January 1998
Anne-Claire Chambron and Alistair Smith
Bananas are the fourth most important staple crop in the world and are critical for food security in many tropical countries. For at least 15 Latin American and Caribbean producer countries, the Cavendish variety of banana is a crucial source of export income, but there are actually more than 85 countries involved in the production of bananas and plantains, whilst several million people depend on the banana trade for their livelihood. Just 20% of the bananas produced enter world trade, but the socio-economic and ecological sustainability of this production for export is increasingly being documented and challenged in both producing and consuming countries. Apart from the 20% of bananas and plantains produced annually for trading on the world market, the crop is grown by millions of small-scale farmers in Africa, South Asia and Northern Latin America for household consumption and/or local markets. Most of this production is achieved with few or no external inputs. However, once a producer grows for consumers in the industrialised world, considerable and growing levels of 'external' inputs (seed, chemicals, fertiliser) are required to effectively compete in those markets.
In Central America, there is a legend telling of the creation of the banana. The story takes us to an idyllic scene comparable to the Garden of Eden. A group of people, sitting on the banks of a murmuring stream under a big shady tree, are enjoying the peace and quiet. They are chatting until the moment God joins them.
This happened on a Saturday, just after the creation of the world. In those days, God used to mingle with the people and speak with them from time to time. Moreover - so the story goes - the Creation was not yet completely finished, a few things were still missing. So God asked the people if they could think of something they would like to be created. After a moment of consideration, they started to talk about it. Everyone agreed that it had to be a fruit, a fruit which embodied all qualities and had no shortcomings. In other words, they decided to ask for a perfect fruit. God agreed and asked what that fruit should be like. Then all of them gave their opinions, first Diego the Toothless: "A fruit that is easy to chew, Lord, so that those who have no teeth can eat it." Then came Pedro Lazybones: "It should not be too much trouble to peel, like the pineapple." Everyone said what the fruit of their dreams should be like. I would have to be nutritious, edible in its entirety, easily digestible, not stringy, not liable to rot, not too sweet or too sour, not too hard or too soft, enjoyed by children and adults, available throughout the year. When they could not think of any other qualities, the people fell silent and looked at God expectantly.
Then God said: "Perfect things do not belong to this world. I am always pleased if the people can improve them. Should the opposite be true, the world would be very boring. In this case, however - because of your unanimity - I will respect the voice of the people and make an exception. But only this time." And then God created the banana.
It is only a story. But it reflects the importance of the banana in the daily lives of the people in Central America. However, the idyllic scene in this story is in striking contrast with reality. The unanimity described in the story has disintegrated into oppressive and exploitative labour relations. The luxuriant garden has been seriously harmed by the range of chemicals used in large-scale banana cultivation. The direct relationship between demand and production has been overrun by a jumble of political trade interests and regulations. The world of banana bears a greater resemblance to a jungle rather than to a neat Garden of Eden.
Economic power in the banana trade has remained in the hands of a few large businesses which, historically, have not had to consider their socio-economic and ecological impact on the people and the countries from which they source the bananas. Workers on medium- and large-scale plantations and small farmers supplying the world market are marginalised from the benefits of this lucrative trade, and recent competitive pressures have forced producers to seek productivity gains, often at the cost of an increasingly negative impact on labour and the environment. The period of relative stability in the market which lasted until the late 1980s came to an end, and the transnational companies entered the 1990s with a period of intense competition. In their drive for EU and world-wide market share, they influenced the governments to such an extent that countries from Colombia to Belize had to accept impositions with regards to: tariff duties, customs preferences, duty-free export and import of their products and raw materials free of taxes, and preferential financial treatment in the banking systems of the host countries. Transnational companies also pressurised Latin American governments to push through new labour policies directed at the partial or total modification of existing laws. Taking advantage of the world-wide banana market crisis, the big four transnational companies (Chiquita, Dole, Del Monte, and Fyffes), national producer companies such as Noboa in Ecuador and governments in Latin America are slowly eliminating many of the workers social guarantees. These measures include: refusing to sign collective agreements; reducing salaries; increasing the length of the working day; fuelling anti-union feeling through the mean of 'solidarismo'; increasing persecution of trade unionists and abandoning plantations without paying the social benefits of the workers.
