Banana Link has warned that the UK retail chain practice of sustained low pricing of bananas may be spreading to other European markets. A number of UK retailers are currently selling bananas at a loss, despite growing awareness among retail buyers that selling loose bananas at £0.68/kg is unsustainable and “is destroying banana value for producers and workers worldwide”.

According to Banana Link, “none of them [i.e. the retailer buyers] has managed to convince the commercial leadership of their companies to break out of the poverty-perpetuating logic of ‘everyday low prices’”. The trend in pricing policy in the UK has in part been driven by increased direct sourcing of bananas by three out of the top four UK retail chains. Direct sourcing accounts for 40% of the UK banana market (in contrast, fair-trade bananas account for 30% of the market).

The UK market accounts for “about 7% of the world export market” for bananas. Retailer banana price wars over the past decade have left prices for 2013 for loose bananas in Tesco, Asda, Sainsbury’s and the majority of other UK supermarkets 37% below prices prevailing in 2001 (£0.68 compared to £1.08/kg). Only the Co-op has made an effort to sustain banana prices, with current Co-op banana prices 31% above those of its competitors.

UK banana pricing policies are a source of concern, given rising producer costs – researchers at the Fairtrade Foundation estimate that costs of production have doubled in the last decade. The British Retail Consortium, however, has criticised the link between in-store promotions and low banana prices as “simplistic”, maintaining that the retailers themselves, not the producers, carry the costs of these promotional activities.

Banana producers are concerned that the pricing practice of major UK retailers offering “everyday low prices” is spreading to other EU member states. In October 2013, the Netherlands' second largest retail chain, Jumbo, “announced it was moving away from the traditional continental approach to banana promotion – one- to three-week cut prices, then back to normal – and is now selling its multinational branded fruit at €0.99 (£0.85) per kilo, until further notice”. Fortunately for banana exporters, German and French retailers have to date not followed this UK trend, and prices in some French retailers are as high as £1.70/kg.

Banana Link has called for “selling below the cost of purchase” to be made illegal. According to analysis in The Guardian, such below-cost pricing is already “illegal in many EU states”. According to Alistair Smith of Banana Link, “competition law so far deals only with cartels of suppliers, not with cartels of buyers. But we’re in a new world where cartels of buyers can force down prices, whatever the sector.”

Bananas: Average retail price in selected EU markets (£/kg)

Source: Banana Link, 31 October 2013 (see below)

Overall, in the EU banana market the volume of banana imports from ACP countries rose by 5.5% from January to October 2013 compared to the corresponding period in 2012. In contrast, the volume of imports of dollar bananas was down by 3.5% from January to October 2013. The EC forecasts that EU banana production for 2013 will be down by 6.6% compared to 2012: the largest declines are forecast in Martinique (–11.8%), Portugal (–11.5%) and Cyprus (–9.5%).