Organic Banana Producers Lobby for Higher Prices

At the recent Organic Produce Summit in Monterey, CA, some of Mexico’s leading organic banana growers and distributors informally got together and agreed that their industry was in dire straits as the price paid for their organic bananas by US retailers is not coming close to keeping up with rising costs.

Mayra Velazquez de Leon, Daniella Velazquez de Leon, and Manuel Velazquez de Leon, Organics Unlimited at OPS

Coliman Bananas, Organics Unlimited, and Tropical Organic Growers decided that something must be done about the pricing issue before the situation leads to a dwindling of supplies and reduced options for consumers. Rolo Leyton, who is CEO of Tropical Organic Growers, agreed to write a statement articulating the companies' concerns, pointing out that the rising costs during the past 18 months have not been reflected in the FOB price or the retail price of organic bananas.

Rolo Leyton, CEO, Tropical Organic Growers

On Monday, September 27, the three companies released the joint statement, which noted that over the past year and a half “our industry has undergone intense cost pressure and has absorbed it to ensure that consumers can continue buying affordable organic bananas. However, the current commodity pricing surge has made this effort unbearable any longer. Packing material prices have risen nearly 20 percent, and plastic bags have gone up 15 percent. Labor costs have also increased nearly double-digit as we have supported our workforce throughout the pandemic. As most experts indicate, there is no end in sight to these cost pressures.”

The statement also pointed out that the world’s shipping container shortage has put additional pressure on logistics costs, which have risen 15 percent over pre-pandemic rates. Additionally, COVID-19 safeguards have increased costs, and two hurricanes have impacted Mexico in the last year, resulting in loss of fruit and more unexpected costs.

"Our industry has undergone intense cost pressure and has absorbed it to ensure that consumers can continue buying affordable organic bananas. However, the current commodity pricing surge has made this effort unbearable any longer." – Joint Statement of Coliman Bananas, Organics Unlimited, and Tropical Organic Growers

Leyton told OPN Connect that banana pricing tends to be on a year-long contract and driven by retail desire to use bananas as a loss leader. He noted that over the last decade, organic banana pricing has actually dropped with retailers only charging about a 10-cent premium for organics over conventional. 

“Organic bananas are the cheapest fruit in the stores,” Leyton said, adding that this makes no sense since there is no domestic production, and all bananas face much higher logistics costs than US-grown fruit just to get to market.

He added that it is unrealistic to believe that you can sell organic bananas for 69 cents per pound at retail when Washington apples are four or five times that much.

“We remain steadfastly committed to harvesting organic bananas week in and week out to ensure that supermarket shelves remain well-stocked. However, we cannot support this great pressure any longer,” Leyton wrote in the statement. “This is not a recent issue as we have been struggling with reduced margins for several years. However, the current situation is impossible.”

Daniella Velazquez de Leon, business manager at Organics Unlimited, confirmed that the statement fully represents the views of their family-owned operation, along with the other two producers. “Bananas are notorious for being used as a loss leader by retailers,” she said, adding that it is time that this dynamic be changed. “The price being paid is not reflective of what is happening on the farm.”

“This is not a recent issue as we have been struggling with reduced margins for several years. However, the current situation is impossible.” – Rolo Leyton

Velazquez de Leon said the organic banana industry cannot survive without better pricing. She noted that it costs much more to grow organic bananas, yields are lower, and retailers expect many certifications, including organic, Global G.A.P., Fair Trade, and Rainforest Alliance. “It’s crazy to see the prices that organic bananas are being sold for at retail,” she said.

Leyton added that he visited one market in California recently and noticed a sign on which the retailer was bragging that its retail price of bananas hadn’t risen in 10 years. “That might be good for the consumer—I’d like it if the price of Nikes hadn’t risen in the last decade—but it’s not good for the producers," Leyton said.

He added that while the smaller organic producers are getting a sympathetic ear from smaller natural food retailers, the larger retailers and large multinational banana companies have control over the ultimate price paid to producers and paid by consumers.

In their statement, the three banana producers ended their missive stating: “Now is the time for a price adjustment for organic bananas to endure and promote the benefits of sustainable, organic agriculture.”

“The price being paid is not reflective of what is happening on the farm.” – Daniella Velazquez de Leon

Velazquez de Leon indicated that these organic producers are at their wits' end trying to get a fair price. She said all the producers have to come together and demand a higher price.