PREPARED BY:IQRA JUNEJO

PRESENTATION TOPICS:

DEMAND & SUPPLY OF BANANA PRICE MECHANISM EXPORT MARKETING CURRENT AND EMERGING HIGH END

MARKETS FOR PAKISTANI BANANA UNDER COMPETITIVE MARKETING SCENARIO 

Banana is the 4th largest crop of the world. Banana is staple food for more than 70 million people

in sub sharan africa. Banana is extensively grown in the lower part of

Sindh(pakistan). The total share of Sindh is 87% in total area of

cultivation. The total share of sindh is 89 % in total production.

INTRODUCTION:

The area under banana cultivation at the time of independence was only 117 hectares and the production reported was 368 M tons.

According to “Pakistan Statistical Year Book 2011”,out of 34,800 hectares 32,200 hectares were grown in sindh province.

Sindh produced 127.4 thousands tones of banana. The average yield per hectare was 3957 kg in sindh . Average cost of production in sindh is RS 80,000 to

RS 150,000 per acre. Our domestic consumption/capita/year is 0.9 kg

whereas maximum in Philippines 34 kg.

DEMAND & SUPPLY OF BANANA:

There is very close relationship between price, demand and supply, the supply declines if the prices are increased.

There is very close relationship between price, demand and supply, the supply declines if the prices are increased.

In may 2012 banana supply at local markets was declined by 30 %, and prices were increased by 30 %

In 2010 banana crop was damaged by mega flood in kacha areas which result in the short of supply of banana in 2011, 2012

AN OVERVIEW:

Virus also damages our crop due to improper agronomic activities and since the input cost of the crop has increased, growers switched to other crops, thus, increasing the gap between the demand and supply.

Pakistan used to be self-sufficient in banana production and almost 90 percent of its demand was met from Sindh alone.

Now bananas are being imported from India. Indian bananas were initially imported for markets in

the most populous province of Punjab and are now being supplied to the southern province of Sindh, which produces most of the country's banana crop in order to fulfill the local demand.

In Pakistan wholesalers buy and the sell the fruit with help of commission agents who bring the seller and buy together.

Wholesaler deals in the inter-regional markets and supply produce to processing industries, exporters, retails according to their demand.

GENERAL DISSCUSION ON DEMAND & SUPPLY:

INCOME OF THE CONSUMER:A consumer’s demand is influenced by the size of his

income. With increase in the level of income, there is increase in the demand , A rise in income causes a rise in consumption. As a result, a consumer buys more

FACTORS INFLUENCING DEMAND:

PRICE OF THE COMMODITY:Price is a very important factor, which influences demand

for the commodity. Generally, demand for the commodity expands when its price falls, in the same way if the price increases, demand for the commodity contracts.

PRICE EXPECTATIONS:Expectations of people regarding the future prices of

goods also influence their demand. If people anticipate a rise in the prices of goods in future due to some reasons, the demand for goods will rise to avoid more prices in future. Contrarily, if the people expect a fall in price, the demand for the commodity will fall.

SEASON BASED DEMAND:Demand of some commodities like banana increases in

summers than winter ,people like to have banana for juices and shakes because of hot weather.

THE PRICE OF FACTORS OF PRODUCTION:With the rise in the price of factors of production the cost

of production rises. This result in decrease of supply and vice versa.

FACTORS INFLUENCING SUPPLY:

CHANGE IN TECHNOLOGY:A change in technique of production may lead to a

change in supply if the technique of production improves, cost of production will fall. Even at the same prices, producers will like to supply more and vice versa.

THE PRICE OF THE COMMODITY:The supply of a commodity very much depends on its

price. There is direct and positive relationship between the price of the commodity and its supply.

NATURAL FACTORS:Natural calamities like flood, drought and cyclone reduce

the supply of a commodity. If natural disasters are absent, production and supply of a good will increase.

MEANS OF TRANSPORT:Goods transport and communication facilitates free and

quick mobility of factors of production to the producing centers and the final products to the market. Presence of good means of transport and communication thus increases the supply of a good.

LOCAL MARKETING/SUPPLY CHANNELS:

PRODUCER FRUIT VENDOR CONSUMER

PRODUCER WHOLESALER RETAILER

CONSUMER

DISTANCE MARKETING CHANNEL -1

PRODUCER VILLAGE MERCHANT RETAILER

CONSUMER

MARKETING CHANNEL -2

PRODUCER PRE HARVEST RETAILER

CONTRACTOR

CONSUMER

CONTRACT MARKETING CHANNEL-1

PRODUCER PRE HARVEST COMMISION AGENT

CONTRACTOR

RETAILER

CONSUMER

CONTRACT MARKETING CHANNEL-2

PRODUCER COMMISION AGENT/ PRIMARY

TRADER WHOLESALER

SECONDARY

WHOLESALER

SECONDARY

WHOLESALER

CONSUMER

HIGH DISTANCE MARKETING CHANNEL:

PRODUCER PROCUREMENT AGENCIES STORAGE/

RIPENING

RETAIL OUTLETS

CONSUMER

MODERN MARKETING CHANNEL:

Like India in Pakistan there is no proper mechanism for transportation of this important fruit, bananas are transported without proper coverage.

