Organic Banana Industry Still Suffering with Low Prices

In the summer of 2021, the pricing structure surrounding the sale of bananas in the US received national scrutiny as grower advocates argued that bananas are sold at retail prices far too low, leading to little or no returns for growers. In response, the multinational banana companies did hike the price they charge for bananas, including the market price for organic bananas.

The average price of a pound of conventional bananas at many US supermarkets is often in the 50-70 cents per pound range, with organic bananas usually only 10 or 15 cents per pound more. Most other fruit (apples, berries, stone fruit) are typically four to five times higher than that on a per pound basis.

“Organic bananas need to be selling at retail for at least $1 per pound,” said Daniella Velazquez de Leon, general manager for Organics Unlimited, San Diego, CA. “The other day I saw organic bananas being sold at a big box retailer for less than the price paid to growers. That is so frustrating.”

Daniella Velazquez de Leon, General Manager, Organics Unlimited

The origins of Organics Unlimited run deep as Velazquez de Leon’s mother is the company president, and her grandfather first worked with Mexican banana growers many decades ago. She said this long history works well for the company as both its growers and customers remain loyal. “We have decades-long relationships with our customers, and they respect that prices have gone up and are willing to pay a fair price.”

“Organic bananas need to be selling at retail for at least $1 per pound.” – Daniella Velazquez de Leon

Velazquez de Leon said Organics Unlimited worked with all its customers this year to establish a fair contract price for bananas. She revealed that most bananas are sold on a yearly contract that mirrors the calendar year. She said Organics Unlimited's retail customers are paying more this year. “Independent retailers are leading the way in trying to increase the banana price at retail,” she said.

The Organics Unlimited executive added that prices have gone up across the board for everyone, but it is unfair to make banana growers, who are already receiving a very low return, eat their increased costs. She believes consumers would pay more at retail if they knew the plight of banana growers. Velazquez de Leon said there have been protests in Latin American countries by banana growers who believe they are being paid far too little for their bananas, and that grower unrest still exists.

Velazquez de Leon believes consumers would pay more at retail if they knew the plight of banana growers.

Jonathan Kitchens, purchasing manager for Earl’s Organic Produce in San Francisco, said the organization has been advocating for increases in the retail price of organic bananas for several years. “I don’t think organic bananas should be sold at retail for less than $1.29 per pound,” he said. “We have been saying for a long time that bananas don’t have to be the loss leader.”

In fact, he argues that banana sales fluctuate very little: “Those who buy bananas have them as a steady part of their diet and buy the same amount each week.”

Jonathan Kitchens, Purchasing Manager, Earl's Organic Produce

Kitchens said Earl’s has experimented with promoting organic bananas at the beginning of the year to coincide with healthy-eating New Year’s resolutions and again during back to school promotions. “Sales don’t change. You don’t sell more bananas when you promote,” he said. This would lead one to speculate that sales would not suffer if retail banana prices were higher.

While prices to growers have long been too low, Kitchens said cost increases to the grower have been significant over the past year. “The cost to ship from Ecuador [a primary banana producing country] has gone up significantly. In some cases, it has doubled," he said.

“Sales don’t change. You don’t sell more bananas when you promote,” he said. This would lead one to speculate that sales would not suffer if retail banana prices were higher.

He estimated that this year Earl’s is paying about 10 percent more for the organic bananas it buys directly from growers or through grower co-ops in both Mexico and Ecuador. He revealed that the SF wholesaler has added three new banana ripening rooms to keep up with its steady growth in business. Looking forward, he expects organic banana supplies to remain steady over the next several months.

Rolando Leyton, founder and CEO of Tropical Organic Growers, based in the state of Colima on the Mexican Pacific shore, said the 2021 publicity did create pressure that resulted in a couple of the multinational banana shippers announcing increases in the FOB price for conventional bananas. But as we are now a month and a half into 2022, Leyton said that increase has not yet trickled down to the grower, nor has he noticed much of a change in the price consumers pay at US supermarkets. However, Leyton is based in Mexico, and he did allow that he has not visited US supermarkets in several months and does not know if the retail price points have changed since he last visited in 2021.

Rolando Leyton, Founder and CEO, Tropical Organic Growers

Like the others interviewed for this article, Leyton argues that organic bananas are typically sold well below where they should be. He said organic bananas should have a retail sales price point of at least 30 cents per pound more than conventional, but often there is only a 10-15 cent price gap.

While he worries that the cost for growing organic bananas continues to rise without a comparable rise in the price paid to growers, Leyton said it is not an option for organic growers to switch to conventional production. He noted that organic bananas are typically grown in a subtropical climate that has far less rain than the tropical areas where conventional bananas thrive. “There are 5 million hectares of bananas in the world and only 50,000 hectares of organic bananas,” he said. “Even though the price differential is not there, I don’t see organic growers switching to conventional bananas.”

Leyton said organic bananas should have a retail sales price point of at least 30 cents per pound more than conventional, but often there is only a 10-15 cent price gap.

While he is happy that there has been some movement on conventional and organic pricing over the past six months, Leyton believes more needs to be done. He worries that the market price increases the multinational companies have imposed on their US customers are being used to cover their own increased costs in the supply chain and not to help improve the plight of farmers.