Banana Trade

• Bananas are the fourth most important food product within least developed countries, being a staple food for around 500 million people
• Bananas are the most internationally traded fruit, generating a revenue of over $15 billion per year
• A single banana provides more than an adult's daily potassium requirement
• Globally, bananas are the fifth most traded agricultural commodity within global exports, primarily from Latin America and the Caribbean, estimated at 23.3. million tonnes
• Bananas are a cash crop, although 80% of bananas are produced for local or national consumption
• Bananas are grown predominantly in hot, rainy lowlands of tropic regions. The top four producers of bananas are India, China, Indonesia and Brazil, and these are also the top consumers
• Global production of bananas in 2019 was 120 million tonnes
• Main reigion producing bananas are concentrated in Latin America and the Caribbean. Some of these e.g. Ecuador and Costa Rica are highly dependent on banana exports
• Bananas are susceptible to disease, so almost all are treated with chemicals
• Commercial plantations operated by large TNCs apply around30kg of active ingredient, pere hectar, per year. These include fungicides and insecticides
• With the exception of cotton, the banana industry has the largest agrochemical input into the environment
• Global Banana Trade

  • Dominated by the ACP group (Asia, Caribbean and Pacific) controlled by US TNCs
  • Most bananas grown on monoculture plantations in Latin America and Africa. Banana production in Caribbean controlled less by TNCs and more by small farmers
  • Exports dominated by Latin America and Caribbean countries, producing 17 million tonnes in 2018
  • Leading producers are Ecuador and Costa Rica
  • Largest importers are the EU and USA
• In Asia, which produces 17% of banana export market, the main producer is the Philippines. In Africa (smaller exports) the two main producers are Ivory Coast and Cameroon
• Around 85% of the price paid by the end consumer for a banana stays in the richer country and never reaches producers, who are at the highest group
• Large price taken from banana trade is one of the biggest profit markers in supermarkets. Workers receive 5-9% of a bananas value, wheras retailers capture 36-43%
• Banana Price Split

  • Retailer = 42%
  • Ripening facility and wholesaler = 15%
  • Harvesting and picking = 7.5%
  • Plantation management = 4.5%
  • Import duties and importer = 7%
• In past, banana trade has been dominated by TNCs: Chiquita, Dole, Del Monte (all US based) and Fyffes (Ireland based). These are all vertically integrated in the supply chain, they own or contract out plantations to other producters
• In 2002, big 5 companies controlled 70% of the banana market, but their share fell to less than 45% in 2017
• Bananas were the subject of the longest trade disbutes in history, lasting 20 years from 1992 to 2009 when the 2009 Geneva Banana Agreement was reached in 2012
• Reasons for the Banana Trade War

  • Dispute began in 175 when EU agreement Lome Convention was made with 71 ACP countries
  • Countries received SDT with tariff free import quotas for EU markets
  • Agreement extended to suppliers e.g. Cameroon, Dominican Republic, Ivory Coast etc.
  • Protected smaller, family run farms in Caribbean and Africa
  • US TNCs controlled Latin American crop, supplied 75% of EU market, only 7% came from Caribbean
  • Trade war between USA and the EU, resulted in US imposed WTO approved sanctions
• Resolving the Banana Trade War

  • Compromise reaches in Geneva in 2009 with the EU agreeing to gradually reduce tariffs on Latin American bananas from 2012 onwards
  • Tariffs came down from €176 to €75 per tonne between 2012-2018, following EU trade agreement, this deal now applies to other Latin American coutnries
• Poor Conditions

  • Low prices paid to supermarkets have lead to companies relocating their plantations to West Africa
  • This is to search for lower labour costs and weaker legislation
  • Called pursuing a 'race to the bottom' in terms of social and environmental standards
  • Banana plantation work involves long shifts in unbearable heat
• Fair Trade and Organic Bananas

  • This increasing trend helps smaller-scale producers in the Caribbean and in parts of Africa, and will counter the deterioration of conditions in banana production
  • Growing market segment of ethical consumers in richer nations who are becoming aware of shortcomings in the supply chain and are willing to pay a higher price
• Disease and Bananas

  • Cavendish Cultivar variety of banana account for 47% of bananas grown and around 99% of global trade
  • Grown commercially because it is resistant to tropical race 1 (TR1) which led the previous most popular variety to extinction
  • New disease, TR4, is killing Cavendish plantations in South East Asia and Australia, not spreading to Africa
  • TR4 can lay dormant in soil, until bananas are ripe
  • The only way to get rid of this is to genetically modify them
• Banana Trade Summary

  • Mass production in developing countries has negative environmental consequences
  • TMCs have large control of markets and can influence politics
  • WTOs support free trade at all costs, even when protection may be to help development
  • Geopolitical processes mean that trade disputes can spread and escalate to trade wards
  • Power and control has shifted from growers and towards retailers in HDEs
  • However, ethical consumerism is increasing