Intensive banana production and the application of pesticides can have a devastating toll on the ecosystem of the producing countries. For optimum production, plantations need an array of drainage ditches, all of which eventually empty into the region's rivers and finally the sea. According to a IUCN report of 1992, the average use of pesticides on banana plantations in the second major banana exporting country in the world, Costa Rica, is as high as 44 kg/ha/year, compared to an average of 2.7 kg/ha/year for most crops in industrialised countries. The EARTH College (Escuela de Agricultura de la Region Tropical Humeda) estimates that of the fungicides applied by aeroplanes some forty times during each cultivation cycle, 15% is lost to wind drift and falls outside of the plantation, 40% ends up on the soil rather than on the plants and approximately 35% is washed off by rain. This results in a 90% loss of the estimated 11 million litres of fungicide, water and oil emulsion applied each year to the banana production regions. Furthermore, for every ton of bananas shipped, two tons of waste is left behind, not least mountains of plastic bags sprayed with herbicides.
Costa Rica is also at the top of the list of countries with a high incidence of pesticide poisonings. The average consumption of pesticides per capita is 4 kg. per person per year - eight times as high as the world average of 0.5 kg. - and twice as much as the average in Central America. Studies conducted by the National University of Heredia reveal that rates of pesticide poisonings are three times higher in the banana regions than in the rest of Costa Rica. According to a 1993 report, banana production rates first for occupational accidents (72%), followed by decorative plant and flower production (7%), sugar cane (6%), coffee (5%), pineapples (4%) and pesticide manufacturers (2%). The figure given for occupational poisonings in Costa Rica is 4.5% (i.e. 4.5% of all agricultural workers suffer from some kind of pesticide poisoning every year), and is well above the World Health Organisation estimate of 3% for developing countries.
1996 however brought good news for banana consumers and producers. In mid-November, Rotterdam, the world's largest port, was the backdrop to a significant moment in the history of world trade. The first shipments of fair trade bananas arrived by barge from an environmentally managed plantation in Ghana and from a small farmers' organisation in Ecuador. Some 400 people from the Dutch government, press and supermarkets, from the producer organisations and from sister solidarity organisations across Europe greeted this long-awaited moment. The initiative was organised and financed - complete with prime-time TV adverts - by the Dutch development agency, Solidaridad. The consumer guarantee is provided by the familiar Max Havelaar Foundation, breaking new ground by including environmental criteria together with the better-known social criteria. A new company, Agrofair, one third owned by the producers, has also been set up. By Christmas, in just one month, the Ok banana had achieved a 10% share of the highly competitive Dutch market. This alone makes history for fair trade (the most successful product previously had 5% of the Swiss coffee market). It is available in all seven major supermarket chains. But what is likely to shake up the big companies even more in the medium to long term, is that the producers are receiving between 40% and 80% above world prices, whilst consumers are paying the same price as for a conventional banana. All along the chain the margins have simply been trimmed. Finally, this price structure also allows for a 'profit' to be invested back in to the producer organisations: in Ghana, this will give plantation workers 25% ownership of the company over the next five years; whilst in Ecuador it will go to strengthen the small farmers' organisation and to finance an environmental improvement programme.
World banana production amounts to some 50 million tonnes per year. The cultivation of bananas is concentrated in Africa, Asia and Latin America because of the climatic conditions. In 1970, Latin America was the main producer with around 60% of total production. Asia ranked second with 24%, while Africa accounted for 10% of the total world production. But within the last 20 years, there has been a clear shift in the volumes produced in each continent. In 1992, the Latin American share had fallen to 43%, whereas production went up in Asia to 40%. Production in Africa remained stable at 10%. Six main producer countries (India, Brazil, Ecuador, Philippines, China and Indonesia) account for 55% of total world production. The two biggest banana-producing countries, India and Brazil, are hardly involved in the international banana trade at all.
The differences between exporters are significant in term of the prevailing production systems and costs of production and hence their competitiveness on world markets. The major contrast is between plantation production of Latin America and the smallholder production of the Eastern Caribbean Islands. Given the topography of the latter, plantation production and the potential to reap economies of scale is not generally possible. Farms are typically less than two hectares and demand a labour intensive production system. This is in stark contrast to plantations of Latin America which may extend over 5,000 hectares, and require massive capital investments in roads, drainage and irrigation, cableways and packing facilities. Such investment costs can reach $13,000 per hectare not including the price of the land. While production costs on the plantations are low, an unhappy history of low wages, limited workers' rights, poor working conditions and consequent political and social unrest has attracted much concern over many years.
