The Economics of Bananas

The Economics of Bananas
Have you ever wondered why bananas are so cheap? Well, the answer might surprise you.
Bananas are a carbohydrate and nutritionally dense which makes it an ideal staple food in much of the world. There is a lot of demand for bananas for these reasons.
The banana plant is an herbaceous perennial plant meaning it does not form a woody growth and they live multiple years and can even regrow from subsoil.
High Yield: A single banana plant can produce a large number of fruits. Banana plants grow relatively fast and yield a lot of fruit per acre.
Efficient Cultivation & Economies of Scale: The banana plant is also quite hardy and does not require a lot of maintenance compared to other crops. A banana plantation is also relatively easy to maintain and operate despite requiring some manual labor. However, labor is quite cheap in the areas where bananas are grown. Banana plantations are very large and leverage economies of scale whereby size also allows the bananas to be produced more cheaply. There are also well-established global distribution networks that allow the fruit to be efficiently transported from plantations in the tropics to consumer markets.
Large corporations have set a goal of making bananas the cheapest fruit on the market. Costs are minimized in every part of the supply chain. The banana species that are chosen to be grown are the ones that grow the fastest and do the best being transported long distance.
Climate and Geography: Bananas are grown in tropical regions. These geographies often have low labor costs and the conditions to grow bananas year-round.
High Demand & Short Shelf Life: Bananas are popular across the world which means there is a ton of demand for the fruit. Given the size of the demand, large scale production on plantations can occur to create supply. When you leverage scale, your operation becomes more efficient.
Bananas are picked before they are ripe. At this stage, the banana is pretty hard, and therefore easier to transport without going bad or bruising. At the point of being picked, the banana will begun to ripen. Ripening can be hastened using ethylene gas during either transportation or at the destination.
Conclusion:
Bananas are really a marvel of international logistics and economies of scale. It is only through efficient agriculture can we hope to continue to produce enough calories to feed the world affordably. Bananas are an excellent case study to consider how products can be brought to international markets quickly, cheaply and efficiently.
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