Impact of War on Banana Market, America's Most Consumed Fruit

The New York Times reported that the consequences of the war against Iran, from rising fuel and fertilizer prices to transport costs, supply chains and banana prices, have put pressure on the fruit that is widely consumed in America and reaches its stores from Central American farms.

The New York Times reported that the consequences of the war against Iran, from the increase in fuel and fertilizer prices to transportation costs, have put pressure on the supply chain and the price of bananas in the United States; A widely consumed fruit that reaches the stores of this country from the farms of Central America.

The New York Times newspaper has explained how the economic consequences of the war against Iran have spread to one of the most common food items in the basket of American households.

The increase in the price of fuel, fertilizer and transportation of goods has caused various parts of the banana supply chain to face increased costs. This industry has a limited possibility to increase the final price due to the small profit, despite the product being transported over long distances.

The war against Iran has increased the costs of producing and bringing bananas to the market in several stages. According to the report, the price of diesel for Del Monte's refrigerated trucks in the United States has increased by nearly 70% since the start of the war and at one point exceeded $6 per gallon. The cost of fuel for ships and irrigation systems for farms in Central and South America has also increased.

In addition, more expensive chemical fertilizers, packaging items and materials used to deal with plant diseases

The New York Times writes that the movement of ships in the Persian Gulf and the Strait of Hormuz is still far less than it was before the war. Before the war, about a third of the world's chemical fertilizers and a quarter of the oil transported by sea passed through this strait.

Although the transfer of oil from the Middle East has increased compared to some previous periods of the war, the global price of oil has risen above 100 dollars a barrel many times in the last seven months. The higher cost of energy has also been transferred to industries that, at first glance, are not directly linked to war; including food production and distribution sectors.

The process of transporting bananas to America shows how dependent this industry is on fuel and refrigerated transportation. Some of Del Monte's imported bananas are grown in farms in Guatemala. The product then travels over 250 miles in refrigerated trucks to a port on the Caribbean coast and is shipped to the Port of Gloucester City, New Jersey.

Bananas should be kept in good condition throughout this route. After reaching the destination, this fruit is gradually ripened in special centers. Therefore, the increase in the price of fuel and transportation increases the costs of several parts of this route.

Although banana is the most consumed fruit in America

According to this report, the average price of a pound of bananas in the United States was around 65 cents in August and has not changed significantly in the last ten years. Also, Del Monte's profit margin from the sale of bananas in the second quarter of this year is only 2.3%.

Rising agricultural costs may force some producers to use less fertilizer and pesticides; An action that can reduce the amount of next year's crop. A number of Central American farmers have also stopped cultivating bananas and have turned to the production of products such as pineapples due to the heavier costs.

Miguel Angel Morales, a banana grower in northern Peru, said his costs have risen 25 to 30 percent this year, but annual contracts prevent him from easily raising sales prices. According to Morales, the production of his region has decreased from 12 containers of bananas to one container since five years ago; However, plant diseases have also had an effect in this process.

Even before the war, the banana industry was facing difficulties such as climate change, trade tariffs, lack of truck drivers and the spread of plant diseases. Panama disease, which is caused by a fungus, almost drove Gros Michel off the market in the past, prompting growers to cultivate Cavendish; The species from which almost all the bananas consumed in the United States come from.

Now another strain of the disease is threatening Cavendish farms in parts of Asia and South America, and may leave infected land out of cultivation for decades. The increase in costs caused by war also limits the financial resources available to companies and farmers to deal with these threats.

The New York Times report shows that the economic effects of the war against Iran are not limited to the oil and energy market and have also put pressure on the supply chain of one of America's cheap and widely consumed fruits. Increasing the cost of fuel, fertilizer and transportation in an industry with little profit can reduce the income of farmers and make it more difficult to provide the necessary resources to deal with plant diseases.

While the eyes of the markets are fixed on $100 oil, a quiet but deeper crisis is taking shape; A crisis in the chemical fertilizer market that can lead to an increase in global food prices in the coming months.

According to Amazon, following the increase in global oil prices due to tensions with Iran, it has announced that it will apply a new fee called "Fuel and Logistics Fee" to third-party sellers; An action that can ultimately lead to an increase in prices for consumers.

Trump is lost in reality and by giving many points to Russia in the Ukraine war, in order to consume America for a few days, he took diesel from Putin; But every day he confidently repeats that the Strait of Hormuz is open, and he keeps saying this until it becomes the dominant and main narrative about Hormuz.