The Latin America banana exports are dominated by three transnational companies (TNCs): United Brands (United Fruit Co.), known to the consumer under the brand name Chiquita; Castle & Cook (Standard Fruit Co.) with the brand name Dole; and Del Monte. These TNCs account for almost 64% of the entire world trade in bananas, which allows them to control the market and, to a considerable extent, to set the rules of the game. In comparison with the sales figures of the 'big three' and the financial strength that they imply, many producing countries have economies that are tiny. Most significantly, the combined ACP export earnings from bananas are only around 10% of Chiquita's total sale, and only 4% of all the banana TNC sales.
This oligopolistic structure of the banana trade is largely connected with what is sometimes referred to as the 'vertical integration' of these companies. They own large-scale banana plantations, special refrigerated ships as well as ripening and distribution facilities in consumer countries. Such vertical integration is only feasible for large corporations and allows them to achieve considerable economies of scale and comparative advantage over smaller producers and traders. It enables them, for instance, to continuously supply quality products at a relatively low price. Historically, these companies have been able to maintain high levels of profitability from their banana production and trading activities. In May 1995, the Association of Panamanian Banana Growers (ABAP) reported that the price to producers had fallen from $5.25 per 18.4 kg case in 1992 to $3.86. Meanwhile, a European wholesaler sells Panama bananas to retailers at around $ 26. The very low returns to small family farmers (5-12%) and plantation workers (1-3%), as a proportion of the consumer price, mean that this fruit has become a classic example of inequitable primary commodity trade.
The largest producer and marketer of bananas is the US company, Chiquita (formerly United Fruit, as well known for paying bribes in Central American countries and its links to a coup in Guatemala as for its fruit). Chiquita is owned by United Brands and sells about a third of world's supply of bananas from which it obtains some 60% of its profits. (Chiquita's prepared foods division, mostly meats and packaged goods, accounts for about half of its sales but less than 10% of profits). Close on its heels is the US company Dole, owned by Castle & Cooke, a property and food group. Dole is the world's largest producer and marketer of fresh fruit and vegetables. Both these companies own vast banana plantations in Central America, and together effectively act as price-setters. The third largest transnational banana company is Del Monte, which finally was taken over in June 1996 after successive take-overs by Santiago based Grupo IAT, which also owns Chile's third-largest fruit exporter. (Del Monte's canned food division eventually went to a consortium of Del Monte management, Japan's Kikkoman food company, and Citicorp investors). Meanwhile, Irish-based company Fyffes (which together with WIBDECO, a company set up by the Windward Islands' governments, bought up British company Geest in 1995) is the UK and Ireland's main banana distributor. Since 1993, Fyffes has bought into a dozen joint ventures across the EU and has moved into third position in the European market, ahead of Del Monte.
These transnationals are more closely associated with exports from Latin America, and especially Central America, where they are directly involved in the production of around 60% of their export supply. However, they were quick to become involved in the Philippines and more recently in Indonesia after the opening of the Japanese market in the 1980s. They are also active to a lesser extent in certain ACP countries. Chiquita, for example, has been involved in the management of the banana industries of Belize, Surinam and Jamaica, and until the mid 1980's owned Fyffes which was closely involved with ACP production. Since the beginning of the 90s however, the transnational companies are tending to free themselves of direct ownership of plantations, in favour of guaranteed supply contracts with medium- and large-scale producers in the countries where they operate. This trend is not just confined to the banana sector, but allows the Northern-based company headquarters to shift the responsibility for labour and environmental conditions in the plantations onto local shoulders, saying that these conditions are not in their control and that national legislation is in place to ensure minimum standards are respected. Trade unions and other NGOs in the region have regularly reported that wages, labour conditions and environmental management practices are generally speaking as bad, if not worse, on these nationally owned plantations as in their transnationally owned neighbours. Adequate labour and environmental legislation often exists, but is rarely enforced until directly challenged in court.
