in banana distribution companies in search for restructuring their business and reducing costs.

Growth of Organic and Fair Trade Banana Markets

Niche markets are also seen as an important outlet for banana market. A study presented in the frame of the intergovernmental group on bananas and on tropical fruits illustrated this issue by analysing both organic and fair trade markets' development (they reached 152,000 tonnes et 46,000 tonnes en 2003 respectively).

Growth of organic and fair trade markets for banana sector
over the period 1998-2003 (tonnes)

Source: Organic and Fair Trade Bananas and Environmental and Social Certification in the Banana Sector, FAO, December 2003 (CCP: BA/TF 03/5)

Interactive map of exports flows illustrating destinations of organic banana by main origins (2002)

Dominican . Rep	Colombia	Peru	Ecuador
Mexico	Honduras	Guatemala	Canarian Island

Source : UNCTAD secretariat based on data from FAO

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