Supply chain management in banana: Integration of tradition and innovation of world’s favorite fruit

Introduction

Banana is the world’s most favorite fruit, comprising 14% of all global fruit trade. Banana has several unique characteristics as a traded commodity, as a fruit and as a plant. As a tradable commodity, it is produced predominantly in the Asia, Latin America and Africa regions, with countries like India (31.5 million tons) and China (11.5 million tons) contributing to almost 35% of the global production in 2020, and Ecuador, Costa-Rica, Philippines, Guatemala and Colombia contributing to almost 80% of the exports of this humble fruit. Banana is the primary source of revenue for more than 70 million people in low-income developing economies like Africa.

On the import figures, the top 5 international buyers (including plantains) are the United States of America, Germany, Russia, Belgium and Japan. Collectively, this group of importers bought 43.4% of the world’s bananas in 2021. The main importer of organic bananas is the United Kingdom. The fact that Banana is produced predominantly in the tropics, and its largest consumers are developed, temperate countries, makes the banana supply chain a long, complex and interesting one.Indeed, this supply chain has, in the past, upended politics in many developing countries in Latin America, in the past.

As a fruit, Banana is a rich source of carbohydrate and is rich in vitamins particularly vitamin B. It is also a good source of potassium, phosphorus, calcium and magnesium. The fruit is easy to digest, free from fat and cholesterol. Banana powder is used as the first baby food. It helps in reducing risk of heart diseases when used regularly and is recommended for patients suffering from high blood pressure, arthritis, ulcer, gastroenteritis and kidney disorders.

Processed products, such as chips, banana puree, jam, jelly, juice, wine and halwa can be made from the fruit. The tender stem, which bears the inflorescence is extracted by removing the leaf sheaths of the harvested pseudo stem and consumed as a vegetable. As a plant, Banana is probably the best utilized in India, wherein every part of the Banana is either consumed as food or used for other purposes. Some of the latest developments in this field include the use of fibre from Banana for fabric applications, and the treated sap as a soil nutrient.

Banana varieties and their target markets

There are more than thousand varieties of bananas produced and consumed locally in different parts of the World. The most commercialized variety is Cavendish (Dwarf and Grand Naine varieties), which accounts for around 47% of global production. Some of the other commercial varieties are Robusta, Red banana and Nendran. The Cavendish varieties are more commonly produced and exported because of its favorable varietal traits (shorter stem, higher yield per hectare) and marketability (better resilience to impact to environmental changes and transportation). India is fast becoming an alternative source for Cavendish Banana to the Middle East as well as Europe, as their traditional sources, such as the Philippines and other regions are impacted by climate change, diseases and soil quality depletion. This makes the creation of good quality supply chains for Cavendish Banana very critical.

In India, there are several other varieties that are commercially produced for local consumption and trade. These include Rasthali, Poovan, Karpuravalli, Virupakshi, Pachanaadan etc. There are several indigenous varieties which have also obtained the GI (Geographically Identified) tag by the Intellectual Property India (IP India). This recognition eliminates the unauthorized use of these banana varieties and also acts as a major boost in the marketability of the produce, especially for the International buyers. In a significant milestone initiative, 22 tonnes of GI certified “Jalgaon banana” were sourced from farmers of Tandalwadi village in Maharashtra’s Jalgaon district, a banana cluster identified under the Centre’s Agri Export Policy - in June 2021.  Other such Indian GI varieties include Moira Banana (Goa), Changalikodan Nendran (Kerala) and virupakshi in Tamil Nadu.  It must be noted that these banana varieties are also increasingly being exported to the Middle East, where they cater to the diaspora from the Indian subcontinent.

Banana at WayCool

Banana as a SKU (stock keeping unit) provides a strategic opportunity for WayCool with its year-round supply and demand potential unlike many other seasonal fruits. WayCool has introduced Bananas in multiple lines of business viz. Retail, Modern Trade, HORECA along with its own Sunny Bee outlets and has developed a robust value chain with farm level sourcing from Mysore (Karnataka), Sathyamanglam, Trichy from Tamil Nadu and Andhra Pradesh. The key operating markets are Bangalore, Chennai, Kerala, Coimbatore and Hyderabad.

Banana Yelakki and Banana Robusta share the largest volume of the SKU with projected annual tonnage of 2000 MT and 4500MT for Yelakki and Robusta respectively alone in the domestic markets, which is altogether expected to contribute INR 155 million to the topline of the company business. The firm is focusing on building trust worthy and safety-first brand for Bananas under its umbrella brand of domestic fruits viz. “Dezi Fresh” to provide a hygienic and safe alternative to all the consumers against the existing market choices of fruits ripened with hazardous chemicals and ripening malpractices. Along with the domestic channels, WayCool also exports Premium Banana Robusta fruits to Arabian countries like Muscat and Oman.