BANANA TRANSPORTATION:

Depended on cost of production and transportation from farm to wholesales and retail markets.

Depended on sorting on basis of good physical appearance.

Depended on Pre and Post harvest losses. No proper mechanism exits( in Pakistan) Also depended on will of contractor & commission

agent.

PRICE MECHANISM :

In Pakistan sorting of bunches/ fingers is not done by grower or producer. Only at retail level, fruit is sorted according to physical appearance.

According to government estimates, around 30–35 percent of all horticulture produce is wasted due to poor post-harvest handling.

Less than 1% banana farming is done by owner, rest is depended on contractor or commission agent.

IMPORTANT TO NOTE:

There are several factors which influence the efficiency of fruit marketing and price mechanisms ,which are

Rotting of products. Seasonal viability . Quality of produce. Transportation price. Location of farm and market. Pre and Post harvest losses. Role of contractor or middle man.

FACTORS INFLUENCING PRICE MECHNISMS:

Approximately Rs 800 to Rs 900 for Kabul. Approximately Rs 650 to Rs 750 for Lahore. Trader buy for Lahore on Rs 400 to Rs 500. Approximately Rs 700 per 35-36 dozens ( small size

an d poor quality bunches) Approximately Rs 1300 t0 1400 per 35-36

dozens(slightly large size & improved quality bunches)

PRICES OF BANANA / 40 KG IN PAKISTAN:

We have observed that the prices of banana at wholesales market remain in between RS 20 or RS 25 to RS 60 per dozen depending on the quality of produce.

Earlier banana was sold for Rs20 to Rs30 per dozen, but now it is being sold for Rs40 to Rs50 per dozen.

While banana that was being sold for Rs50 to Rs60 is now being sold at Rs70 to Rs80 per dozen in the retail market in some markets of Karachi like defense, clifton, steel town.

EXPORT MARKETING:

Global import of banana was total 14.8 million tonnes in 2010, 4% less lower than exported volume due to losses during transportation.

Import of banana into developing countries and transitional countries will rise at higher rate than developed countries.

Developing & transitional countries represented nearly 50% of the world import of banana in 2010, it was 25 % in 2009.

AN OVERVIEW

Banana import of developed countries is forecasted to rise by 1% - 2% in the coming years. 80% of the increase will be represented by Canada and the US. However, the EU will remain to be the major banana importer (USDA, 2007).

A UN study had recently concluded that no more than seventeen cents of each dollar spent by North Americans on bananas went to producing countries. 

World imports of banana fell by 7% in 2009. Although China and Japan respectively increased imports by 36% and 15%, these were not enough to offset the decline in traditional import markets of the United States and the EU.

This decline was an effect of a significant drop in consumption due to the economic slowdown and the higher prices of goods. Import returns in the EU increased in 2010, possibly as a result of the reduction in import tariffs and the natural recovery in consumption trends.

Total world banana exports marginally declined to 14.7 million tonnes in 2009 compared to 2008, due to a lesser available supply from Asia and Africa. 

Exports from Ecuador are predicted to further increase in the upcoming years.

Costa Rican exports recovered by 14% in 2010 after falling by 17% in 2009 due to bad weather.

Export volumes from Colombia and Guatemala also decreased by 14% and 24%, respectively because average export prices fell by about 12%.

World production of bananas was estimated at more than 102.1 million tonnes in 2010, about 6% more than 2009. 

Asia accounted for nearly 61% of world production. Next were the Americas with 27%, Africa with 10%, Oceania with 1.7%, and Europe with 0.4%.

