Tough Battle Against Nature

Tough Battle Against Nature

Alfred Romann

Tough Battle Against Nature

South american producers of bananas are going through some tough times. Prices are dropping and plagues have hit crops, even as overall production of fruit and vegetables rises around the region and long-term prospects look brighter than ever. The banana is the most traded fruit in the world and four out of five of the world’s largest banana exporters are in South America: In Ecuador, Colombia, Costa Rica and Guatemala. The Philippines, in Asia, is the only one that isn’t.
But bananas have hit on some hard times. Over the last decade, the average retail price that bananas fetch in their largest export markets of the U.S. and Europe has plummeted. The total value of production across South America was down to US$4.67 billion in 2012 from more than US$5 billion just two years earlier. Since then, the retail prices of bananas have dropped further.
Banana production last year took another hit with the emergence of a new pest , the fusarium osysporum – a soil fungus that is spreading through Africa and the Middle East and could, in time, hurt crops in South America. The fungus is hitting the Cavendish variety of banana that is most popularly traded and is not unlike the one that destroyed the Gros Michel variety in the 1950s. The Gros Michel variety vanished in a matter of years and was replaced by the sturdier Cavendish.
But while the fungus has not yet affected the banana trade in Latin America, other challenges have emerged. Climate change is one issue banana producers are grappling with. Changes in rainfall have affected crops. In December, Costa Rica declared a national emergency after more than 90 percent of its banana crop spread on more than 44,000 hectares was hit by dactylopius occus, a cochineal insect that affects the look of the bananas and prevents them from being exported.
Four Giants Control Trade
The banana trade is somewhat unique. Four producers – Dole, Chiquita, Del Monte and Fyffes – control 80 percent of it. At the same time, ease of production and global availability have made bananas cheap, sidelining small producers. On the other hand, tropical fruits may offer better prospects, particularly for countries in South America and the Caribbean that are among the largest producers of fruits and vegetables in the world.
Most of the global trade in fruit, or around 75 percent, is based on major tropical fruits with mango being the dominant tropical fruit variety in production around the world, according to the Food and Agriculture Organization of the United Nations. Mangoes, pineapples, papaya and avocado are grouped together as the major tropical fruits. Other tropical fruits like lychees, durian, rambutan, guavas and passionfruit are considered minor tropical fruits. The markets for both have been expanding in recent years.
By 2010, the global production of major tropical fruits hit 62 million tones, up by almost a quarter in a dozen years. Asia and the Pacific account for about 56 percent of global production of tropical fruit, while Latin America and the Caribbean make up 32 percent. Latin American countries are the biggest producers of papayas and avocados, the second-largest producers of pineapples and a distant second in the production of mango. But it is citrus fruits that generate the most value in terms of trade and Brazil is one of the largest producers of the fruit globally, second to China, which recently took over the top spot. In Latin America, Mexico is another large citrus producer.
Brazil, the largest county in South America, produces 42.6 million tones of tropical and subtropical fruit on 2.2 million hectares of land. As much as 47 percent of the production trades as fresh fruit, with the rest processed. Small and medium sized properties produce most of Brazil’s fruit, and Europe, taking up around 70 percent of output, is the single largest export market.
Brazil Banks on Europe
South America has emerged as a large global producer of fruits and vegetables. In a recent study, the World Bank noted that production across the region has grown by about eight percent per year since the mid-1990s while diversification of export destinations away from the United States and Europe and towards Asia, particularly China, is giving exporters greater confidence.
But domestic barriers to trade are slowing down growth. Export taxes and controls that limit trade have been significantly streamlined but are still causing friction.
The trade in agricultural products has, in broad strokes, declined as a percentage of overall global trade but South America has seen its share of this trade grow, say Nabil Chaherli and John Nash in a World Bank report. Much of this growth has come from Brazil and its growing tracts of arable land.
Pockets of trouble, such as the banana pest that is now hitting Costa Rica notwithstanding, the production of fruits and vegetables across the region should continue to grow in the years ahead. A look further into the future supports this view. By 2050, says the World Bank, Latin America will produce a third of fruits and vegetables consumed globally.


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