The banana companies Dole Fresh Fruit and Chiquita, and the chemical companies Dow, Shell and Occidental currently face lawsuits from 16,000 workers in 11 countries over the harmful effects of the highly toxic chemical nematicide Nemagon (DBCP) which include birth defects, damage to the liver and kidneys, and sterility. This insecticide continued to be used on banana plantations, in some cases up to 1990, after it was banned by the US Environmental Protection Agency in 1977, and even though the companies were aware of the risks encountered by workers. Dow Chemicals and Dole are presently seeking to settle the long-running legal claims out of court. Dow, who claim that all their products carry appropriate health warnings and that they can not be held responsible if those warnings are overlooked or ignored, have made an offer of more than US$20 million to workers in more than a dozen countries. A Dow spokesperson made it clear that it was not an admission of guilt, simply a way to end an already long and uncertain legal battle. The company has placed strict conditions on the offer: workers involved in the claim have just one month to accept the offer, and the offer will be withdrawn if fewer than 95 per cent of the employees affected accept. Dole, possibly in a break of ranks with the other US-based banana transnationals, are reported to have also made an out of court offer to affected banana workers. In both cases, it is likely that legal costs will swallow up a large part of the cash on offer. The likely level of payment is regarded by affected workers as derisory, but they have little option but to accept.
Carlos Mora, Secretary of Environmental Affairs at SITRAP - the plantation workers' union in Costa Rica's Atlantic zone, was himself made sterile from handling DBCP, and in an earlier case, was forced to settle for a US $7,500. Another case, that of Gilberto Artavio Cambronero who was made sterile, was heard in Costa Rica. Although the court ruled against the Standard Fruit Company (Dole), they awarded compensation of only US $388. The sum was ultimately paid out by monthly payments of US $6.50 from March 1989 to 1994. In contrast, workers at the Californian plant making the chemical were given compensation of US $1 million each.
DBCP has now been banned. But such a tragedy could recur. The chemicals the workers are using include at least four classified by the World Health Organisation as extremely hazardous (the strongest classification) including three organophosphates not approved for use in the UK, and Paraquat an extremely dangerous product which has been banned in Finland, Austria, and Sweden.
The banana sector has been an important pillar of the Ecuadorean economy since 1950, when favourable natural conditions on the coastal plain and a rising price level led to a rapid expansion of production. In 1952, Ecuador had already become the world's largest exporter. In the late 1980's, the approaching integration of the European Union and the opening up of new markets in the former socialist countries led to high expectations of growing demand for bananas. In anticipation, Ecuador expanded its production of bananas more than any other country. Large and medium-sized producers increased their area of farm land and invested in higher outputs per hectare. Small farmers, in particular cocoa producers, converted to small-scale banana cultivation. Total exports thus doubled from 1,360,000 tonnes in 1986 to over 2,700,000 tonnes in 1991, and to 3.8 millions tonnes in 1996. After petroleum, the banana export is the country's main source of foreign exchange, accounting for 28% of its export earnings in 1996.
To encourage investment in new production techniques, Standard Fruit Company (Dole) introduced a method that was soon adopted by other exporters. Dole concluded contracts with major producers for a period of five years, under which the producer agreed to supply exclusively to Dole. In exchange, the so-called 'productor asociado' received credits and permanent technical assistance. This exporter-producer relationship stepped up productivity on the plantations, but Dole took no responsibility for the working conditions and payment of the plantation workers. This was shifted upon the 'independent' producers. In addition to these associated producers, there was also a group of independent producers who served as a 'buffer' to accommodate fluctuations in the demand for bananas on the world market. They sell their bananas through the traditional system of 'cupos', which means that exporters purchase part of the crop to increase the volume of exports when necessary. This system is governed only by the laws of supply and demand, without any of the parties entering into obligations through contracts or loans. The only facility provided by the exporter is the packaging. Transport is normally arranged by the producer or an intermediary. The position of this group of producers is even poorer than that of the 'productor asociado'. They have no guarantee that there will be a buyer for their fruit, which makes their dependence complete. The exporter has absolute power because he controls the export facilities. In fact, the trader dictates the price. The only choice the producers have is between selling their crop or letting it rot. Today, only a minor portion of the volume exported by the export companies is actually produced by them. For example, the biggest national exporter, NOBOA, produces only 20% of the bananas it exports and buys the remaining 80% directly from other producers.
