This shit is bananas
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This shit is bananas
B-a-n-a-n-a-s // Banana talk, my favorite type of business talk.
This article explores how bananas became such a cheap commodity, and what that can teach us about the price of alternative energy. If you know anyone who likes bananas, pretty please share
Before we get down to business, literally, please allow me to knock you on your ass with some banana facts. Actually, these will be facts about the musa acuminata, (for real aficionados, the Cavendish), which we call “the banana” but is actually one of more than two hundred varieties of bananas that exist. That’s right, there are more than two hundred types of bananas. The politicians have been keeping them from us! Surely this is not what Friar Romas de Berlanga, the Spanish Catholic missionary, intended when he introduced bananas to the New World in 1516 [1]. “Wait, bananas aren’t indigenous to Central America?” you must be asking, jaw agape. It’s not surprising that you’re surprised. Over 95% of bananas sold in the US come from Central America, so it’s a natural assumption that bananas have always come from there. Globally, though, Southeast Asia grows the most bananas. That makes sense, because bananas originated in those rainforests, in what I can only assume was the true location of the Garden of Eden. As you can tell, I’m a big banana guy. And I’m not alone. Americans on average consume about two bananas per week, making it the most popular fruit in the country. Fortunately, our love for bananas doesn’t break the bank. A banana costs about $0.25 (national average), which translates to about 400 calories per dollar. That’s a better deal than pretty much anything on the menu at McDonalds. Nutritious, delicious, and financially propitious! All this raises two obvious questions. First, why isn’t Friar Berlanga in our history books? Not only did he introduce bananas to the two continents, he discovered, by way of enchanted accident, the Galapagos Islands, which basically means he came up with the theory of evolution himself.
Make him a holiday! I’d be comfortable adding him to Mt. Rushmore. The second question, and the real topic of this post, is: why are bananas so cheap?
Why wouldn’t bananas be cheap?
Bananas seem like a natural staple crop: they don’t need to be refrigerated, they grow with their own natural packaging, they flower in dense clusters. However, the same could be said for avocados (or oranges, or watermelons, etc) and they aren’t as cheap as bananas. Plus, banana growing is manually intensive and banana plants are finicky: they need at least 14 consecutive months of frost-free, sunny weather and a ton of rain. That means bananas aren’t commercially viable agriculture anywhere in the continental US. Even if they were naturally cheap, consumers would still have to pay the cost to transport them thousands of miles (which they do). Still, bananas are cheaper than Florida oranges or Georgia peaches.
What gives? Why are bananas so cheap?
The first official import of bananas to the US, in 1843, ended up selling for 25 cents a piece (or over $5 in today's dollars) [1]. Bananas today are 20x cheaper (after inflation). That has nothing to do with the banana itself. The reality is that bananas are cheap because humans have spent a staggering amount of time, energy, money, and blood to make them that way. For example, have a look at this video of a banana farm in South America:
What you just watched is the product of centuries of specialization, research, technology, and infrastructure spending. For example, in the 1980s Central American growers spent $100 million to contain banana diseases [1]. It didn’t stop at the farms either. Beginning in the late 19th century, entire fleets of trains and boats were specially equipped for the transport of bananas.
Even after transport, an entire trade economy was built around distributing bananas efficiently throughout cities [2]. A great example is the “banana docks,” of New York City, which even today process 20 million bananas a week.
As an aside, the banana docks sound like they were absolute mayhem. Kids used to dive into the water and chase stray bananas that fell from “banana handlers,” professionals who balanced mountains of the fruit on their shoulders as they walked the gangplank. In many ways, turn-of-the-century America was a golden age for the banana. Teddy Roosevelt, ahead of his time as always, declared “war on the banana peel,” the New York Sun printed a full-page poem to protest a proposed banana tax, and the song “Yes, we have no bananas” spent five weeks at the top of the charts [1]. It was banana mania! Again, where are the history books on this?
All this only cracks the surface of the industrialization of the banana. In the early 20th century Standard Fruit and United Fruit, the duopolists that controlled the banana trade in the Americas, convinced the U.S. government to launch a full-scale invasion of Central America in order to promote commercialization of the banana. These conflicts are now known as the “Banana Wars.” The result was that Standard and United colonized by proxy large swaths of the region in violent fashion, with the resulting territories nicknamed “Banana Republics.” For example, in 1928 Colombian banana farm workers went on strike for “dignified working conditions.” At the behest of United Fruit and the US government, the Colombian government sent in the military, which slaughtered thousands of workers. This is the dark side of the wallet-friendly fruit. Part of what has made bananas so cheap is exploitation and brute force. And if you’re thinking, “wow, United Fruit and Standard Fruit sound like real shitbag companies, thank god they aren’t around anymore,” you should know that United rebranded to Chiquita and Standard rebranded to Dole and they remain the largest banana companies in the US [3]. Clothing brand Banana Republic, meanwhile, just kept its name and nobody seems to notice that its existence celebrates the subjection of nations for the sake of cheap fruit, which I suppose its parent company, GAP, thinks is just good old fashioned capitalism.
