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Storm damage could lead to banana shortage, says Chiquita

By Lorraine Heller , 02-Dec-2005

Banana producer Chiquita has said that it expects fruit shortages in the US after large areas of its banana farms were destroyed last month by Tropical Storm Gamma.

The storm, which hit the coast of Central America in November resulted in 1,600 hectares of the company's banana farms in Honduras and more than 500 hectares of banana farms of independent growers being severely flooded due to heavy rains.

 

Chiquita, one of the largest banana producers in the world and a major supplier of bananas and other fruit in Europe and North America, said it is still assessing the full extent of the damage but estimated that the affected areas will be out of production for a minimum of several months.

 

The most heavily affected areas could be out of production for over a year, said the company.

 

"The loss of our Honduran production, combined with the ongoing impact of Hurricane Stan on purchased fruit volumes in Guatemala and other weather problems this season, has created product shortages in North America through the first quarter 2006," said Bob Kistinger, president and chief operating officer of Chiquita Fresh.

 

"We are working hard to identify alternative sources in Latin America to meet our North American customer volume and service requirements. However, we believe some service disruptions will be inevitable."

 

As a result of the flood damage, the company expects to incur a charge of $13- $18 million in its fourth quarter.

 

Chiquita has not yet determined whether it will replant the damaged farms.

 

The company's business was also recently hit by disruptions in supply after Mississippi's Gulfport was heavily damaged by Hurricane Katrina on 29 August.

 

The port, the third busiest container port on the Gulf of Mexico, is the second largest importer of green fruit in the United States and moves over 2.3 million tons of cargo annually.

 

In the immediate aftermath of the hurricane, Chiquita had been forced to shift its port operations from Gulfport to Florida.

 

"The city of Gulfport sustained tremendous wind and water damage, and many port facilities, including ours, have been severely affected," Kistinger had announced.

 

Yet despite the effect of the recent hurricanes, the fruit giant last month reported a modest improved net income for its third quarter.

 

Net sales were $954 million, up 44 per cent from $662 million in the third quarter 2004. Operating income was $20 million, compared to $10 million in the year-ago period, primarily due to the acquisition of Fresh Express.

 

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