The wholesale cost of the world’s most popular fruit went bananas in the early part of this year.
The price that stores paid for bananas hit a record high in the first quarter, pressured by limited supplies in Central and South America, which produce most bananas sold in the U.S.
Floods, cooler temperatures and mudslides in countries including Costa Rica and Guatemala have hurt banana-crop yields in recent months. A strike among banana-plantation workers in Honduras that lasted several weeks at the start of the year also affected production, delaying growing schedules and harvesting of the fruit.
Wholesale banana prices in the U.S. rose 15.5% in the first two months of 2018 to around $0.577 a pound, an all-time high, according to data from the World Bank, after the weather phenomenon known as La Niña upended weather patterns. The price fell somewhat in March as supplies to the U.S. improved but are still up 8.4% from a year ago.
Bananas are the most widely eaten fresh fruit in the U.S., and many retailers have been loath to pass their higher costs on to shoppers. For many supermarkets and other stores, bananas drive trips to the store because they are an item that most people go out to purchase rather than buy online. Most large retailers sell bananas at a slim margin or sometimes no price markup, which means higher wholesale prices are likely hurting returns for sellers that haven’t locked in prices with long-term contracts.
“I go to competitors regularly, and no one has moved on retail prices,” said Jeff Cady, director of produce and floral at supermarket chain Tops Friendly Markets, which has stores in upstate New York and neighboring states. “I’d love to go up, but we just can’t,” he said, referring to prices. He also said that limited supplies have meant Tops is shipping out fruit from its warehouses that has spent four days ripening as opposed to the usual five days.
Exacerbating the issue, according to producers, is that Americans tend to eat more bananas at this time of the year because many other fruits are less available and more expensive during the cooler months.
Americans consume an average of 11.4 pounds of bananas each year, according to the U.S. Department of Agriculture, beating out both oranges and apples as the most popular fresh fruit. Bananas are consistently Walmart ’s top-selling product.
Longer term, exportable bananas are under threat of extinction from a fungal disease. But so far plantations in Central and South America remain free of the disease.
In late February and again in mid-March, average retail prices in the U.S. reached $0.57 a pound, a level not seen since December 2016, according to USDA data. Retail prices have inched up 2.3% this year, holding largely steady relative to wholesale prices.
Bananas were one of the items that Whole Foods Market Inc. slashed prices on late last year after the grocer was bought by Amazon.com Inc. The company declined to comment on its current prices: Some of its stores are selling bananas at 20 cents each or $0.49 a pound.
Patrick Galleher, chief executive of SweetFrog, a chain of stores selling frozen yogurt, said he has noticed about an 8% increase in the wholesale price of the thousands of bananas he has to buy weekly to stock his more than 350 stores across the country. He said his company is absorbing the higher prices and notes that bananas are still one of the cheapest fruit toppings.
The weather over the past six months has been affected by La Niña, which occurs when easterly trade winds strengthen, cooling water across the central and eastern Pacific Ocean. That has caused cooler-than-normal conditions and heavy rain in banana-growing regions in Central and South America, which account for around 85% of the world’s banana exports.
Banana volumes to the U.S. market were lower than normal in the first quarter, which caused wholesale prices to increase, said a spokesman for Dole Food Co., which sells more than five billion pounds of the fruit globally each year. The spokesman added that volumes are starting to improve.
Frederic Verborg, manager of innovation at Chiquita Brands International Inc., one of the world’s largest banana exporters, said that tropical temperatures have normalized and that supply and demand should be back in balance soon.