All of these factors meant that, over the course of the 19th and 20th century, the cost of extracting bananas from the earth went from precious metal level to well-water level. Because bananas are commodities, the end price the consumer pays generally approaches the cost to produce. These aren’t luxury handbags where the makers can charge a fat fee for a designer label. A banana is a banana no matter where it comes from, and therefore price competition is intense. As such, bananas are dirt cheap - the cheapest fruit or vegetable out there according to the USDA.
Why did this happen to bananas of all foods?
This really gets to the heart of the matter. If bananas are cheap because people chose to make them cheap, then why did people choose bananas of all fruits? The easy answer is that bananas are a $25 billion dollar industry, so the juice was worth the squeeze (lack of pun intended). As in, people loved bananas and therefore chose to make bananas cheap. That doesn’t hold up though, because prior to all of this investment bananas weren’t an industry at all! Up until the late 19th century bananas were a luxury, an upper class eccentricity; that $5 price point I mentioned earlier would have been about a week’s wages for the average worker. Even a few decades later, when they were more affordable, bananas still weren’t the household favorite they are today. Women were advised to eat bananas with a fork and knife to avoid accidentally miming a a sex act (the real forbidden fruit). Parents were advised to only serve bananas to children “if the skins are quite black,” for health reasons. Even the most maverick of all visionary entrepreneurs couldn’t have envisioned the eventual success of the banana. That’s okay though, because no visionary was needed. At each instant in the banana’s history, there was just enough demand for bananas to compel enterprising individuals to create better ways to cultivate and export bananas to America: more economies of scale, more investments in machines and infrastructure to produce quicker, more energy expended on getting bananas off the leaves and into the stores. And each time that was done, bananas became slightly cheaper. Slightly cheaper bananas meant they were more accessible to a wider audience, more available in grocery stores, more familiar to the American palette. That, in turn, created more demand. Demand begets supply, and supply begets demand. Or as I like to call it, the Banana Flywheel:
This can be a natural process, but it can also be a manufactured one. In America, demand for the banana got some assistance from Madison Avenue. In the 1940s the banana industry brought in those Mad Men executives to conjure up a propaganda campaign. And boy did they deliver:
Madison Avenue invented Chiquita Banana, a sexualized anthropomorphic banana cannibal who spread the tropical fruit gospel to homes around the nation.1940s America loved it. That sped up the Banana Flywheel by a lot. But little, natural things sped up the flywheel too. Images in National Geographic of monkeys playfully eating bananas, Saturday cartoons use of banana peels as a lethal slipping hazard, bananas incorporation into popular cookbooks. As with any product, there were a million little dents, a million lucky breaks that shaped Americans' love and acceptance of the banana. On the other side of the flywheel, banana producers bought refrigerated steamships, outfitted plantations with banana zip lines, and kept investing and building to meet that new demand. By the middle of the 20th century bananas became the ubiquitous and economical fruit we all know and love today. In 1700 only a visiting member of the royal family would have seen a banana in person. Today you can get a banana at a gas station. In fact, is it some kind of rule that every gas station must have one loose, browned banana in a bowl by the register? Or are bananas just so cheap and popular now that they have to be sold everywhere?
Bananas for scale
The journey of the banana reveals an important business lesson: the cost to produce is not a static value. Take, for example, solar energy. Even just ten years ago solar energy was 3.5x the cost of coal or gas. Back then you would have seen a lot of articles arguing that solar couldn’t possibly be an efficient source of energy because it was so damn expensive. Nominally, that wasn’t a crazy argument, but when you think about it that argument was meaningless. Is it cheaper to convert sunlight or dead dinosaurs into fuel? The answer to that question depends on when you ask it. If you asked our founding father Friar Romas de Berlanga, he would have told you sunlight is easier to convert into power. Just wait for trees to convert that sunlight into wood, and bam, you’ve got an abundant source of energy. What use would coal be to a 15th century Friar? It would have been an infinitely expensive source of energy. In the 20th century coal became a much cheaper option because humans developed the means to extract and convert it into energy. In this way, production cost really depends on the available technology, infrastructure, resources, capital, and labor; i.e., it depends on where in the Banana Flywheel something is. Over the last ten years the Banana Flywheel for solar energy has been juiced by environmentalist sentiments and energy independence aficionados. Private and public sector money has flooded into optimizing solar power, making it cheaper, which made it more accessible and therefore increased the demand. Today, solar power is often cheaper than coal. In the future, it will be universally cheaper. It might even become energy’s top banana.
Pretty much everything you can purchase today for cheap went through this process. All the things we take for granted, from saltine crackers to toothpicks to bananas. Everything except printer ink, of course. What the Banana Flywheel teaches us is that, over a long time horizon, things will eventually cost what we, as a society, want them to cost. And that shit is bananas.
Thanks you for reading!! If you enjoyed this article please consider sharing the sweet, simple, dirt cheap joy of bananas.
Additional Reading
[1] Bananas, by Virginia Scott Jenkins
[2] Peeling Away the History of NYC's Banana Docks6SQFT.com