Banana price hikes slowing, reveals Chiquita update

By Lorraine Heller

- Last updated on GMT

Related tags: International trade, United states, Chiquita

Banana prices are showing signs of stabilizing, with the
announcement today by leading global banana supplier Chiquita that
the recent price increases in North America and Europe have slowed
and even reversed.

The announcement comes after more than a year of continuous price hikes, as the firm struggled to offset the negative impact of new European import tariffs. But Chiquita today revealed that prices in the US have remained unchanged compared to the same period last year, and prices in Europe were down by one percent. This decrease reflects the continued impact on the firm's business of the new European regulations, which resulted in an increase in bananas on the market and therefore more competition. Chiquita had previously enjoyed a European market with little competition, but in January 2006 the European Commission imposed a higher tariff on bananas imported from Latin America - Chiquita's primary source of bananas - while allowing a duty-free annual import quota of 775,000 tons for bananas from certain African, Caribbean and Pacific countries. This resulted in a surge in costs for the firm. In its interquarter update published today, Chiquita said volumes in its European markets decreased by 4 percent, which the firm said was a result of its strategy to focus on profitable volume and maintaining its premium position in these markets. In North America, pricing was flat year-over-year; base contract prices increased, but this was partially offset by lower spot-market pricing. Banana volume sold in the region rose 8 percent, reflecting distribution gains at several top-25 customers as well as the company's recovery from weather-related disruptions in the previous year. In Asia Pacific and the Middle East, pricing rose 5 percent year-on-year on a US dollar basis. This was primarily as a result of significant improvement in local pricing in Japan, but was partially offset by unfavorable dollar-yen exchange rates, said the firm. Volume in this region fell by 17 percent year-over-year, primarily related to supply constraints in the Philippines, which resulted in lower yields of premium-quality fruit.

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