According to the secretary of the Federacin Clasista de Trabajo del Oro, affiliated to the FUT (Federacin Unitaria de Trabajadores), the rate of unionisation among employed plantation workers is extremely low. The large companies have succeeded in breaking the unions' power by paying the formal minimum wage to the union members and higher wages to the other workers. The union members are also given the hardest work to do on the plantations. The position of the workers has deteriorated as a result of the international banana crisis. Plantation workers are no longer given permanent contracts. Because Ecuador's labour legislation entitles workers to a permanent job after one year, the large businesses force them to renew their annual contracts under fictitious names each year. Moreover, "recalcitrant" workers or union members are put on a "black list".
The United States, Europe and Japan are the main importers of bananas, together purchasing around 80% of all exported bananas. In 1995, world banana trade was valued at over US$ 8 billion, with the European Union being the largest importer, consuming nearly 35% of traded bananas (one reason why the European Union's policy concerning the banana trade has had a strong impact on the international trade). Each of the 350 million EU citizens now consumes an average of just over 10kg per year. The US imports from Latin America and the Philippines: Japan mainly from the Philippines, but also from China and South-Africa. Europe produces about 20% of its needs, and imports the rest from various regions: from former colonies (the so-called ACP bananas) and from Latin America (dollar bananas). European bananas come from Spain, Portugal and Greece, and from French overseas territories, Martinique and Guadeloupe. Historically, special ties have developed between certain producing and consuming countries, often within the context of their common colonial history of repression and dependence. This has resulted in a diversity of national trade regulations in the individual European states.
This caused no problems until the Single European Market was to be implemented in 1993, when a variety of relations, interests and regulations had to be harmonised. Already complicated in itself, this process was exacerbated by two further requirements: to comply with GATT commitments and to guarantee the privileged access to European market for ACP bananas.
During the various GATT rounds, a process of trade liberalisation was established. This was clearly in contradiction with the Lom Convention between the EU and its former colonies in Africa, the Caribbean and the Pacific (ACP), which had been drawn up from a development policy perspective: a policy that recognised that trade can contribute to development. The fourth Lom Convention was signed on 15 December 1989, and included a so-called "Banana Protocol". This Protocol gave special concessions to ACP countries. It stated that no ACP country should, as a consequence of the establishment of the Single European Market, be placed in a less favourable position with respect to banana exports to the EU.
The European Union's new banana policy, as laid down in Regulation 404/93, became effective on 1 July 1993. It seeks to combine two of the Community's objectives: creating an integrated market for bananas and ensuring access to that market for ACP and European suppliers. It involves a combination of tariffs and quotas. European bananas form a special category whereby they are not subject to any customs duties, because they come from European territories and do not cross the EU's borders. However, a ceiling has been placed on the production level: quantities exceeding the quota are subject to a levy. ACP bananas may also be imported tariff-free up to a certain maximum. In this case too, a levy of 750 ECU per tonne is imposed when the quota is exceeded. European bananas were assigned a quota of 854,000 tonnes whereas the ACP quota was established at 857,700 tonnes per annum.
The Regulation also includes provisions for non-traditional ACP bananas (i.e. bananas that are produced in ACP countries which were not traditionally supplying the EU like the Dominican Republic or Ghana, or bananas that come on top of the fixed quota), and the so-called "dollar bananas". The latter are produced in Latin America and owe their name to the fact that they are traded by North American transnational companies. The dollar and non-traditional ACP banana imports to the EU must be matched with an import licence. An allocation system based on the historical market shares of established parties applies to the distribution of the dollar quota among the operators. Licences are allocated according to three categories:
The two first categories are then subdivided into three operators' categories: ripening, primary import, secondary import. Each company will receive a number of import licences, after calculations by Brussels, for its market shares. The complex system of allocation is meant to make up for the difference of costs between ACP and dollar producers. It is reported that ACP operators are paying about 9-10 US$ per box for Caribbean bananas while dollar bananas are valued at $3.5-5 per box. The 'B' licences distributed to ACP operators allow them to obtain a quota rent on the associated imports of dollar bananas into the EU (i.e. they can lease their licences to dollar operators). This quota rent is then available to cross-subsidise imports of ACP sourced bananas.
