Bananas Flashcards
(12 cards)
How important is the banana trade ?
-A staple in 500 million people’s diets
-4th most important food within least developed countries
-Revenues of over $15 billion a year
-Globally bananas are the 5th most traded agricultural commodity with global exports (23.3 million tonnes from Caribbean and Latin America)
-80% of bananas that are produced are for local or national consumption
What are the conditions needed to grow bananas ?
Hot, rainy lowland of tropical areas.
India, China, Indonesia and Brazil are top 4 producers and consumers.
Main regions being Latin America and Caribbean (Ecuador, Costa Rica)
What producer groups is banana trade dominated by ?
-ACP (Africa, Caribbean and Pacific) which includes mainly small - medium sized producers.
-TNCs
Most bananas for exports grown on large monoculture plantations (especially in Latin America like Colombia, less so in the Caribbean)
What is the pattern of trade of bananas ?
-Developing regions export a low-value primary product to more developed countries.
-Exports dominated by Latin America and Caribbean,producing 17 million tonnes for export market in 2018.
-Leading producers are Ecuador, Colombia, Costa Rica and Guatemala.
-Asia produces 17% of the export market.
-Largest importers are EU and USA.
-Around 85% of the price paid by the end consumer stays within the reacher country and never reaches the producer.
-Workers on average receive 5-9% of the total value of bananas, retailers capture 36-43%
Explain the TNCs in the banana trade
-In the past 4 TNCs dominated, Chiquita, Dole, Del Monte and Fyffe’s.
-They were vertically integrated in the supply chain (own or contract out plantations, own sea transport, own ripening facilities).
-In 2002, the 5 big companies controlled 70% of the market, their share fell to less than 45% by 2017.
What did the shift in power of TNCs cause ?
-Big companies have free themselves of direct ownership of plantations, in favour of guaranteed supply contracts with medium and large scale producers.
-An increasing number of national growing companies (in Ecuador, Costa Rica and Colombia) sell their produce to TNCs (as distributors) or directly to retailers in developed countries e.g. was-mart and tesco
-A shift in power has given retailers an increasingly dominant role in the supply chain
-As market share becomes concentrated in the hands of fewer retailers, suppliers have little option but to accept conditions like low prices, discounts and delayed payments. Otherwise risk being taken from supplier list.
Explain the trade war
-Bananas were subject of one of the longest trade wars in history, lasting 20 years, until 2009 Geneva banana agreement reached.
-The Lome Convention was made with ACP countries and EU giving special and differential treatment with tariff-free import quotas to supply EU markets.
-Enabled former EU countries to develop independently without relying on overseas aid
-Protected mainly small, family run farms in Caribbean and Africa against large Latin American producers, whose bananas were produced more cheaply on mechanised plantations
-At the time US TNCs were supplying 75% of EU market, only 7% from Caribbean
-TNCs filed a complaint to GATT now (WTO) that the practise constituted unfair trade, in 1997 WTO ruled against EU to cease discrimination
-Led to a trade war between EU and USA. US gov imposedWTO-approved sanctions on a range of EU products
-Compromise reached in Geneva in 2009, EU agreed to reduce tariffs on Latin American bananas from 2012 onwards
-Tariffs came down from £175 to £75 per tonne 2012-2018
What are the concerns from the ACP countries ?
-That they are not able to compete
-Of the Caribbean countries only Dominican Republic, Belize and Windward Isles are competing successfully with larger producers
-Their focus on organic and fair trade bananas is meeting the needs of growing market for ethical, sustainable-produced food in richer EU countries
Explain the race to the bottom
-Due to low prices paid to suppliers by supermarkets, many of the larger companies are relocating their plantations
-Shifting to West Africa, in search of lower labour costs and weaker legislation
-Called ‘pursuing a race to the bottom’ in terms of social and environmental standards
-Plantation work is based on sub-contracted casual labour
-Work involves long shifts in unbearable heat, many workers barely earn enough to cover basic needs
Explain fair trade and organic bananas
-There has been a steady growth in ‘sustainable’ bananas
-Helps smaller-scale producers in the Caribbean and Africa and partly counter the deterioration of conditions in banana production
-A growing market seem,nt of ethical consumers in richer nations who are becoming aware of shortcomings in the supply chain and willingly pay a higher price for a certified product
Explain disease of bananas
-The Cavendish cultivar is the most popular grown banana variety, accounting for 99% of global trade
-Resistant to TR1, a fungus that wiped out the previous most popular banana variety
-A new disease TR4 is ravaging the Cavendish plantations in South East Asia and Australia and spreading to Africa.
-As bananas have no seeds and reproduce asexually, they can’t be hybridised
-Only option is to genetically modify the variety, or encourage consumers to eat other varieties
Summarise
-Mass production in developing countries has negative environmental consequences
-TNCs have a large degree of control in markets and influence political decisions
-WTO will support free trade against protectionist activities
-Geopolitical processes mean trade disputes can spread and escalate to trade wars between regional trading blocs
-Power and control of food production has shifted away from growers and towards retailers in HICs
-More ethical, sustainable consumer markets are growing (slow, as only people who can afford)
