Hurricane hits banana prices

Banana prices have jumped as Hurricane Mitch has caused widespread damage to crops in Central America, an important source of supply of the fruit.

Philip Halpenny at Fyffes, the Irish fruit group, said: "Our understanding is that Honduras has lost 70 per cent of banana production and Guatemala has lost 60 per cent. Most of the fruit from those countries is sold in the US, so it will not have a direct impact on the European market, though of course it is an enormous disaster for Central America."

Mr Halpenny said that Eastern Europe could bear the brunt of any supply shortfall, as US importers redirect supplies to satisfy the more profitable markets at home. Central America is the US's biggest source of bananas, accounting for $642 million worth last year, according to the US Department of Agriculture. The biggest supplier in the region is Costa Rica, which provided $301 million. Ecuador provided $287 million, Colombia $176 million and Honduras $146 million.

Growers in Honduras, gazing on plantations that lie under lakes of muddy water, have no illusions of salvage. Juan Manuel Moya, government relations manager of Standard Fruit, one of the two big producers in Honduras, said he expected "a 100 per cent loss".

Chiquita Brands, the US fruit group, said it would make a fourth-quarter write-off of about $50 million on the 7,000 hectares it owns in Honduras. With land needing to be rehabilitated, and the plants taking nine months to begin producing fruit, Honduras will be banana-free for most of 1999, leaving a $200 million hole in exports and a gap in world availability.

Dole Foods, which this week said it would take a $50 million to $70 million charge in the fourth quarter because of Hurricane Mitch, said yesterday that 40,000 acres of its plantations had been damaged.

"We expect a 12-month to 18-month interruption in supply from Honduras, Guatemala and Nicaragua. But it is too early to say how that will affect prices and supplies in the long term," Dole said.

Europe relies less heavily than the US on bananas from Central America, and its supplies of "dollar bananas" - from countries such as Ecuador, Colombia, Costa Rica, Honduras and Panama - are restricted under European rules. Nevertheless, some importers are predicting supply problems.