Banana trade

• The banana trade


  The banana trade raises a variety of environmental, economic, social and political problems. Bananas are one of the world's favourite fruits and globally one of the most commonly eaten

  4th most important food product within least developed countries

  1 of 5 most consumed fruits

  5th most traded agricultural commodity
• The banana industry


  Bananas are grown predominantly in hot, rainy lowlands of tropical regions. large quantities are produced but are mostly consumed domestically in: India, Brazil and much of Africa

  India = producer - exports —> Middle East + parts of Asia

  Main commercial producing regions for export —> Central America + Caribbean

  Some countries are dependent on banana exports

  Commercial plantations operated by larger TNCs apply around 30kg of active ingredients per hectare per year.

  Fertilisers = applied regularly. After harvesting the fruit is washed with a disinfectant
• Production


  Two main groups of producers ACP GROUP - Africa, Caribbean + Pacific

  The so-called 'dollar producers of Central American republics controlled by large US TNCs - Ecuador + Colombia

  Exports - Latin America + Caribbean - 13 million tonnes, 80%

  Producers - Ecuador, Costa Rica, Colombia, Guatemala, Peru + Honduras

  Asia produces 17% of the export market

  Main country producing commercially = Philippines

  Importers - EU + the USA - 2013 each consumed 27% of total exported

  90% of price paid by end consumer never reaches the producer

  Largest slice taken by retailers

  Bananas = one of the biggest profit-makers in supermarkets
• Production 2


  Most bananas for export = grown in monoculture plantations in Latin America

  Remainder is produced in smaller-scale family farms

  In the past, 80% of the banana trade was dominated by four TNCs - Chiquita, Dol Del Monte and Fyffes. Most important producer - Noboa

  Integrated vertically up the chain

  Own or contract out plantations to other producers

  They have their own sea transport and ripening facilities

  They have their own distribution networks in consuming countries

  This chain allows them significant economies of scale gains so they can sell bananas in the USA AND EU markets at a very low price
• Production 3


  2002- The big 5 companies controlled nearly 60% of the market but their share has now fallen by volume to 45%

  -still major stakeholders

  -responsible for labour standards on plantations

  The big companies have freed themselves of direct ownership of plantations, in favour of guaranteed supply contracts with medium and large-scale producers

  As grocery market shares become concentrated in the hands of fewer retailers, suppliers have little option but to accept conditions e.g. low prices or otherwise risk being taken from the supplier list.

  An increasing number of national growing companies based in Ecuador, Costa Rica and Colombia sell their produce either to the banana TNCs or directly to retailers in the grocery sector in importing countries are increasingly dominating the supply chain.
• Issues with the world trade in Bananas: trade wars

  Bananas were the subject of one of the longest trade disputes in history, lasting 20 years from 1992 until the 2009 Geneva Banana Agreement was reaches coming into effect in 2012.

  1975- EU countries negotiated a trade agreement with former European colonies. —> Lomé convention, 71 banana producing ACP countries

  To enable for,er European colonies to develop independently without overseas aid, special and differential treatment was given with preferential tariff-free import quotas to supply EU markets

  The agreement was extended to a list of banana suppliers to the EU e.g. Ghana And Surinam

  Effects: To protect the mainly smaller, family-run farms in the Caribbean and Africa from competition with the large Latin American producers <— bananas produced cheaply on mechanised plantations

  EU markets - US transnationals which controlled the Latin American crop were supplying 75%. 7% from Caribbean suppliers.

  In 1992 - TNCs filed a complaint to the WTO that the EU practice was unfair trade.

  In 1997- WTO ruled against the EU and the Lomé convention and ordered the EU to cease discrimination

  Dispute not resolved as EU proposals did not satisfy the larger producers

  Trade war between EU and USA

  WTO approved sanctions on EU products

  A compromise was eventually reached in Geneva in 2009 between the EU and 11 Latin American countries. The EU agreed to gradually reduce tariffs on Latin American bananas; the Agreement was ratified in 2012
• Issues with the world trade in bananas: Race to the bottom


  Pursuing a race to the bottom (in terms of social and environment standards) - Low prices paid to suppliers by supermarkets -x> large companies relocate plantations to West Africa for lower labour costs and weaker legislation

  Employers usually sub-contract labour so plantation work is increasingly casual

  The work involves long shifts in unbearable heat and many workers fail to earn enough to cover their basic needs
• Issues with the world trade in Bananas: Fair-trade and organic bananas


  There has been a steady growth in the sales of so-called 'sustainable' bananas, which includes both fair-trade and organic produce

  This will help smaller scale producers in the Caribbean and in parts of Africa and will partially counter the deterioration of conditions in banana production.

  There is undoubtedly a growing market segment of ethical consumers in richer nations who are becoming aware of the shortcomings in the supply chain and are willing to pay a higher price for a certified product.
• How much was the export value of bananas in 2018

  $13.6 bn
• How much would a standard Costa Rican Banana cost in Sainsburys?

  12p

  
• How much would a Fair Trade Costa Rican banana cost?

  15-20p
• Standard, Plantation worker profit?

  4%
• Chiquiter (TNC) standard profit?

  18%

  
• Transport profit for both Fair Trade and standard?

  25%
• EU tariffs Standard and Fair Trade?

  8.6%
• Chiquiter Fair Trade profit

  6.4%
• Plantation Worker Fair Trade

  18%
• Ripening Fair Trade


  7%
• Ripening Standard


  10.6%
• Retailer Standard?


  33.8%
• Retailer Fair Trade?


  30%
• What percentage of the banana market was owned by US TNCs in 2002?

  80%

  
• What percentage of the Banana market is now supplied by 'other growers'

  57%

  
• what type of crops are banana for countries such as Ecuador?

  Cash Crop

  
• what is the definition of 'Race to the Bottom'?

  a situation characterized by a progressive lowering or deterioration of standards, especially (in business contexts) as a result of the pressure of competition.

  
• How many tonnes of bananas does India consume a year?

  30 million
• 3 examples of small countries which trade the most bananas?

  Ecuador, Guatemala, Costa Rica
• why doesn't India trade bananas if they grow and consume so many?

  They want to produce higher value products to maximise GDP.

  
• What is the main goal of Free Trade?

  To increase nations growth
• What is the main goal of Fair Trade?

  to empower marginalised people.
• Who does Fair Trade benefit?


  Vulnerable Farmers, artisans and workers in less industrialised countries.
• what do critics say is a negative of free trade?

  Punishes marginalised people and the environment.

  
• Who are the key advocates for free trade?

  World trade org, World Bank and IMF
• 4th


  Bananas are the 'n'th most important food product in LDCs
• Least Developed Countries


  What does LDC stand for?
• susceptible to disease


  Why are bananas treated with so many chemicals?
• commercial plantation


  A banana plantation run by a TNC on a large scale
• Transnational corporation


  What does TNC stand for?
• cotton


  What's the one industry within farming that has a larger agrochemical impact that bananas?
• loss of terrestrial and aquatic biodiversity


  Loss of forest and contaminated water ways leads to...