FROM FARM TO MARKET: BANANA SUPPLY CHAIN EFFICIENCY AND PROFITABILITY IN SRI LANKA

Abstract

Banana (Musa spp.) is a staple fruit cultivated on about 9 million hectares worldwide. In Sri Lanka, despite the substantial production, limited information is available comparing the efficiency and value distribution of local and export banana supply chains. Hence, this study analyzes the supply chain efficiency of bananas from the farmer to the consumer with a special focus on post-harvest losses (transporting, distributing), initial capital investment for cultivation, and profit distribution in both local and export markets. Interviews were conducted at the Manning Market in Peliyagoda and the Rajanganaya export processing unit. Collected data include transport volumes, buying and selling prices, quantities rejected and processed, and farmers’ production costs and profits. The research revealed significant differences between local and export markets. Farmers invest approximately Rs. 360,000 per acre and Rs. 601,000 per acre for cultivation in local and export markets respectively. The local market loses up to 40% of its harvest due to inefficient storage, inappropriate transport modalities, and an intermediary-dominated disintegrated supply chain while the export market has hardly any post-harvest losses due to the use of high-tech cold-chain supply chains and centralized quality inspection. The study further indicated extreme gaps in profit realization between the two markets. The local market is affected by sharp seasonal price swings (Rs. 50-200/kg) while the export market benefits from fixed pricing (Rs. 165/kg). The most striking finding of this study is that local farmers receive only 20-30% of the final retail price in contrast to the guaranteed returns secured by export-oriented farmers, highlighting severe imbalances within the value chain. These findings highlight the critical need to modernize local banana supply chains through enhanced post-harvest management practices and stronger value chain integration, thereby reducing food wastage and improving farmer incomes. The pack house in Rajanganaya, where 50% of the produce meets export quality and the remaining is sold to local supermarkets or value-added, presents an implementable model of improvement throughout Sri Lanka. These findings indicate that strengthening post-harvest processes and fostering greater supply chain coordination hold significant potential for improving the economic sustainability of banana cultivation in Sri Lanka.