WORLD PRODUCTION STATISTICS:

TOP TEN COUNTRIES OF WORLD IN PRODUCTION AND THEIR SHARE IN % IN WORLD PRODUCTION OF BANANA:

RANK # COUNTRY NAMAE PRODUCTION IN MT SHARE IN %

1 INDIA 11,000,000 19.9

2 BRAZIL 6,339,350 11.5

3 ECUADOR 5,000,000 9.1

4 CHINA 4,812,530 8.7

5 PHILIPPINES 3,560,800 6.4

6 INDONESIA 3,165,730 5.7

7 COSTA RICA 2,101,450 3.8

8 MAXICO 1,802,280 3.3

9 THAILAND 1,720,000 3.1

10 COLOMBIA 1,57O,000 2.8

INTERNATIONAL MARKET STATUS OF BANANA:

FAO STATISTIC 2011-2012

BANANA WORLD IMPORT AND EXPORT STATISTIC:

BANANA- WORLD IMPORT PRICES:

BANANA WHOLESALES PRICES:

BANANA RESALES PRICES:

BANANA EXPORTS (WORLD STATISTIC):

BANANA EXPORTS BY REGION:

BANANA EXPORTS-MAJOR COUNTRIES:

RANLK #

COUNTRY NAME SHARE IN EXPORT IN %

1 EUCADOR 30.5

2 COSTA RICA 18

3 COLOMBIA 17.9

4 PHILIPPHINES 7.7

5 PANAMA 5.9

6 ITALY 5.3

7 UNITED STATES 5.1

8 FRANCE 4.8

9 GUTATEMALA 4.1

SHARE OF COUNTRIES IN WORLD EXPORT OF BANANA IN % :

RANK # COUNTRY NAME AMOUN T IN $ MILLION

1 EUCADOR 954.00

2 COSTA RICA 564.00

3 COLOMBIA 560.00

4 PHILIPPHINES 241.00

5 PANAMA 184.00

6 ITALY 165.00

7 UNITED STATES 161.00

8 FRANCE 151.00

9 GUATEMALA 147.00

VALUE OF BANANA EXPORTED IN US $ (MILLIONS) STATISTIC:

Total amount= $ 3,127.00 million Weighted Average = $ 347.44 million

BANANA IMPORTS (WORLD STATISTIC):

BANANA IMPORTS BY REGION:

BANANA IMPORTS MAJOR COUNTRIES:

RANK # COUNTRY NAME SHARE IN IMPORT IN %

1 UNITED STATES 33.4

2 GERMANY 16.6

3 JAPAN 13.2

4 UNITED KINGDOM 12.8

5 ITALY 8.3

6 FRANCE 4.8

7 SWEDON 3.7

8 RUSSIA 3.6

9 CANADA 3.6

SHARE OF COUNTRIES IN WORLD IMPORTS OF BANANA IN %:

RANK # COUNTRY NAME AMOUNT IN $ MILLIOM

1 UNITED SATES 1,389.00

2 GERMANY 689.00

3 JAPAN 548.00

4 UNITED KINGDOM 534.00

5 ITALY 346.00

6 FRANCE 201.00

7 SWEDON 152.00

8 RUSSIA 151.00

9 CANADA 149.00

VALUE OF BANANA IMPORTED IN US $ (MILLIONS) STATISTIC:

Total Amount= $ 4,159.00 million Weighted Average = $ 462.11 million

COOL CHAIN OF BANANA

FOR EXPORT MARKETING OF BANANA:

COOL CHAIN OF BANANA

Cold store at the farm. Refrigerated truck from farm to the airport Cold store at the airport. Building up of the pallet in a cold store at the airport.

THE VARIOUS STEPS OF THE COOL CHAIN OF BANANA FOR EXPORT ARE:

Loading the aircrafts directly from the cold store in a short time.

Cargo aircraft maintains cold store temperature in hold.

Off loading direct into a cold store in the receiving country.

Refrigerated truck to the customers.

ROLE OF NATIONAL & INTERNATIONAL EXPORT &

IMPORT STANDARDS:IN EXPORT MARKETING

Banana grow naturally . Quality of banana is influenced by cultivation,

harvest, storage , handling and transport condition. Trading volume & price is influenced by quality. Producer & Traders grade banana to best serve the

market. Standards serve as trading language.

WHY MARKETING STANDARDS FOR BANANA?

Technical definition of quality parameters. Labeling as a reference ( address, country of origin,

adress). Increased reliability, creditability, profitability. Contract without personal inspection by the buyer. Transparency in the market.

POSITIVE EFFECTS OF STANDARDS:

Valid only for one country. Exporters have to meet the national standards of the

different importing countries. Importing countries should accept multiple export

standards. Trade is complicated and paved with conflicting

regulations. Barriers to trade established in national law.

NEGATIVE EFFECTS OF NATIONAL STANDARDS:

Developed & Agreed by importing & exporting countries.

Technical barriers to trade avoided. Market transparency increased. Competition based on uniform minimum standards.

POSITIVE EFFECTS OF INTERNATIONAL STANDARDS:

CURRENT AND EMERGING HIGH END MARKETS FOR PAKISTANI BANANA UNDER COMPETITIVE MARKETING

SCENARIO 

Most of the banana export takes place without information to Iran and Afghanistan.

There is hardly any data available on the export figures for this fruit. However, it is assumed that around 20 percent (around 25,000 metric tons) of Sindh’s produce crosses borders into Iran and Afghanistan through Balochistan and Khyber-Pakhtunkhwa.