The Latin American producing countries challenged the arrangement and submitted a complaint to a GATT panel in 1993. The European Commission then tried to ease the pressure by making a reconciliation proposal on 14 December 1993. Four countries from the dollar zone gave up their resistance in exchange for a gradual enlargement of the general dollar quota from 2 million tonnes to 2.1 million tonnes as of 1 October 1994 and 2.2 millions tonnes from 1 January 1995. The quota was then raised again in 1996 after the enlargement of the EU to three new members states: Sweden, Finland and Austria. It was also agreed that the import tariff would be reduced from 100 to 75 ECU per tonne. On top of that, the four countries concerned - Costa Rica, Columbia, Nicaragua, and Venezuela - were offered a guaranteed proportion of the total quota through the application of a system of export licences. Together they account for 49.4% of the dollar quota. Of the export licences implemented, 70% are handed over to national governments and 30% are issued directly to traditional exporters, i.e. national and/or international companies.
This compensatory arrangement, the so-called "Framework Agreement", has created bad feelings among the other Latin American producing countries. They feel that the European Union had managed to break their opposition to the arrangement by pursuing a sly policy of divide and rule. The TNCs are also unhappy about the Framework Agreement. Their former export position is threatened, now that national governments are entitled to distribute export licences. Despite all these objections and despite the condemnation of Regulation 404/93 by the GATT panel, the Framework Agreement was included in the last phase of the Uruguay Round signed in April 1994 in Marrakesh.
But the case itself was pursued by the United States, which itself actually produces or exports very few bananas. On May 8th 1996, in Geneva, the formal establishment of a dispute 'panel' in the World Trade Organisation was announced: between the EU on the one hand, and the USA, Guatemala, Ecuador, Honduras and Mexico on the other. A panel of three selected lawyers arbitrated on the vexed question of whether or not the European Union's single market banana regime (404/93) was 'discriminatory' to US-based corporate - and Latin American governmental - interests. This legal challenge followed two earlier GATT dispute panels over EU banana trade policy, well over a year of threatened sanctions against the EU as well as Costa Rica and Colombia (using punitive US domestic trade law Section 301), and numerous cases - both resolved and unresolved - brought by German governmental and corporate interests before the European Court of Justice in Luxembourg since 1993.
The US and the Latin American governments targeted what they argued is a discriminatory EU licensing system. At stake however is the question of sovereign rights to 'protect' preferred - and often more sustainable - producers with different tariff levels and supply quotas, i.e. sovereign rights to determine one's own national or regional agricultural trade policies. Some thirty governments were directly involved in the dispute, and the complaints revolved around the charge that this system contravenes articles in both the GATT and the new General Agreement on Trade and Services (GATS) signed in Marrakesh in 1994.
A great deal of criticism of the Banana Regulation 404/93 comes from strong advocates of neo-liberalism, who are averse to any type of regulation. An example is the World Bank report 'EU Bananarama III'. It runs down the European regime, arguing that free trade is much cheaper for the consumer and that assistance to ACP countries should be provided in more efficient ways. It conveniently forgets that the international banana trade is fully controlled by a small number of powerful transnational companies so that there is virtually no scope for competition.
The European regime has overall met its stated objectives, and effectively given the least competitive ACP producing countries a guaranteed market access. But it was not able to stop the process of the increasing concentration of the market, and to prevent the price fall in many previously "protected" markets which forced the most vulnerable producers out of the market. Furthermore, in the signatory countries of the Framework Agreement, where export certificates must match import licences, it has sometimes even accelerated the concentration of the production into fewer hands. In the current situation, there are virtually no small-scale banana exporters in Latin America. Only in Ecuador, Honduras and Dominican Republic are there a few thousand. The vast majority are in the Windward Islands - some 25,000. There are also about 10,000 in the Canaries, 500 in Jamaica and a few hundred more in the French islands of Martinique and Guadeloupe. Taken together these 40,000 or so small exporters currently supply less than 15% of the EU market, with a maximum potential to supply up to about 20%. In Ecuador, still the largest exporter in the world, the small farmer exporters are used as a kind of 'buffer stock', getting squeezed out of the market as soon as the world market shrinks slightly. This happened in early 1993 as the market became saturated and producer prices fell sharply, and when the EU's regime excluded Ecuador from the Framework Agreement: cuts in the temporary over-supply fell mainly on the shoulders of the smallest producers who were unable to sell their fruit for export.
