Peru’s Banana Industry Braces for Challenges Amid Water Scarcity and Market Pressures
The Peruvian banana industry is facing mounting challenges as water shortages, increased competition, and rising production costs threaten to disrupt both domestic output and international exports in 2025. According to recent data from FreshFruit Peru, the sector has already experienced a decline in performance during the first quarter of the year, raising concerns about its ability to sustain growth in an increasingly volatile global market.
Declining Exports Signal Growing Challenges
In the first three months of 2025, Peru exported 39,689 tonnes of bananas valued at 0.87, reflecting a 3% increase year-over-year, this modest rise was insufficient to fully offset the revenue losses caused by reduced export volumes.
FreshFruit Peru noted that 2024 had been a relatively positive year for the sector, with a moderate recovery in both volume (8%) and value (14%) compared to the struggles of 2023. However, these gains appear to have been short-lived, as structural issues within the industry and external pressures now threaten to undermine progress.
Water Scarcity Hits Key Production Regions
One of the most pressing issues facing Peru’s banana growers is the ongoing water shortage in Piura, a critical agricultural region. The Chira Valley, known for its fertile land and high banana yields, has seen a reduction in cultivated acreage due to limited water availability. This development is expected to have a ripple effect on production levels for the remainder of 2025, further straining the country’s ability to meet export demands.
The water crisis in Piura highlights broader environmental challenges facing the agricultural sector, including the impacts of climate change and unsustainable water management practices. Without significant intervention, these issues could pose long-term risks to Peru’s position as a leading banana exporter.
Fragmented Producer Base and Rising Costs Add to Struggles
Compounding the challenges are the fragmented nature of the producer base in northern Peru, heightened competition from rival suppliers, and escalating production and logistics costs. Small-scale farmers, who dominate the region, often lack the resources and bargaining power to navigate these difficulties effectively. Meanwhile, global competitors are aggressively targeting key markets, making it harder for Peruvian producers to maintain their share.
Transportation costs, driven higher by inflation and geopolitical uncertainties, have also placed additional strain on exporters. These factors collectively erode profit margins and limit opportunities for investment in modernizing infrastructure or adopting more sustainable farming practices.
US Tariff Threats Cast Shadow Over Market Prospects
Adding to the industry’s woes is the potential impact of trade policy changes. Earlier this year, former US President Donald Trump announced a 10% import tariff on certain agricultural products, including bananas—a measure currently suspended for 90 days. If implemented, the tariff could deal a significant blow to Peru’s exports, given that the United States is the country’s second-largest market after the European Union. In 2024 alone, the US imported 8,137 tonnes of Peruvian bananas worth nearly $8 million.
Industry stakeholders fear that even the threat of tariffs could destabilize demand, particularly among buyers who may seek alternative suppliers offering more competitive pricing. This uncertainty comes at a time when Peru can ill afford further disruptions to its export-oriented economy.
A Glimmer of Hope Amid Uncertainty
Despite the daunting outlook, there are reasons for cautious optimism. The slight uptick in banana prices during the first quarter suggests that some market dynamics remain favorable. Additionally, efforts to improve water management and promote efficiency in production could help mitigate the effects of the current crisis. Collaboration between government agencies, private sector players, and international partners will be crucial in addressing systemic vulnerabilities and ensuring the resilience of Peru’s banana industry.
As the sector navigates these turbulent times, the focus must shift toward innovation, sustainability, and strategic partnerships. By doing so, Peru can work toward safeguarding its status as a major player in the global banana trade while overcoming the formidable obstacles ahead.
