Banana price war in UK supermarkets is hurting farmers, growers warn

The huge popularity of bananas makes them a weapon in UK supermarket price wars, but the tactic is hurting farmers amid soaring production costs, growers have said.

The major supermarket chains are ignoring the impact of higher raw material and freight costs because they want to offer the “cheapest bananas on the market”, according to a joint statement from Latin American producers and exporter associations.

The criticism comes as price negotiations take place over the bananas that will be sold in shops next year. The statement, issued by Clúster Bananero del Ecuador – the region’s biggest grower – singles out Aldi. As one of the world’s biggest banana contracts, the price struck by the German retailer is a key barometer.

“These negotiations are taking place in a global context of spiralling inflationary prices that affect production costs but are not reflected in the purchase price,” the group said. “All the supplies needed to ensure that bananas reach the shelves of European and North American consumers have become more expensive.

“However, the supermarkets, led by the German supermarket Aldi, are unwilling to compensate for this increase in costs, something that seriously harms banana producers and exporters who are forced to bear the full cost increase.

“With the excuse of offering the cheapest bananas on the market, the German giant is setting the price by which the rest of the supermarkets will be guided and none of them will be willing to pay more.”

In common with other parts of the global food supply chain, banana growers are grappling with much higher costs after the price of inputs such as fertiliser, cardboard and plastic increased by between 30% and 45%. Freight costs are up 60%.

The industry group said that by contrast the price paid for the fruit had not risen for more than two decades, with retailers taking advantage of a sector comprising small- and medium-sized producers that do not have a strong negotiating hand.

When it comes to UK fruit sales, bananas are second only to apples in popularity, with shoppers spending nearly £600m on them last year. At the moment Aldi is selling a five-pack of bananas for 69p, and the same deal is available at the market leader Tesco thanks to its “Aldi price match” scheme. Both stores charge 13p for a single banana.

This month Fairtrade announced an 8% average increase in its minimum prices in an attempt to help farmers cope with the tough market conditions, which are expected to continue.

Despite the rising export costs of bananas it said import prices had gone the other way, falling to a 10-year low of less than €10 (£8.45) a box. Tesco has committed to make up the shortfall where workers on plantations supplying its UK stores are not earning the living wage.

Aldi said it was a member of the World Banana Forum and part of a working group looking at the cost of sustainable production. “We are working hard towards ensuring everyone in our supply chain is paid a fair price, as well as supporting suppliers that engage and invest in sustainable supply chains,” a spokesperson said.

Source: The Guardian