Split Over Bananas – How China and India are Meeting Demand Differently
This article was written by UC Davis ARE PhD student Sam Raburn. It is the fourth in a series of excellent articles written by students in my ARE 231 class this fall.
India is the world’s largest producer of bananas. It has plenty of fertile soil, tropical climate, and access to water via the Bay of Bengal and the Arabian Sea. You may wonder, however, “why have I never eaten a banana grown in India? Only Ecuador or Costa Rica?”
Few countries in the developed world grow bananas; only Australia and Spain produce them in nontrivial quantities. For much of the global south, however, bananas and plantains are staple crops that play an important role in daily diet. These countries, including India, traditionally consume their produced bananas domestically.
Since bananas grown in India are almost entirely consumed domestically, Indian exports of bananas account for less than 1% of total production. Although far behind the immense production of India, China is the world’s second-largest banana producer, and similarly does not export its bananas. It is not until the Philippines, the world’s third-largest producer of bananas, that we encounter the first significant exporter of bananas.
Bananas (Musa) are native to South and Southeast Asia and have been cultivated since about 8,000 B.C.E. Banana cultivation in India occurs in the majority of provinces, while banana cultivation in China primarily occurs in 5 provinces. Production in India has grown with demand, perhaps enabled by its broad production area, so banana imports are infrequent. Chinese demand, on the other hand, has rapidly outgrown domestic production.
In addition to a growing population, increased disposable income has inflated the demand for fresh fruits – including bananas. This phenomenon is referred to as the “Nutrition Transition” and has been frequently documented in developing nations. As households earn more income, a larger percentage of money is spent on nutritious foods (e.g. fruit, meat, and dairy).
The banana deficit in China has roots in a few other potential realms. Notably, Chinese consumers often believe that bananas grown in Latin America are of superior quality to those grown in Asia. Another issue facing Philippine exports to China is the increased frequency of typhoons due to climate change. Typhoons disrupt the banana supply chain and can cause breaks in the flow of fruit. These ancillary issues may be contributing to the deficit at hand.
This increased demand for bananas, particularly Latin American bananas, may be the reason that price for bananas has increased in the last 30 years. Basic economic intuition tells us that if production of a good increases, then its price should subsequently decrease.
The explanation for why prices are increasing is tricky. Expanding international demand for bananas is plausible. Greater transportation costs due to more frequent shipping from Ecuador to China might be a possible explanation, but pre-shipping data is needed for further analysis. Climate change is causing more volatile weather patterns in the Philippines. Tropical Race 4 is a fungal pandemic that is afflicting banana plantations worldwide and is particularly devastating to Philippine banana production… The list of issues goes on.
One thing is certain: as the two most populated countries continue growing their appetite for bananas, the little yellow fruit isn’t likely to get cheaper anytime soon. With just how different the world’s two largest producers of bananas have handled increased domestic demand, only the future can tell how the trajectory of global banana supply will shift in the coming decades.
You can replicate the graphs in this article using this R code.