New York Times: War on Iran Bruises America's Favorite Fruit

The US war on Iran has affected the global economy in various ways, sharply raising oil prices, chemical fertilizer prices, and those of other products. It has specifically hit America's most popular fruit.

According to Ambassador Arjan, the banana trade has been an example of logistical masterpieces since the distant past, but less attention has been paid to its challenges. In this industry, a sensitive and vulnerable fruit must be transported thousands of kilometers from tropical regions to finally be sold at a price of less than 25 cents per piece. Now, with the increase in the cost of fuel and other materials needed by banana producers following the Iran war, the management of this business has become more complicated than in the past.

These conditions have put more financial pressure on banana producers; Producers who operate with small profit margins and do not have much power to increase prices. The threat of diseases, climate changes, customs tariffs and this year's "El Nino" phenomenon, which is exceptionally intense, have doubled the problems of this industry.

Banana is perhaps the most unpretentious fruit in America; An inexpensive product that is a staple of smoothies and school cafeterias. This fruit is considered the most consumed in America and every American eats about 80 bananas on average every year.

However, bananas are not very profitable for grocery stores or the companies that produce them. Instead, stores sell the fruit cheaply to entice more customers to buy it. The average price of bananas in America in August was about 65 cents per pound (about 453 grams); A price that has not changed much over the last decade despite the increase in costs.

"Everything is getting more expensive," says Danny Dumas, DelMonte's senior vice president of North America. "It's a crisis if you ask me." Despite this situation, the Del Monte company, like other large banana producers, including Chiquita, Dole and Fifes, imports a huge amount of this fruit to the United States.

The increase in transportation costs caused by the Iran war

To better understand the impact of the war, The New York Times followed the path of a container of bananas from a ship to a grocery store in Pennsylvania; A path of about 2,500 miles from the banana farm to the store shelf.

Although many farmers and food vendors have faced increased costs in the wake of the war, the banana industry has been hit harder; Because this fruit must travel long distances and be carefully kept at a low temperature all the way.

The price of diesel, which is essential to power the refrigerated trucks of Del Monte Foods, has risen about 70 percent in the U.S. since the war began seven months ago, topping $6 a gallon. Also, the price of heavy fuel used by ships and fuel needed by farmers' irrigation systems in Central and South America has also jumped sharply.

The chemical fertilizer needed for banana farms has also become more expensive. Because a large part of it is produced from natural gas that comes from the Middle East. The increase in transportation costs has also spread to other products such as cardboard and plastic packaging and chemicals that farmers spray on bananas to prevent them from getting infected with pests.

Although the administration of Donald Trump (President of the United States of America) has repeatedly claimed the end of the war with Iran, these ceasefires have not been stable so far. The passage of ships through the Persian Gulf and the Strait of Hormuz, a route that used to transport about one-third of the world's chemical fertilizers and one-fourth of marine oil, is still much lower than the pre-war level.

Although (according to Washington) the volume of oil exported from the Middle East has increased more than in the past, the global price of oil has repeatedly exceeded $100 per barrel in the past seven months. According to Mohammad Abbas, president of Delmonte, "everything depends on energy throughout the supply chain."

According to the New York Times, the concern of companies active in the banana cultivation industry is that the increase in the price of inputs will force farmers to reduce the use of fertilizers and chemicals to deal with pests; An action that can reduce next year's crop. Some Central American farmers have already abandoned banana cultivation and switched to pineapple cultivation.

Rising costs may also reduce the industry's ability to invest in disease-resistant cultivars. The banana that Americans know, a genetically homogenous species called Cavendish, is at risk from fungi and viruses that are spreading in South America.

Companies are frantically exploring alternative genetic options in order to have a way to continue production if the global supply of bananas collapses; An endeavor that requires significant investment.

A small banana grower in northern Peru says the Panama fungus has wiped out a third of the valleys where bananas were grown in his region, forcing him and other farmers to move their farms to other areas. Five years ago, the region produced 12 containers of bananas, but now farmers barely fill a single container.

The pressures caused by the Iran war have also aggravated the problems of banana producers. According to this producer, "costs have increased by 25 to 30 percent this year, and banks and the government are not supporting producers very much." However, he says that he has not yet increased the price of his bananas; Because the annual contracts have predetermined the sales price. But according to him, "ultimately, consumers in richer areas will have to pay more for bananas."