In Ivory Coast in the early 1990s, it was the process of privatisation of the state marketing boards which pushed several hundred family farmers out of the export market. This process was exacerbated by a major expansion into West Africa by the big companies who had hitherto concentrated their activities in the dollar zone. In both cases, small farmers suffer from their lack of access to adequate transport and infrastructure. Quite simply, they cannot resist the internal competition from production with greater economies of scale. Workers in countries like Honduras or Panama (which are not part of the Framework Agreement) have also been badly hit by the European banana regime. Honduran exports to the EU for instance fell from 193,500 tonnes in 1993 to 25,600 tonnes in 1994 - almost a 90% drop. This massive loss of sales has been a disaster for the country. The closing down of banana plantations led directly to job losses for about 4,000 workers and their families. However, some analysts argue that this was a deliberate policy by the US based companies to divert export from the EU to the US market and this help their case in the trade dispute. By 1996, exports from Honduras had recovered to approximately 60 000 tonnes.
Although it is certainly true that the Lom Convention played an essential role in the political commotion over the trade regulations, and it cannot be denied that the ACP producers sorely needed protection against the cheaper dollar-bananas, it is evident that the European regulation does not take the producers' interest as its starting point. The quota system is based on traders' market shares, not on production volume. Furthermore, the complex system of licences leaves little chance for newcomers like Agrofair, the company set up by NGOs and producers: between 1993 and 1996, the average quantity allocated to newcomers was 50 tonnes per operator per year; a quantity far too small to make the import profitable. The system removes incentive for market innovation. The licences required for these Max Havelaar labelled bananas could only be secured by engaging in close co-operation with a French banana company; the cost of the licences may well make the price of the bananas prohibitive for European consumers.
To many people the world over, the Caribbean islands are viewed as an idyllic chain of islands on account of their great natural beauty and warm tropical climate. But this is only one side of the picture. Recently, a combination of world price fluctuations, market instability, constant demands for higher quality standards, Sterling devaluation, and then, in 1994 and 1995, four major hurricanes have conspired to squeeze the most economically fragile farmers out of the banana market. A price war among the giant supermarket chains in the UK last year forced down prices to as low as 19p per lb. (0.56 Ecu/kg) while oversupply from Martinique and Guadeloupe further depressed prices. Many farmers have gone out of production, unable to maintain profit margins in the face of falling prices and ever-increasing production costs. The annual report of the St. Vincent Banana Growers Association (SVGBGA) for 1995 reveals that whereas there are 13,216 registered growers, only 5,591 of these sold bananas to the Association in 1995. As a result, production in St. Vincent has fallen from 76,095 tonnes in 1992 to 50,013 tonnes in 1995.
It is true to say that there was not enough preparation in the Islands for the effects of the Single European Market (SEM) and the implementation of the regime 404/93. Even the structure of the industry itself was ill-equipped to deal with the new situation. Developed under the protective umbrella of the UK, based on scattered small-farmer production sometimes on steep slopes, with strong government control over the official Banana Growers Associations (BGAs) in which the farmers have very limited say, the banana industry was in no position to respond positively to rapidly-changing circumstances. As prices fell sharply, so the debts of the BGAs mounted. The governments found themselves scrambling to mount missions to Europe, sometimes led by the Prime Ministers themselves in a desperate bid to save their economies from collapse. To complicate matters, the British firm Geest which had exerted a monopoly over the farmers in the islands for four decades, after long denying rumours of a sell-out, chose the moment when the industry was virtually bankrupt to try and sell its banana business to one of the foremost opponents of the European regime, the NOBOA company of Ecuador. The islands could not afford to let ownership of the industry fall into the hand of a major rival. They were forced to form a company, WIBDECO (the Windward Islands Banana Development and Export Company) half owned by the Governments and the BGAs. WIBDECO then went into a joint venture with the experienced Irish-based group, Fyffes, and purchased Geest's banana enterprise for the sum of ú147 million sterling.
Farmer confidence in the Windward Islands has recently been further undermined by the ruling of the WTO. The Caribbean Banana Exporters' Association which represents growers in Belize, Jamaica, Surinam, and the Windward Islands, expressed alarm at the WTO panel's report, saying it could have devastating consequences for their countries' economies. In Brussels, the EU emphasised that if successful, the US strategy "would lead directly to the destruction of the Caribbean banana industry and provoke severe hardship and political instability in a region already struggling against deprivation".
