Commodity Corner

South Africa’s banana imports have increased exponentially since the early 2000s as local producers struggle to compete against countries with lower production costs.

The main production region for bananas in South Africa is around Komatipoort in Mpumalanga, where 42% of the country’s banana crops are grown.

Other important production areas are Kiepersol, also in Mpumalanga, which produces 19% of the total national crop, and KwaZulu-Natal’s north and south coastal regions, which produce 5% and 22% respectively.

Farms around Tzaneen and Levubu in Limpopo are responsible for 12% of the national production.

Growing imports

Since 2000, banana imports have increased immensely ( see table) and local producers have been under pressure to compete with countries such as Mozambique due to droughts and high electricity and labour costs.

Some South African producers have responded to this challenge through geographical diversification, either expanding their businesses or relocating to Mozambique, where production costs are lower.

There has also been a trend among banana producers in Mpumalanga to reduce their banana production in favour of macadamia nuts, because of the high demand and prices achieved for these nuts in recent years. Due to higher demand for bananas, prices increased by an average of 30,98% between 2015 and 2017, when the average price at the five biggest fresh produce markets in South Africa was R4,97/kg.

The average price for the first two quarters of 2018 was R6,61/kg, a 9% drop compared with 2017 prices. The decline in price is due to larger volumes traded at the produce markets.

Alternative markets in the informal sector can be a good buffer during times of high supply at municipal markets

Reducing Costs

The effects of the recent drought have since subsided in South Africa’s growing regions and many have received good rain, which might stimulate local production.

This said, it’s become crucial for local producers to minimise costs where possible in order to remain competitive. Even though demand remains relatively high, operating costs are hitting producers quite hard.

Planning for the future

The industry has advised farmers to focus on crop management as well as increasing fruit quality to ensure producers can earn a premium for their fruit at the markets.

Planting dates should be carefully selected to ensure harvesting processes coincide with low-supply, higher-price periods.

One of the most expensive input costs in the industry is packaging. Experts suggest producers research alternative carton manufacturers or designs, such as reusable plastic crates, to bring costs down.

Higher transportation costs can be managed by finding closer markets and by shopping around for the most cost-effective transport partner.

Finding alternative markets in the informal sector can be a good buffer during times of high supply at municipal markets.

by Conce MorabaConce Moraba is an agricultural economist at Absa AgriBusiness. Email her at conce.moraba@absa. co.za, or email senior agricultural economist, Wessel Lemmer, at wessel.lemmer@absa.co.za.

Steve Hopson ABOVE:South Africa has become increasingly reliant on imports to supply local demand as farmers struggle to compete with some of the main banana-exporting countries.