Ever more volatile weather conditions and a shift to GM production may not squeeze banana production as feared, says Mintec’s Robert Miles

This has not been a particularly good year for banana supply.

The coldest northern European winter in 30 years cut European demand at the start of the year and prevented large container ships from landing in the iced-up Baltic ports. This slashed Russian and Eastern European supply and precipitated a glut of unsold bananas in the markets of western Europe, causing lower-than-normal EU wholesale banana prices at a time when suppliers would normally expect to be getting the best prices for the year.

Then bananas became the latest crop to be hit by unusually poor weather over the summer months as a result of the cooling effect of La Niña with hurricanes in the Caribbean devastating some important sources of supply.

With new reports suggesting that tropical storm Tomas is now restricting shipments from the Dominican Republic and the Windward Isles, should we be concerned about the security of our banana supply?

La Niña conditions look likely to continue at least into the first quarter of 2011, and growing banana imports in Asia and the US are putting pressure on world supply.

Global banana exports are forecast to reach a record 15 million tonnes this year, but prices could rise as better management reduces waste. Previously, large quantities of low-quality bananas were processed to banana purée, the price of which has been rising due to limited supply and increasing demand. If processors have to buy better-quality bananas to make purée, costs overall could rise.

Only about 10% to 15% of the world's banana production is destined for export, but with 2010 production levels set to hit 100 million, it doesn't look like we are running out of bananas just yet. The phenomenal doubling in production seen in the banana industry over the past two decades, however, may now be set to slow.

GM bananas could be just around the corner and might be made less susceptible to common banana pests and diseases. Fruits modified to contain increased levels of pro-vitamin A and iron were picked and tested in Australia this year but consumer acceptance, particularly in the EU, could prove an obstacle.

If parts of the world's crop were replaced by GM varieties, they would, in effect, be removed from the EU market. The EU does allow GM crops to be sold and some can even be grown, but regulations and labelling laws could ­seriously restrict their supply.

Fortunately, new sources of supply have been made available to the EU. The Geneva Agreement on Trade in Bananas, reached last December after years of dispute, was signed at the WTO in Geneva on 31 May 2010, and is set to reduce banana tariffs from about 150 per tonne to 75 per tonne over the next 10 years. This should open up the EU market to companies sourcing from producers in Latin America, which have to date been penalised by the high charges.

Given the many challenges the EU's banana supply is likely to face over the coming years, the arrival of cheaper bananas could not come at a better time.