THE BANANA SUPPLY CHAIN IN INDIA

October 2009

INTRODUCTION

WHY INDIA?• Difficulties, mostly related to access to land, for producing

and/or sourcing steady volumes of commercial bananas at a reasonably cost.

• To have sourcing sites close to the markets (reduce food miles):- India Geographic's situation is ideal for supplying

the Middle East markets.- Malaysia future banana production would supply China, Singapore and neighboring

countries as well as the local market.

• India is the world’s largest producer of bananas, accounting for about 23% of global output, about two times the share of the next country, Brazil. • Currently the country has more

than 350,000 hectares cultivated with bananas and produced 11 million of metric tones in 2,008.

INDIABRAZIL

ECUADOR

CHINA

PHILIPINES

INDONESIA

COSTA RICA

MEXICO

THAILA

NDIA

COLOMBIA

0.0

2.0

4.0

6.0

8.0

10.0

12.0

PRODUCTION OF BANANAS BY COUNTRY

Metric Tones - Million

87% of the Bananas in INDIA are produced in four States:

MAHARASHTRA – 102,000 hectares 31%

TAMIL NADU – 85,000 hectares (26%),

GUJARAT – 60,000 hectares (20%)

KARNATAKA – 33,000 hectares (10%)

Main Banana Production Areas in India

Maharastra – 31%

Tamil Nadu – 26%

Gujarat – 20%

Karnataka – 10%

Rest of States – 13%

BANANA EXPORTING FROM INDIA

16,662 metric tones were exported from India in 2,008. This represents

only 0.15% of total Country production

INDIA BANANA EXPORTS - TONES

COUNTRY 2006 2007 2008

U. ARAB EMIRATES 3,477 2,284 5,265

SAUDI ARABIA 1,060 670 1,911

BAHRAIN 746 496 1,012

KWAIT 729 611 916

QATAR 552 330 784

IRAN 565 281 22

TOTAL MIDDLE EAST 9,135 6,679 11,918

OTHER COUNTRIES 5,276 4,796 4,744

TOTAL EXPORTS 14,411 11,475 16,662

INDIA BANANA EXPORTS 2005-2007

NAVSARI (GUJARAT)

• SITE FACTS• NAVSARI is located in Gujarat State in the West

of India. The area is dedicated mainly to agriculture (bananas, rice, cotton, corn and sugar cane).

• Gujarat State has 60,000 hectares (20% of India total banana area) under banana cultivation.

• Small Farmers ( 1 – 5 hectares).• Distance to Port (Mumbai) = 260 km

DESAI (Packer & Exporter)

• Packing Facility: A good packing house with a capacity to pack 2 containers per day.

• Transportation of fruit to Packing House: The bananas are transported in hands on tractor hauled wagons over foam pads.

• Fruit Quality: The fruit being packed was of good exportable quality.

• Carton box quality: The quality of the carton boxes is poor.• Farms: Well maintained farms. All agricultural practices

required to produce export bananas are carried out. It is noticeable that no Sigatoka spot is present.

DESAI PACKING HOUSE

FRUIT TRANSPORTATION TO PACKING HOUSE

EXPORT QUALITY BANANAS

WELL MAINTAINED BANANA FARM

JALGAON (MAHARASHTRA)

• SITE FACTS:• JALGAON is located in the Maharashtra State in the

West of India. The area is also dedicated mainly to agriculture (bananas, rice, cotton, corn and sugar cane).

• Maharshtra State is the largest banana producer in India, with 102,000 hectares (31% of India total banana area) planted with bananas.

• Small Farmers ( 1 – 5 hectares).• Distance to Port (Mumbai) = 380 km

CROWN PRODUCTS PVT. LTD (Packer & Exporter)

• This Company is a subsidiary of ALLOHA AL HANDASEA of Iraq. All the bananas they packed in India are exported to Iraq. They claimed that they can supply all the bananas needed by MAFC.

• Packing House: Good and modern Packing House. No photos were allowed.

• Transportation of fruit to Packing House: By truck in plastic crates.

• Fruit Quality: Good quality.• Carton box quality: Good and strong boxes.

EXPORT QUALITY BANANAS - JALGAON

Vacuum packed in “Banavac”

TENI (TAMIL NADU)

SITE FACTS:• Teni is located in Tamil Nadu State in the South

of India. This State is the second largest banana area in India, with 85,000 hectares (26% of India total banana area).

• Small Farmers ( 1 – 5 hectares).• Distance to Ports:

( Madras or Tuticorin) = 240 km; (Kochi) = 480 km

TENI OVERVIEW

• Packing Facilities: As all bananas in the area are actually sell to the local market there are no packing houses in place. However, some exports have been occasionally done, packing the boxes in temporary set ups in the farms.

• Farms: Basic agricultural practices are performed.

The bunches are of good size and quality. However, as currently they produce only for local market they are not being protected with plastic sleeves.

BANANA FARM - TENI

EXPORT QUALITY BANANAS TENI

BANANA PACKING - TENI

BANANA PACKING - TENI

KARNAKATA STATE

SITE FACTS:• The State of Karnataka has 33,000 hectares (10% of India total banana

area). AS in the other States, the bananas are being sold in the local markets, but some exports to the Middle East have been made.

