India File

India goes bananas over export prospects

Vishwanath Kulkarni | Updated on September 07, 2020 Published on September 07, 2020

Lasting benefits Bananas need to have a high shelf life to be export-worthy Pic courtesy: INI Farms   -  Pic courtesy: INI Farms

India is the world’s largest producer of bananas, but a minor exporter. The tide is turning in its favour, thanks largely to a global pest attack. Vishwanath Kulkarni reports

The Indian banana has started going places, literally.

As the production of the fruit comes under pressure in major exporting regions of Latin America and South-East Asia due to spread of diseases, the demand for banana from India has begun to increase. In fact, over the past three years, banana exports from India have almost doubled.

India is the world’s largest producer of bananas, accounting for 27 per cent of the global output. However, its share in the export market is less than 0.1 per cent. Due to the large domestic market, the government and trade had not taken export markets seriously. Banana shipments have picked up only over the past eight to ten years. “Ten years ago, exporting bananas from India was considered a joke,” says Pankaj Khandelwal, Chairman and managing director, INI Farms, one of the large exporters, narrating an experience at a trade show in Dubai. And, the industry has grown from almost zero to about ₹1,000 crore (CIF value) over the past decade, he adds.

A slew of emerging developments in the global banana economy have brightened the prospects for banana shipments from India. Apart from the rising intensity of extreme weather events triggered by climate change, the banana fusarium wilt, which has been affecting plantations since late 19th century, continues to be a serious concern for growers across the world.

 

Making up for the Philippines

The current expanding strain of fusarium wilt, better known as Tropical Race IV (TR4), poses elevated risks to global banana supplies, says FAO, as it can affect a much broader range of banana and plantain cultivars than other strains of the fungus. Further, there is currently no effective fungicide or other method capable of eliminating TR4, which has begun to make impact on output in major exporting countries such as the Philippines and Ecuador, among others. However, India is not immune to TR4, which has presence in some parts of Eastern India, mainly in Bihar, over the past couple of years.

Besides, the rising demand due to sheer demographics is driving consumption in the Asian continent. Also, India has the advantage of being located amidst the emerging consuming centres in West, Central and South-East Asia, considered a big positive by the stakeholders.

“Supply shortages in the Philippines, the main competing exporter, meant that shipments from India could benefit from the high demand in Gulf countries and South-East Asia. With the declining production, enhanced cost of production and disease spread in the Philippines banana industry, following good agricultural practices in India opens up new vistas of export to farthest countries. This will enhance the export volume and share from a mere 0.1 per cent to 10-15 per cent of international trade with the value of $2-3 billion over the next 7-10 years,” says S Uma, Director at ICAR-National Research Centre for Banana, at Tiruchi.

The Cavendish, which accounts for 65 per cent of total India’s production, is the major variety exported, while other varieties such as Nendran and Yelakki (Ney Poovan) are shipped in small quantities. Major destinations for Indian bananas are the UAE, Saudi Arabia, Iran, Kuwait and Oman in West Asia, Malaysia, and Nepal. Countries in Central Asia, mainly Serbia and Russia, are warming up to the Indian fruit.

Bulk of the exports from India mainly take place from Maharashtra and Gujarat, also major producing States.

Corporate interest

Corporate interest in the banana is also on the rise. Companies such as Navsari-based Desai Fruits Ventures and INI Farms have been working at organising and securing the back-end supplies besides developing the markets. Considering the potential, banana is also seen attracting the interest of major exporters of other fruits, such as the Mahindras and the Sahyadri Farmer Producing Company.

Banana industry in India has seen a significant growth over the past two decades with the widespread availability of tissue-cultured planting material and other technological advances, coupled with the fillip provided by State governments. In the global banana trade, exports are governed by multinational fruit companies with the organised business whereas, in India, the business is totally unorganised and is handled by multiple authorities.

“India has not yet fully tapped the banana export opportunity as its global export share is still very small. We don’t believe that diseases already impact global banana volumes significantly. However, India has an opportunity to increase exports due to logistical advantages compared to other export regions if the quality of bananas can be improved to international standards,” says Marco Klinge, CEO of Desai Fruits Venture, in which Swiss-head quartered private equity firm Pioneering Ventures owns a stake.

