Chiquita Brands International CEO Carlos López Flores warned that banana sales across the industry will shrink in 2027, and that costs will probably climb, according to Bloomberg. He said next year could prove the toughest the sector has faced in decades.
López Flores said El Niño, along with geopolitical upheaval, is complicating banana cultivation for suppliers across Latin America. "We are forecasting a very challenging end of 2026 and a very challenging start of next year for the industry," he said, according to Bloomberg.
The Middle East conflict has driven up what Chiquita pays for packaging, fertilizer and fuel, and the company has had a hard time recouping those increases from customers, López Flores said. He described a strengthening El Niño as an added danger for Latin America, which leads the world in banana exports.
El Niño drenches Ecuador and Peru, while parching the Amazon $AMZN basin and northeastern Brazil with severe drought, according to Bloomberg. Flooding in Ecuador, the largest supplier, can worsen plant disease, ruin harvests and damage roads. Drought can also shrink the water supply in the Panama Canal, a crucial route for shipments from growing countries in the vicinity, according to Bloomberg.
Chiquita has started preliminary talks with retailers to settle supply arrangements and prices for the coming year, López Flores said. Talks have centered on "surety of supply" rather than price increases, though he said the company has raised with buyers the extra expenses working their way through the supply chain.
Most bananas are sold under long-term contracts that fix prices for future harvests, leaving suppliers with little room to pass along unforeseen farm expenses, according to Bloomberg. It is unclear whether retailers or shoppers would accept higher prices, according to Bloomberg.
Bananas in U.S. cities cost roughly 66 cents per pound on average in the previous month, according to Bloomberg, which cited government data. Prices rose 14% over the past decade, according to Bloomberg.
Chiquita operates farms of its own and additionally purchases fruit from third-party suppliers. It sources all its fruit from Latin America. "Everybody in that region who grows bananas will tell you today it is more difficult, more expensive and less predictable to grow bananas than it was a year ago," López Flores said, according to Bloomberg.
The warning comes as a powerful El Niño strengthens in the Pacific. The World Meteorological Organization expects it to peak near the end of the year, with an almost 100% chance it persists through February.
Global food prices rose in September to their highest level since November 2022, according to the United Nations’ Food and Agriculture Organization.