Economy goes bananas over fruit prices
Wed 19 October 2011
Keagan Ryan, Bachelor of Journalism
The escalating price of bananas has not only affected consumers personally, but also severely impacted the Australian economy.
The Australian Bureau of Statistics reported the Consumer Price Index (CPI) rise in fruit prices was largely attributed to the 138 per cent rise in banana prices over the June, 2011 quarter.
Over the March and June quarters, 2011, alone the ABS reported bananas had risen 470 per cent.
Excluding fruit and fuel, the CPI rise in the June quarter would have been 0.4 per cent instead of 0.9 per cent, highlighting the impact both fruit and fuel prices had on the Australian economy.
The Irvine Index indicated a global comparison of banana prices for the month of July 2011.
Australia held the most expensive price per kilogram at $A15, compared to New York $A1.98, London $A1.01 and Derry, Northern Ireland $A1.09.
As a result of the surging fruit prices, headline inflation increased for the June quarter.
The news of increased inflation forced the markets to react, and sent the Australian dollar surging to $US1.10, according to Exchange-rates.org.
Banana prices constantly rose since the destruction caused by Cyclone Yasi in far North Queensland earlier in 2011.
Yasi destroyed most of the banana plantations in Innisfail, Queensland in February, and as a result banana production was severely hampered, sending prices skyrocketing nationally.
Australian Banana Growers’ Council (ABGC) communications manager Jamie O’Brien said the cyclone affected areas formed 75 per cent of Australia’s banana production.
“In 2006 100 per cent of the far North Queensland region was devastated by the effects of Cyclone Larry, while in 2011 approximately 85 per cent was devastated by the effects of Cyclone Yasi,” Mr O'Brien said.
Mr O’Brien said while Cyclone Larry affected a greater area of banana crop in far North Queensland, Cyclone Yasi was much more powerful, and as a result Yasi inflicted significantly greater damage.
Cyclone Larry, which struck North Queensland in 2006, was a category four cyclone, compared to Cyclone Yasi which was a category five.
As such, the aftermath of Cyclone Larry cost roughly $A1.5 billion, while the extent of damage caused by Cyclone Yasi cost a staggering $A3.5 billion.
A Australian Banana Growers' Council (ABGC) media release in early 2011 highlighted the magnitude of the damage to the $A400 million a year industry.
The Tully and Innisfail regions had 95 per cent of their production affected, while approximately 20 per cent in the Atherton Tablelands and a further 80 per cent in Kennedy, south of Cardwell were also damaged.
Mr O’Brien said prices would start falling soon.
“Prices have already started declining, and will continue through to mid-November/late December (2011) and should stabilise from there,” Mr O'Brien said.
Mr O’Brien said it would have taken 10 months since Cyclone Yasi for the banana industry to recover by the time production eventually returned to normal.
Australian Banana Growers’ Council released a statement supporting Mr O’Brien’s claim, which said banana supplies would start returning to normal levels by late September, 2011.
Leahy Bananas, one of many banana distributors in far North Queensland, reflected the statement through its gradual increase in production.
In the month of June, 2011, Leahy’s produced a mere 10 cartons, increasing to 500 cartons in July and a further 3000 cartons in August.
As of early September, 2011, the entire far North Queensland production area averaged 90,000 cartons of bananas transported weekly.
Under normal production circumstances this figure was much higher, averaging 450,000-470,000 cartons delivered to national markets weekly.
Pardon’s Fruit Market owner and general manager Tammy Pardon said her business had been affected by the lack of production.
“Banana sales are definitely down and customers are constantly complaining about how expensive they are,” Ms Pardon said.
“The shop has definitely been affected but not substantially.
“Bananas are one of the most frequently sold items in the store.”
According to the Australian Banana Growers’ Council the price range of Lady Fingers and Cavendish bananas are starting to decrease following months of inflated prices.
The ABGC said the average price of Lady Fingers across Brisbane had declined from $A14 to $A12 since the start of August 2011.
Similarly, ABGC said Cavendish bananas had reached $A11 since peaking at $A14 in late July 2011.
A study has been completed to help combat the high price of bananas.
The ABGC revealed in their annual report on June 30, 2011 that research had been successfully completed, and that a means of limiting the number of rejected banana crop was established, increasing production output by as much as 20 per cent.
Limiting the number of rejected banana should result in a greater number of bananas produced and distributed, resulting in banana prices falling at a faster rate than anticipated.
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Submitted Comments
Interesting article. I wonder how many bananas are imported, and the impact that has on local farmers. It's quite hard to tell these days what's imported or Australian grown.
Teale