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Del Monte Purchases Two Costa Rican Fruit Companies

More fresh fruit from Costa Rica to your local supermarket thanks to Del Monte.

A stroll down any Costa Rican main street will yield several vendors selling fresh fruit off the back of their trucks. Chances are good that the backseat bounty will be heavy on plumb, juicy pineapple and perfect, delicious bananas, two of the country’s most bountiful and popular exports. Capitalizing on Costa Rica’s fruit production and stellar reputation, Fresh Del Monte Produce Inc. announced Monday that it had purchased two Costa Rican fruit companies to the tune of $403 million.

In 2007, Costa Rica exported more than $660 million worth of bananas, 46 percent of which were sent to the European Union. The remaining 54 percent were sent mostly to North America, although they were also dispersed to several smaller countries around the globe. Fresh Del Monte Inc., which produces fresh-cut, ready-to-eat fruits will use its new acquisitions — Desarollo Agroindustrial de Frutales S.A. and Frutas de Exportación S.A. (the two, together, are known as Caribana) — to help increase Del Monte’s Central America supplied banana and Extra Sweet pineapple offerings.

The new deal has increased Fresh Del Monte Produce’s Costa Rican land ownership by about 13,000 hectares (approximately 32,125 acres), many of them close to already-existing Del Monte operations. This proximity will likely produce a “significant opportunity for operating synergies,” essentially a partnership between the new and existing facilities to create more efficient banana and pineapple production.

Fresh Del Monte Produce Inc.’s company acquisitions come just a few months after the National Banana Corporation (CORBANA) announced plans to research less intrusive methods of pest control in the country’s banana crops. Unfortunately, the delicate fruit attracts small bugs and other pests, and Costa Rica’s banana farmers invest millions of dollars each year to protect their livelihood.

CORBANA’s new research will explore alternative pest-fighting methods, hopefully reducing the use of chemicals on the country’s bananas. Though several alternatives exist, a promising possibility is the use of a natural fungus that attacks banana pests, consuming the parasitic worms so destructive to the crop.

The goal to use fewer chemicals on Costa Rica’s bananas will not only reduce farmers’ annual chemical investment, but will deliver a healthier, more marketable fruit. Europeans, the banana crop’s largest purchaser, currently pay a tax of 176 euros per ton. Though CORBANA is fighting to get the tax reduced to 123 euros or below, in any case, health-conscious Europeans will likely be more willing to purchase less chemical-heavy Costa Rican bananas.

Fresh Del Monte Produce Inc. made its $403 million purchase at the beginning of a new fruit era. Hopefully, their investment and renewed interest in Costa Rica’s pineapple and banana crops will help fuel investment in alternative pest-control methods. And with $660+ million in yearly exports, the country and its fruit investors will surely benefit from the healthier, more organic produce that the world increasingly demands, allowing Costa Rica to remain a strong exporter and world supplier of juicy, tropical fruits.

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Written by Erin Raub

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