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What Caused Banana Prices to Rise Sharply in 2017/2018

China Agriculture Report By CnAgri2018-03-09 15:01:33China Agriculture Report Print
In February, the average banana purchase price was 3.54 RMB/kg, up 3.21% month on month, up 66.2% year on year; the average banana wholesale price was 5.24 RMB/kg, up 8.71% month on month, up 33.33% year on year. This was already the price increase for the fourth month. What caused banana prices to rise sharply this year?
According BOABC, the main factors that caused the sharp price increase in this year are the following:
a. Banana cultivation area dropped sharply and the output dropped. Due to poor banana market prices in recent years, Guangdong’s banana industry declined. As the cultivation area reduced and most planters were private farmers, the scale development was low; compared with 2016, Guangxi’s purchase volume of banana sprouts dropped by about 50% from October to December of 2017; Hainan’s banana cultivation area reduced due to land competition with other high-value economic crops; the cultivation area of Yunnan’s producing areas reduced due to blight. Also, affected by the panama disease and the low market prices after the plant expanding, the output reduced.
c. The banana production and sales areas are separated and the cost of intermediate links went up sharply. The banana sales cost mainly includes labour cost, transportation cost and packaging cost. These costs all rose to a certain degree, especially packaging cost. Once  corrugated paper price rose from 2,800 RMB/MT found in April to 4,700 RMB/MT.
As imported banana prices were higher than domestic banana prices, domestic banana prices went up as well. In 2017, China’s banana import volume was 1.039 million tons, up 17.12% compared with 2016. Although the price of imported bananas dropped from 0.66 USD/kg to 0.56 USD/kg, the price still equaled to about 3.55 RMB/kg which was still higher than the domestic banana purchase price. Therefore, the domestic banana price was stimulated to go up to a certain degree. 

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