World trade in bananas

• Bananas are the forth most important food product within least developed countries, being a stable food for around 500 million people.
• Of all fruits, bananas are the most internationally trades, generating revenues of over $15 billion per year (one banana contains more than an adult's daily potassium requirement)
• Bananas (cash crop) are grown predominantly in hot, rainy lowlands of tropical regions.

  2019 - 120 million tonnes produced globally.

  Top 4 producers: India, China, Indonesia, Brazil (also the four largest consumers as most output is consumed domestically)
• Banana varieties are susceptible to diseases and are treated with chemicals throughout the production cycle. Commercial plantations operated by TNCs apply around 30kg of active ingredients per hectares per year e.g. pesticides
• Banana plantations cost the environment in terms of deforestation, soil fertility (contaminants) and loss of biodiversity (especially aquatic life as pollutants run into water courses).
• World trade is dominated by two different groups of producers: the ACP group (Africa, Caribbean and Pacific), which mainly included small-medium sized producers, and 'dollar producers' of Latin America (primarily Ecuador and Colombia) controlled by US TNCs.
• Most bananas for export are grown on large monoculture plantations, especially in Latin America and Africa, which produced 17 million tonnes for the market in 2018. Asia is 17 per cent of the export market
• The largest importers are the EU and USA.

  Around 85 per cent of the price paid by the end consumer stays in the richer country and never reaches the producer, who has most risks of producing a perishable fruit.

  The largest price is taken by retailers, with 5 to 9 per cent of total value given to workers, and 36 to 43 per cent taken by the retailers themselves.
• In the past, the banana trade was dominated by four large TNCs: Chiquita, Dole, Del Monte (US based) and Fyffes (Ireland based). These are vertically integrated, meaning they own all facilities in the supply chain.

  2002 - controlled 70 per cent of the market

  2017 - controlled less than 45 per cent
• Dispute began in 1975, when EU countries negotiated a trade agreement with former colonies (Lome Convention) - 71 ACP countries.

  These countries were given SDT, with tariff-free import quotas to supply EU markets, protecting smaller, family-run farms in ACP countries.
• The US TNCs that controlled the Latin American crop were supplying around 75 per cent of the EU market, with only 7 per cent coming from Caribbean suppliers.

  1992 - TNCs filed a complaint to WTO due to fair trade

  1997 - WTO ruled against the EU and ordered the cease of discrimination
• This led to a trade war between the USA and the EU, resulting the US government to impose WTO-approved sanctions on EU products. A compromise was eventually reached in Geneva in 2009, with the EU agreeing to reduce tariffs on Latin American bananas from 2012 onwards
• Tariffs came down from €176 to €75 per tonne between 2012 and 2018. This increases the chance of over-supply in the EU market so, to safeguard other producers, the EU will not reduce the tariff further.
• Because of the low prices paid to suppliers by supermarkets, many of the larger companies are relocating their plantations (West Africa), in search for lower labour costs and weaker legislation - called a 'race to the bottom'
• There has been a steady growth in the sales of so-called 'sustainable' bananas, including fair trade and organic produce, helping smaller-scale producers in Africa and Caribbean to partially counter the deterioration of conditions in banana production.
• The Cavendish cultivar accounts for 47 per cent of bananas grown, making up 99 per cent of global trade.
• Summary

  • mass production in developing countries have negative environmental consequences
  • TNCs hold much control in markets and political decisions
  • WTO supports free trade against protectionist activities at all cost
  • geopolitical processes - trade disputes spread and escalate trade wars in regional trade blocs
  • food production has shifted away from growers to retailers in HICs
  • growing sustainable consumer market