• SAFAL, a subsidiary unit of MOTHER DAIRY FRUIT & VEGETABLE PVT.

LTD. has a large modern complex in Bengalore where this company centralizes the fruit production bought by them in the State (bananas, mangoes, guava and papaya mainly). The mangoes and guavas are industrialized in pulp concentrate, and the bananas are ripened in their ripening rooms and distributed to the market. They also produce banana pulp concentrate.

KARNAKATA STATE

• The bananas are transported from the farms to this center in plastic creates. The quality of the fruit is very poor and non suitable for export.

• Due to time limitation and long distances to the

production sites we were not able to visit the banana farms.

• Distance to Port (Mumbai): 850 km.• Distance to Port ( New Mangalore Port): 360 km.• Distance to Port (Kochi ): 550 km

BANANA COST STRUCTURE IN INDIA

COST PER KILOGRAM COST PER 13 KG BOX

Rs USD $ RM Rs USD $ RM

FARM GATE BANANA PRICE

8.00

0.17

0.58 104.00

2.17

7.58

CARTON BOX 4.62

0.10

0.34

60.00

1.25

4.38

PACKING LABOR

1.00

0.02

0.07

13.00

0.27

0.95

TRANSPORTATION TO PORT - USD 540 PER CONTAINER

1.30

0.03

0.09

16.90

0.35

1.23

PORT CHARGES & DOCUMENTS - usd 150 PER CONTAINER

0.35

0.01

0.03

4.55

0.09

0.33

TOTAL FOB COST 15.27

0.32

1.11

198.45

4.13

14.47

SHIPPING TO MIDDLE EAST-USD 1,800 PER CONTAINER 4.30

0.09 0.31 55.90 1.16 4.08

TOTAL COST

19.57 0.41

1.43

254.35

5.30

18.55

HARVESTING SEASON OF BANANAS IN INDIAHarvesting season for bananas varies among the States. This should be taken into consideration to assure a year-round supply.

PORT FACILITIES

MUMBAI PORT

Located the Mid-West coast of India is the most appropriate port facility for exporting bananas from Gujarat and Maharastra. In addition to its closeness to the Middle East Countries, this is a modern port equipped with all the necessary equipment for handling reefer containers. It has 2 Gantry Cranes (Portainers), 3 Container Stacking Cranes (Trastainers) and 208 reefer plug points. The Container Docks can berth 5 vessels.

INDIA GATEWAY TERMINAL (KOCHI)

Located in the South-West coast of India would be the port facilities for exporting bananas from Tamil Nadu, Karnataka and Andhra Pradesh States.

This port is dedicated exclusively to Container handling and shipping.

NEWMANGALORE PORT

It is a modern all-weather Port situated at Mangalore, Karnataka State on the West coast, South of India, 190 miles North of Kochin Port.

It would be an option for exporting bananas from Tamil Nadu, Karnataka and Andhra Pradesh States.

It has all the facilities and equipment for reefer container handling.

DAYS AT SEA TO MIDDLE EAST PORTS

TO: JEDDAH TO: DUBAI TO: DOHA TO: BAHRAIN

DAYS NAUT. DAYS NAUT. DAYS NAUT. DAYS NAUT.

AT SEA MILES AT SEA MILES AT SEA MILES AT SEA MILES

FROM: MUMBAI 7 2,353 3.5 1,122 4 1,300 4.6 1,352

FROM: KOCHI 7.6 2,544 4.8 1,598 5.3 1,776 5.4 1,828

FROM: NEW BANGALORE 6.8 2,286 4.3 1,436 4.8 1,596 4.9 1,643

FROM: MADRAS 10 3,334 7 2,455 8 2,631 8 2,678

FROM: KLANG-MALAYSIA 13 4,124 10 3,233 11 3,411 11 3,488

CONCLUSIONS

• Bananas of exportable quality can be sourced from India.

• Mumbai, Kochi and Newmangalore Ports have all the facilities for handling and shipping Reefer Containers to the Middle East Countries.

• All other logistic needs (reefer containers, carton boxes, etc.) are in place. No problems are expected.

• The Operational cost of RM 1.43 per Kg is competitive.

OPTIONS FOR MAFC SOURCING BANANAS FROM INDIA

1. To buy packed bananas from any of the established packers. This option is applicable for the States of Gujarat, Maharastra and Karnataka, where there are Packing Houses in operation.

2. To negotiate a partnership with any of the established packers.

3. To negotiate a business partnership with a local entity(ies) to establish our own Packing House and contract the banana supply directly from a selected group of growers.

RECOMMENDED STRATEGIES

IMMEDIATE ACTIONS

To initiate operations by buying packed bananas from any of the established packers, for a limited period of time, negotiating a purchase price that allows MAFC to break even or have a small profit. During this period MAFC would be able to learn about the banana business details in India and to make a full assessment and planning to implement the second phase of the Project.

SHORT TO MID TERM ACTIONS

A) To establish MAFC own packing House and to get contract farmers to supply the bananas. By doing this, MAFC would not have to depend on a third party and the cost that it implies. As

mentioned above, this could be done in conjunction with some local (Indian)

partner. Rainbow Group representatives expressed their interest in this partnership.

OR

B) To negotiate a partnership with any of the established packers.