Challenges in the banana value chain

Production challenges

• A serious threat to banana production continues to be the Panama disease (Fusarium wilt fungus) that has been affecting banana production in Asia. Present in 20+ banana producing countries, this pandemic disease is still challenging scientist around the world, working on its mitigation
• The banana industry is the second largest consumer of agrochemicals, after cotton around the world. With increased competition in terms of volumes and price, the intensive monoculture practices in banana production poses a serious threat to the environment (soil, water, biodiversity) and its resources.
• The pressure on quality and volume involves high cost of cultivation for the smallholder farmers, who produce 80% of the global volume.

Other challenges

• Lack of awareness among producers and suppliers on the compliance, packaging and quality requirements of international markets, leading to minimal export volume for the country
• High production cost leading to lesser competitive price for international buyers
• Highly sensitive ripening, which needs to be managed with precision to deliver the right level of ripeness for the retailer, and consequently the customer

WayCool’s integrated value chain for banana yelakki - A case study

WayCool has established a vertically integrated value chain Banana Yelakki in Karnataka region. In coordination of its Farmer support team of Outgrow, WayCool engages with the Yelakki farmers of Mysore-Hulahalli region by guiding them with scientific cultivation practices and safe crop protection methods. A regional aggregator is introduced above a particular set of farmers assisting them for labor and transport arrangements at minimum intermediary commission

WayCool ground team conducts field inspections at routine intervals and selects right fields for harvesting as per the maturity stage of looms. Post harvesting, a field executive of WayCool accompanies the aggregator for field level grading as per different customer requirements, segregating material into Premium and Economy grades suitable for different line of businesses. Farm level grading ensures minimum material handling in further steps of the value chain and also establishes a liquidation plan for all the harvested material irrespective of the quality deviations caused due to natural factors like fruit size, black marks etc.

Post grading, the material is then sent to a ripening chamber, where the material if exposed to three stage ripening process viz, Pre-cooling, Gassing and Ventilation. In gassing treatment, the material is infused with Ethylene gas, which speeds up the ripening process by 48-72 Hours without applying any chemical residues on the fruits. The gassing quantities are monitored strictly as per sales plans to avoid excess ripened stocks leading effectively restricting the spoilage and wastage. All the additional raw as well as ripening material is maintained at 13^oC to restrict the ripening. With this level of controls, the firm has demonstrated to limit the material wastage to 0.2% of total traded volume.

The use of cold chains in Banana

Highly sensitive ripening of Banana, makes temperature control an essential factor to minimize the wastage of the product. However, the cold chain use is limited to the export line of business and not for the domestic resulting into large wastage volumes of Banana in domestic market. Thus, the cold chain perspective in Banana value chain can be looked with two aspects:

Cold Chain interventions in Export value chain

For perishable products in the export supply chain like the Cavendish Bananas, cold chain plays a crucial role in minimizing the quality impacts on the produce. The cold chain covers the transport of export quality produce all the way from the farm to the customer. The various steps include:

1. Reefer container at the farm.
2. Reefer container movement from farm to the port
3. Reefer container operation and maintenance at the port.
4. Building up of the pallet in a Reefer container at the port (if container is not stuffed in palletized form at the farm).
5. Shipment with continual temperature control and monitoring
6. Offloading at the receiving country, followed by local ripening

Throughout this cold chain, the use of ripening inhibitors is critical. KMNO₄ is the most common material used for this purpose which acts as an ethylene absorber in an export container. A newly developed equipment called “Ethylene Scrubber” is also used to absorb the existing ethylene gas in the air effectively slowing down the ripening.

Cold chain interventions in domestic value chain

The domestic markets of Banana operate at much lower margins compared to export lines, thus on rare instances temperature controlled referred vans are used to transport the material. However, some of the domestic value chains also extend to 700-800Km in distances of road transport, especially for traditional Banana cultivars which are only associated to particular regions, for such cases it becomes much important to find alternative solutions for ripening control.

One of such solutions can be the use of thermal insulator pallet covers also called as thermal pallet blankets which help to keep the cold temperatures intact for longer time in transit and slows down the ripening.

Conclusion

The development of modern supply chains, incorporating appropriate cold chain and ripening control technologies for Banana will become imperative as India emerges as the primary alternative source of Banana for the Middle East and Europe in the next decade. Further, the increasing consumption of varieties of Banana across the country, as tastes universalize across India, will necessitate innovations in the post-harvest management of domestic varieties of Banana as well. Institutes and enterprises investing in this value chain stand to gain significantly in the emerging decade.

Originally published in the compendium, “Export of GI and Traditional Bananas: Present Scenario, Trade Opportunities and Way Forward' by ICAR- National Research Centre for Banana.