EXPORT FROM PAKISTAN:

Most of the export is takes place by land routes via trucks.

Poor crop management Poor variety selection Post harvest handling of banana Improper price mechanism. Transportation Role of contractor or commission agent. Quality of final products. Absence of cold storages

EXPORT HURDLES FROM PAKISTAN:

According to a FAO report, Iran alone imported 243,000 metric tons of bananas in 2004/05, whereas in 2006 the total import of bananas into Iran grew to 294,000 metric tons.

Saudi Arabia and the UAE imported another 111,000 and 70,000 metric tons of bananas, respectively in 2004/05.

EMERGING MARKETS FOR PAKISTANI BANANA:

The Middle East and the Central Asian Republics are big markets that are in close geographic proximity to Pakistan / Sindh and are easy to penetrate.

Although Middle Eastern markets absorb fruit from the major exporters such as the Philippines, Ecuador and Costa Rica, they are also supplied by other countries as well on a lesser scale, such as Yemen, Pakistan and India.

In the Middle East, banana imports were projected to rise by some 50 percent to exceed 900 000 tonnes in 2010, mainly due to demographic growth and price decrease.

India exports bananas mainly to Middle East countries viz. U.A.E., Saudi Arabia, Oman, Bahrain, Qatar. The varieties which are in demand internationally include Grand Naine and Cavendish.

These two varieties are being grown in Pakistan , Pakistan has chance to export banana to these countries if work is done with serious attention of government and proper pre & post harvest management .

According to data compiled by Corbana, annual banana imports in the Middle East grew by around 16 per cent between 2001 and 2008, rising from 257,000 tonnes in 2001 to 737,000 tonnes in 2007. 

There is clear potential to increase the current volume of bananas imported by the Middle East,” Jorge Sauma, CEO of Costa Rica’s national banana corporation (Corbana) told Fruitnet.com, Costa Rica is trying to target middle east countries for banana export.

The Philippines is eyeing China, Malaysia and Middle Eastern countries such as Saudi Arabia, Bahrain and Qatar as new market for its banana exports.

The Philippines already has about 87 percent of the Chinese market but there is still room for further growth because China’s market is so vast.

In the Middle East, there is even more room for growth, particularly in Bahrain where the Philippines only has a seven percent market share, and in Qatar with a minimal three percent share. Even in Saudi Arabia.

The Philippines’ biggest export market in the Middle East is still Iran, with a market share of 80 percent. Philippine banana exports to Iran amounts to around 50 million boxes. Each box contains around 13.5 kilos of bananas.

RECOMMENDATIONS:

Proper sucker selection. Timely plantation & harvesting. Proper nutrition management of banana orchids. Proper & timely irrigation. Proper disease & pest management. Establishment of cold storages. Reduced role of pre harvest contractor. Proper post harvest management. Reduced gap between demand & supply.

LETS SUM UP:

Production, trade, and consumption of bananas will largely be affected by the environment, trade policies, food safety, and health concerns. However, the expansion of production and trade growth does not necessarily assure improved benefits for banana growers in developing countries.

Though, not only local but huge international markets exist for bananas that are easily accessible through sea and land routes, Pakistan has so far failed to successfully exploit the full potential of these markets, Due to poor variety selection, crop management and post-harvest fruit handling.

According to government estimates, around 30–35 percent of all horticulture produce is wasted due to poor post-harvest handling. These losses could be avoided by streamlining the supply chain.

Sindh possesses all the ingredients such as right soil and climatic conditions; cheap labor; effective irrigation system; sea port and efficient road and rail networks that are required to produce and export world class bananas, but unfortunately still we are unable to full fill our local demand of this fruit because of high prices.

http://www.nationmaster.com/graph/agr_ban_imp-agriculture-banana-imports http://www.nationmaster.com/graph/agr_ban_exp-agriculture-banana-exports http://www.preservearticles.com/201103104451/demand-for-a-commodity.html

http://www.preservearticles.com/201103104455/factors-influencing-supply-of-a-commodity.html 

http://www.thenews.com.pk/Todays-News-3-129826-Fruit-prices-decline-as-demand-lowers http://www.agricorner.com/a-technical-guide-book-of-banana/ http://r0.unctad.org/infocomm/anglais/banana/chain.htm ww.fao.org/economic/est/est-commodities/bananas/en/ http://nhb.gov.in/model-project-reports/Horticulture%20Crops%5Cbanana%5CBanana1.htm http://www.fao.org/docrep/006/y5143e/y5143e10.htm http://www.itfnet.org/v1/2012/04/world-current-market-situation-and-outlook-bananas-and-tropical-fruits/

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