Banana Exports Face Difficulties: Not Just Vietnam

Banana exports face difficulties

In recent days, in some areas of Ho Chi Minh City, there have been places selling "rescue" export bananas at a price of 6,000 VND/kg.

Traders said the bananas were purchased from gardens in Dong Nai – a specialized banana growing area for export. Most of the bananas sold were large and green, and consumption was quite slow. Mr. Do Ngoc Chat, Director of Viet A Agrifood Company Limited, said that at the same time last year, the price of bananas at the garden was over 10,000 VND/kg, making a huge profit, so this year the banana acreage increased sharply.

In addition to Vietnam, bananas in Laos, Cambodia, and the Philippines have also increased production and are all targeting the Chinese market. "Currently, purchasing power in China is very weak, so it cannot consume all the increased amount of bananas. In the garden, banana prices are only 1,000 - 2,000 VND/kg," said Mr. Chat.

Mr. Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said that bananas are one of the three main export items to China, accounting for about 10% of Vietnam's total fruit and vegetable export turnover to this market. Notably, at the end of 2022, Vietnam and China signed a Protocol on exporting fresh bananas to China. According to the latest data from the Vietnam Fruit and Vegetable Association, by the end of November 2023, Vietnam exported more than 270,000 USD worth of bananas, down 2.6% compared to 2022.

Need to open more export markets for bananas

In 2023, banana exports will be a big success because the Chinese market has increased imports of this product through official channels. Banana farmers have promptly met the standards for export. The export price of bananas in 2023 will reach 13-14 thousand VND/kg, many gardeners will win big, with profits of up to 300-400 million VND/ha/year.

Seeing that this product is highly profitable and the market is attractive, many farmers have massively increased their acreage. Some households rent 1-6 hectares of land to invest in growing bananas for export, because they think that bananas that have been officially exported will be stable in the long term and that China is a large market so there are many opportunities to increase the quantity.

However, recently, banana exports have encountered difficulties, since the end of December 2023 until now, the price has continuously dropped, currently only 1-2 thousand VND/kg. Banana prices have dropped sharply but many gardeners still cannot find agents to buy bananas. With the above banana prices, farmers growing tissue culture bananas have suffered heavy losses, because the investment capital is up to hundreds of millions of VND.

Explaining the reason for the recent banana glut, Mr. Nguyen said that this year, China's winter came late and was not as cold as previous years, so the country's bananas are guaranteed to be of good quality and appearance.

According to Mr. Nguyen, in previous years, winter in China came early and was cold, with temperatures below 12oC causing most bananas to bruise and become unusable. However, this year, temperatures have always been higher than 13oC, making the domestic banana supply quite abundant.

In addition, Cambodia and Vietnam have imported a lot of goods, so supply exceeds demand. Currently, banana prices in China have also decreased by 40% compared to the same period. "The situation of banana exports facing difficulties occurs in all countries such as Thailand, the Philippines, Cambodia, not just Vietnam. It is forecasted that banana consumption will be difficult in the next 1-2 months," Mr. Nguyen emphasized and said.

Avoid dependence on one market

Although bananas have been officially exported, most of them go to the Chinese market, while other markets export very little. This makes exported bananas highly dependent on the Chinese market. This will cause high risks, because if the Chinese market reduces imports, Vietnamese bananas will fall into a situation where they cannot sell their products, prices will drop sharply, and farmers will suffer heavy losses.

To escape the above situation, Mr. Dang Phuc Nguyen said that localities need to plan suitable banana growing areas and advise people not to massively increase the area. "For a long time, many farmers have been chasing after trees with high market value without carefully studying the output, so they often fall into risks," Mr. Nguyen said.

In addition, according to Mr. Nguyen, businesses and authorities need to support trade promotion to open more export markets for bananas as well as other fruits. This will reduce risks, because when this market decreases, there will be other markets to replace it. At the same time, it is necessary to attract businesses to invest in processing fresh fruits to increase the value of the products and not worry about the fruits produced not being able to be sold.

As a strong export product of the Vietnamese fruit and vegetable industry, in recent years, Vietnam's banana growing area has been increasing rapidly. Typically, in Dong Nai, in 2016 the whole province had only 7.3 thousand hectares, but by the end of 2023 it had increased to 14 thousand hectares. The banana growing area has increased rapidly, although it has been officially exported, most of it is to the Chinese market, while very little is exported to other markets. This makes exported bananas very dependent on the Chinese market.

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