In April 1997, the WTO's dispute panel in its findings and ruling on the European Union's banana regime found fault with the EU's tariff quota regime for negotiating and allocating quotas in a discriminatory way, for the licensing procedures, and for the violations of its commitments under the GATS (General Agreement on Tariffs and Services) to provide full national treatment to cross-border supply. The EU has decided to appeal the decision. If the verdict is maintained however, the European Union will need to modify its controversial banana import regime, which favours small Caribbean producer countries and other African and Caribbean countries, whose bananas are sold at a much higher price on the European market than the dollar bananas.
But whatever the conclusions of the dispute, it already looks set to leave the major social and environmental issues involved in the international banana trade unaddressed. This is why, parallel to this reality, a new non-governmental partnership of producer and consumer organisations has emerged on the scene over the last few years, precisely to address this failure in the system and hasten a transition towards a more sustainable banana economy. It brings together the interests of plantation workers, family farmers and European NGOs from over 30 countries in Latin America, the Caribbean and Europe.
The European Banana Action Network, EUROBAN, which brings together some 35 organisations in 13 countries, has been pressing for 'fair trade', involving a higher producer price as well as respect for minimum labour and environmental standards. An International Fair Trade Banana Register has been established for producers who wish to apply, and Max Havelaar fair trade labelled bananas were launched in the Netherlands and Switzerland in November 1996 and March 1997. Further introductions are planned in Belgium, Denmark, and the UK in the months to come.
Parallel to this, the Coordinadora de Sindicatos Bananeros de America Latina, a new regional structure representing independent banana plantation workers' unions in 8 countries is calling for the EU to incorporate minimum labour and environmental clauses in all future banana trade agreements. A social and environmental clause in an international trade agreement is intended to improve labour conditions and prevent further degradation of the environment in exporting countries by allowing sanctions to be taken against exporters who fail to observe minimum standards. The social and environmental criteria are based on internationally recognised conventions or standards. Social and environmental clauses can be effective if they are accompanied by fully democratic and transparent procedures of implementation, and backed up by strong action at a local level, international campaigning and information exchange between workers' unions and consumers.
Meanwhile, in the Caribbean, the Windward Islands Farmers' Association, which represents family farmers' organisations in five islands, is actively promoting a transition towards a more diversified, less banana dependent economy both within (fair trade and organic banana products) and outside the banana sector, whilst actively supporting the demands for clausing and for access for 'fair trade' bananas in European markets.
Fair and alternative trade marketing initiatives exist in Austria, Belgium, Denmark, France, Germany, Luxembourg, Netherlands, Switzerland, the United Kingdom and Ireland. In the banana sector, they seek to change unfair international trading structures and improve the social, environmental and economic conditions of disadvantaged producers by giving producers and workers direct access to a market, guaranteeing better trading and working conditions and thus providing them with the tools that permit them to control their own development, and to invest in environmentally friendly production methods. The fair trade marking initiatives try to accomplish these objectives by authorising banana traders who meet their criteria to sell bananas with a fair trade mark. The use of these seals assures consumers that the bananas have been bought directly from acceptable sources which provide more favourable terms for the producers. Preference will be given on
All potential 'fair trade' sources have to meet minimum social and environmental criteria before being accepted for the Fair Trade Marking certification procedures. In collaboration with producer organisations, and banana trade unions, EUROBAN has developed a core package of minimum labour and environmental standards concerning sustainable banana production. The following labour standard issues apply:
Fair trade bananas come from Ghana, Ecuador, the Dominican Republic and soon the Windward Islands and Costa Rica. The bananas from Ghana come from the Volta River Estate Ltd (VREL), a private company with plantations of bananas (currently 150 hectares). In the case of Ecuador, the partner is UROCAL, an organisation of small producers.
In Ghana, the spending of the price surcharge on social programmes and environmental protection is monitored by the independent Ghanaian trade union GAWU, which organises the plantation workers. This trade union has been accepted by VREL as a negotiating partner.
Everyone can make a difference. Very simple changes in our life will make a difference to the lives of producers and their families in poorer countries.
