World Trade in one Food Commodity:

A case study of the Banana Industry

Use the following sub-headings to create a detailed fact-file:

  • Impressive facts!
  • Describe and account for the global pattern of major exporters and importers
  • The role of TNCs (refer to Plantations, monocultures vertical integration, economies of scale)
  • The role of Supermarkets
  • Trade Wars
  • The environmental and social costs of the Banana Industry – examples from South America
  • The role of Fair Trade

Use your text book(pages 313-316, Ross et al p30-32) the internet and this extra information to help you:

In the Caribbean most banana producers are independent, small farmers. Their growing areas are hilly with poor soil conditions and low yields. In addition, shipping, distribution and labour costs are higher than in Latin America. So, Caribbean producers are unable to compete directly on price. However, there are major obstacles to economic diversification away from bananas and bananas recover well from hurricane damage and the whole infrastructure has been built up to support the banana industry. Bananas are vital to the economies of many Caribbean states, accounting for over 60% of St Lucia’s exports for example.

The UK is the sole market for many Caribbean states. Before 1992 the Windward Islands (St Lucia, St Vincent, Dominica and Grenada) Jamaica, Belize and Surinam had been the main suppliers to the UK.

After 1992 when the UK became part of the EU’s Single Market the special trade agreements had to be abandoned in favour of a joint policy for EU countries. Most EU countries purchased their bananas from Latin American countries

In Latin America banana production is characterised by plantation agriculture controlled by TNCs. Within the EU Chiquita, Dole and Del Monte control 43% of the market.

UK banana imports from the Windward Islands fell from 65% of all banana imports to 35% by 1998. Extra sales came from the ‘dollar’ bananas from Latin America, so called because they come from mainly American owned and run plantations. Many are re-exported from the EU to the IUK. The Latin American trade is controlled by a small number of TNCs.

Under pressure from the US government, backed by interests of TNCs the WTO is insisted that the EU ended preferential treatment for Windward bananas, even though they account for less than 2% of world trade. Despite widespread concern for the social and environmental conditions in Latin American Plantations Europe is not allowed to honour its commitment to supporting Windward Island s farmers. These farmers cannot compete with the cost savings enjoyed by big plantation companies (low wages, heavy use of chemicals...) and are losing their livelihoods. Thousands of farmers have abandoned their land or there is evidence that some have turned to farming marijuana, to make some kind of living.

Latin American Plantations

Typically a Latin American banana costs less than half the amount to produce compared to a Caribbean banana. One factor which contributes to this is the economy of scale obtained due to the size of the plantations. Another is the use of agrochemicals which result in a higher yield per hectare. It has been estimated that fungicide, applied by aeroplane, is added 40 times during each cultivation cycle and 40% of it ends up in the soil, 35% of it is washed off by the rain and 15% is lost in the wind. Health effects are serious and there is evidence of Costa Rican banana workers becoming sterile after handling the highly toxic chemicals.

Working conditions are also sometimes appalling. In Ecuador plantation workers are paid $1 a day and attempts to organise trade unions are quashed. Working days can be 14 hours long and there are no workers rights. In Guatemala a strike in March 2000 resulted in large-scale firing of workers.

Extract from ‘Bent Bananas’ The Ecologist:

Highlights the social and environmental impacts of the Banana Industry in Latin America

As the Caribbean share of UK banana sales has plummeted, Latin American countries, most notably Costa Rica, have become the biggest supplying region to the UK, producing about 60 per cent of our bananas. But what do we know about the conditions in which Latin American bananas are produced?

Gilberth Bermudez works for the Latin American Coordination of Banana Workers’ Unions. He gets very angry when he talks about conditions in the banana sector of his native Costa Rica. He has slides of insecticide-impregnated blue plastic bags, waste from banana plantations, collecting in river deltas flowing into the Caribbean Sea. ‘What are we going to show tourists in a few years when all our coasts and beaches are polluted by intensive banana and pineapple cultivation?’ he asks. ‘Species like the sea cow and the tortoise are facing extinction. Pesticides are killing off the algae on which the sea cows feed, and the tortoises are asphyxiating on plastic bags from plantations. The coral reefs are dying. When scuba divers go down now, they can’t see the reefs for the residue from banana plantations. It’s the same story in Honduras, Belize and Panama.’

Bermudez explains that until the 1960s, Costa Rican growers concentrated on traditional varieties of Creole bananas that were curvy and flavoursome. Then production intensified, switching to one variety: the Cavendish. It is straighter, tolerates refrigerated transport, and produces higher yields and, with liberal applications of pesticides, the smooth, uniform, cosmetically perfect fruits that supermarkets like.

