Bananas are getting cheaper. That low price comes with hidden costs.
“As the grocery corridor gets more difficult, stores are desperate to keep shoppers in the store,” Vitello says. “Stores typically go for a 30- to 40-percent margin in the produce department, because they have to deal with shrink [spoilage] and overhead and all these other things. But for bananas, typically you see them more at a 10- or a 15-percent margin for stores. And, with many stores now, they’re literally practically selling them at cost.”
In the rare instance that retailers do sell bananas at eye-popping discounts, it can reverberate throughout the industry. When Amazon officially took control of Whole Foods in late August of 2017, it mounted a shock-and-awe discounting campaign, lowering the price of important household staples dramatically. One of the biggest discounts was to its Whole Trade bananas, which were lowered 38 percent to just 49 cents a pound. That move did more than get customers excited about making a trip to Whole Foods. A look at BOL data suggests that this had an industry-wide affect, lowering the average retail price by almost two cents in September of 2017, the largest month-to-month price drop in several years. The point is that, when one retailer lowers its prices on bananas, others feel pressure to do it as well.
In this context, brands like Equal Exchange have struggled to make the case to shoppers that it’s worth it to pay a little more for bananas. When it comes to goods like coffee, which we’re more likely to think of a higher-end product with a whiff of indulgence, that model has had significant success, leading to demonstrable social and environmental benefits. But the same logic doesn’t apply when it comes to bananas. It doesn’t matter if we let them rot on the countertop half the time. We’re so accustomed to their low cost that it’s come to feel like something we are owed.
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The Fairtrade International report published last year sought to determine the true cost of bananas—that is, what the fruit would cost if not artificially subsidized by damaging environmental practices and worker exploitation. The study conducted dozens of interviews with plantation managers, workers, and small producers across four key banana-producing countries: Colombia, Dominican Republic, Ecuador, and Peru.
Unsurprisingly, the study found that the true cost of banana production is not reflected in the price we pay at the grocery store. Externalized social costs were primarily related to poor wages and low job security, but the researchers also found that range of other issues related to banana production—including child labor, harassment, and occupational injuries. The study also used data from Ecoinvent and World Food LCA databases, among other sources, to determine the environmental costs of production, costs that could be offset and avoided if more money flowed back to farms. Those costs included loss of biodiversity, water pollution, and contribution to climate change. These can be offset using a range of practices, from soil tilling at the end of each cultivation cycle and reducing aerially-sprayed pesticides, to building in infrastructure for proper drainage. But all those approaches cost money.