Thinking About Thinking

The Economics of Bananas

Posted in Economy, Pop Culture by larrycheng on January 10, 2014

Yesterday, I had the unexpected opportunity to speak with a former executive of a major fruit and produce company.  I always find it really fun to talk with someone about something I know nothing about – and in this case, the topic was bananas.  So, I asked him about the economics of bananas, and this is what he said:

  • Depending on location, retail price is ~$0.70 per pound.
  • That retailer buys them by the box which is 40 pounds.  So $28 is the retail revenue per box.
  • The producer charges the retailer $12 for the box.
  • The retailer also incurs additional costs for 7-days of storage and refrigeration at 56 degrees for ripening.
  • The producer pays $10-$11 in costs for that box ($6-$7 for pick and pack, $1 for packaging, $2.50 for shipping, and $1 of marketing/sales overhead)
  • Within a few hours of picking, the bananas are stored and shipped in refrigerated containers at 56 degrees.  Shipping can take 7+ days.
  • The picker probably makes ~$12/day and is paid per stem picked.

It’s always interesting to look at a supply chain of a product and decipher where in the chain you’d want to be.  In this case, I’m happy to be the one eating the banana.

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  1. Inwoo said, on March 14, 2014 at 11:39 am

    Larry, I come across your blog pretty often and enjoy reading your insights. I attend a church across town and we’ve been studying the banana industry as a part of an economic discipleship small group. I wanted to pass this along in case you haven’t read this before:

    http://www.scq.ubc.ca/global-issues-for-breakfast-the-banana-industry-and-its-problems-faq-cohen-mix/


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