The consequences of this, Bermudez says, are there for all to see: degradation of soil, and sick people. ‘Eighty per cent of banana families live in slums with very precarious sanitary conditions on the edge of plantations where aerial spraying of pesticides is [done] almost daily and the planes don’t distinguish between workers’ homes and plantations. Hundreds of children have deformed fingers and joints as a result of pesticides applied during the 1960s, 1970s and 1980s. Thirteen thousand male workers are sterile as a result of working with pesticides, and still today highly toxic pesticides are being used. It is a human tragedy, and we can’t keep silent about it.’

There are similar stories in Guatemala. Guatemalan banana workers typically earn less than the minimum wage for a 12- to 14-hour day, six days a week. Many female workers are illiterate and can’t afford to send their kids to school. On the plantations pesticides are used without regard to effects on workers, so allergies, nausea and lumbago are commonplace. Many women have varicose veins from being on their feet for 11 to 14 hours a day.

It is not surprising that transnational companies choose to locate banana production in countries where ‘production costs’ (wages, social conditions, environmental standards) are at their least onerous. This is made all the more significant as the large supermarket chains now wield the most power. These retailers increasingly set the terms of trade with producers by demanding ever lower prices. They also impose ‘quality’ standards designed to ensure a uniform, blemish-free fruit: standards that perpetuate the intensive systems in which virtually all bananas are currently grown. No wonder then that on many banana plantations these days, more money is spent on pesticides than on wages.

Alistair Smith, of the fair-trade NGO Banana Link, sums up the situation as follows: ‘The “promise’ of free trade leads, in practice, to a driving down of prices and squeezing out of smaller producers, forcing down wages and cutting social benefits, more trade union repression, less job security, and increasing damage to the environment and human health.’

Unless the British government stands up and fights their case, the ethical, small-scale banana producers of the Caribbean will be forced out of business, and the pay and conditions on the corporate plantations poised to completely replace them will decline even further.
Some stats…

■ In 1995 the average use of pesticides in Costa Rica’s banana plantations was 44 kilograms per hectare per year, compared to an average 2.7 kilograms per hectare per year for crops in industrialised countries.

■The chemicals used on corporate banana plantations include at least four classified by the World Health Organisation as extremely hazardous (the strongest classification), including paraquat, and three organophosphates not approved for use in the UK.

■ Pesticide poisoning rates in Costa Rica are three times higher in the banana regions than in the rest of the country. Cases of sterility and cancers are increasingly frequent among workers.

Fair Trade

The Fairtrade mark is used by the Fairtrade Foundation, an independent UK charity set up by a group of charities including Oxfam, the Catholic Agency for Overseas Development (CAFOD) and Christian Aid. The mark indicates that a product has met specific criteria in the way it was produced and traded. The internationally accepted fair-trading standards are set by Fairtrade Labeling Organisations International (FLO).

Of the 4,000 remaining banana growers in the Windward Islands approximately 3,400 are members of the 48 Fairtrade groups across Dominica, St Lucia and St Vincent.
The first small consignment of Fairtrade bananas from the Windwards was shipped to the UK in 2000. To Co-op stores. Since then volumes have grown to nearly 42,000 tonnes and the percentage of Windward Islands bananas sold to the Fairtrade market has grown from 30% in 2004 to over 90% in 2009, with more than 90% of banana growers in the Islands now members of Fairtrade groups. All of Waitrose’s bananas are now fair-trade and the supermarket has an agreement with 100 producers in the Windward Islands.
Fairtrade has helped banana farmers to strengthen their organisations and regain confidence in the banana industry, which had been eroded by the long-term decline. Traditionally the farmers sold their crop to banana companies on the Islands who cut into farmers’ profits and provided few services in return. But in the face of strong resistance from banana companies, the farmers won historic legal victories in 2008 that enabled them to bypass the companies and deal directly with Winfresh, the regional banana export company.
It is only by selling their produce as Fairtrade – and receiving the Fairtrade price and premium – that the banana farmers of the Windward Islands have been able, so far, to remain in the market. The challenge now is to maintain sales to the UK Fairtrade banana market and to develop Fairtrade, regional, and other markets for additional fresh fruit such as mangoes and coconuts, along with juices and processed fruit products from the Islands. And for those farmers unable to compete in the new environment, ways must be found to diversify away from agricultural production.

Examples of Fairtrade Premium Use in St Lucia

  • A banana ripening centre is under development to expand sales to local market,
  • Farmers and workers receive an annual healthcare allowance of up to US$370 to cover GP visits, medicines, and costs of surgery or other treatment,
  • Because few farmers have access to a pension, a retirement fund was set up to provide a lump sum payment on retirement,
  • A water project supplies clean water to120 villagers in Rosalie,
  • A range of community projects were funded including improvements to farm roads, tree planting, bus shelters, equipment for a retirement home, and sponsorship of sporting activities.

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