“Another supporting factor is the low price of Indian bananas, which reportedly sold at a 50 per cent discount compared to bananas from Ecuador and the Philippines at the Dubai auction centre,” says Uma. “Also, our logistics costs are lower by almost 50 per cent and the quality of production is improving dramatically. The only problem is because of our small-hold farmers, our quality is not consistent. That has started to change with new technology and ag-tech coming in,” Khandelwal says.

 

Technology impetus

Techniques such as precision farming and use of artificial intelligence are also seen entering the banana value chain. Bengaluru-based Fasal has developed precision farming techniques that are currently being tested and validated in farms around Rajnandgaon in Chhattisgarh, which can reduce the cost of cultivation, says Ananda Prakash Verma, founder and CEO, Fasal. Fasal, which has already introduced precision farming techniques in pomegranate and tomato, says banana farmers are showing interest in the concept.

Improving quality would also mean extending the shelf life of the produce. “It has got to do with maturity control at the farm gates. It is a complex process to get shelf life extended,” Khandelwal adds.

With a shelf life of 30 days, Indian exporters are able to tap the markets in West Asia, while for Europe, the product needs 45-day shelf life. “It is this unbelievable opportunity. The world trade is $15 billion in bananas. For a country that produces 30 per cent of the world’s bananas, to get a 7-10 per cent market share should not be a big deal, especially when you have logistics and cost advantages,” says a bullish Khandelwal.

Recent reforms introduced by the Centre in the areas of contract farming are expected to have a positive impact on the value chain. Many exporters, who have been working with farmers on an informal basis, are expected to make their arrangement formal with the new contract legislation in place.

Logistics challenge

Reliable supply is critical for consistent banana volume exports, Klinge says. “Contract farming is an import channel for large exporters like DFV to ramp up volumes. It is important that contract farming provides a level playing field for both farmers and exporters to create a win-win situation,” Klinge adds.

“Considering the large volume of production, just minimising post-harvest losses, which are 15-20 per cent, to less than 5 per cent, gives trade surplus,” says Uma.

Uma says the low volume export of banana is due to improper pre and post-harvest practices, such as the right choice of plant, planting methods, bunch covering, growth regulator sprays, non-ideal post-harvest practices, transport procedures, lack of proper storage facilities, outdated banana handling practices, etc. Due to mishandling of produce, 25-40 per cent is being wasted, she says.

“Though shipments to Europe were made from Tamil Nadu on trial basis a couple of years ago, exports are yet to happen on a regular basis,” observes G Ajeethan, general secretary of Tamil Nadu Banana Growers Federation, Namakkal.

“Lack of post-harvest infrastructure — pack houses and cold chains — has been a big challenge hampering growers in the region. There is a need for creation of infrastructure in the producing regions. The nearest laboratory to testing our produce for residue and other parameters is in Pune, while the nearest branch office of the promotional body APEDA is in Bengaluru. While growers are being sensitised about producing a quality fruit through various initiatives, the absence of certified pack houses in the region in a big concern,” points out Ajeethan.

The industry has been partnering with State governments and groups of farmers in promoting concepts such as GAP (Good Agriculture Practice) to meet market demands. INI Farms, which has a PPP model in Andhra Pradesh, is in the process of working out a similar arrangement in Karnataka to broad-base its sourcing.

Uma feels commodity-based cluster formation or co-operative farming for procurement of all the inputs on collective basis, better implementation of technologies, credit approval and better price realisation need to be strengthened and encouraged. Traceability should be given importance and farmers need to be educated about export requirements and international quality standards. Unlike other countries, Indian banana industry is highly fragmented. Time has come for farmers to work together and “widen the circle of banana growing regions”. This will reduce the input cost and enhance uniform maintenance of plantations, facilitating uniform quality, exportable bunches. The supply chain in banana has to be shortened to reduce the travel cost, starting from production site to port. Farmer producer organisations could be equipped with better farming infrastructure, including cable way conveyor system and the creation of APEDA-certified pack houses to ease the export of banana from different regions. Banana-specific export zones could be created with the provision of tax holidays to the entrepreneurs to sustain the banana industry, says Uma. Development of exclusive railway transport system connecting different banana growing regions may also be mooted.

While TR-4 has been a concern in India, the NRCB has been in the process of identifying varieties that are resistant to the fungal disease. “There are about 460 varieties in India and we have tested them for TR-4 in the affected areas of Bihar. Of these, about 30 varieties have shown some resistance,” says Uma. Efforts are on to evolve resistant varieties using technologies such as gene-editing, among others,” she adds.

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Published on September 07, 2020
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