3.3.3 The banana trade

Question 1

Consumer

Answer 1

Consumer

Question 2

Plantation

Answer 2

Land on which crops such as coffee or sugar are grown.

Question 3

Company

Answer 3

An organisation which sells good/services to make money.

Question 4

Profit

Answer 4

Money earned in trade or business.

Question 5

The importance of the banana

Answer 5

The banana is the most popular commodities in the world – they are one of the world’s most consumed fruits and are a staple food for around 400 million people.

The banana is the fifth most traded agricultural commodity. In 2013, a record 16.5m tonnes were exported, primarily from Latin America and the Caribbean.

Question 6

Where are bananas grown?

Answer 6

Bananas are grown predominantly in hot, rainy lowlands of tropical regions.

In India, Brazil and much of Africa, large quantities of bananas are produced, but are mostly consumed domestically.

The main commercial producing-regions for exports are in Central America and the Caribbean.

Question 7

Are bananas organic?

Answer 7

Bananas are not organic because they are treated with chemicals, because they are susceptible to diseases.

Question 8

What are sustainable bananas?

Answer 8

Sustainable bananas include fair trade and organic producers. The growth in the sales of sustainable bananas will help smaller-scale producers in the Caribbean and in parts of Africa. This growth of sustainable banana sales is likely as a result of the growing market of ethical consumers in richer nations who are willing to pay higher prices.

Question 9

Impacts of the banana trade on the enviromment

Answer 9

The banana industry has the second largest agrochemical input into the environment.

It also costs the environment in terms of deforestation (as land is cleared), waste (as each tonne of banana is produced, there are two tonnes of waste), soil fertility (because of contaminants) and loss of biodiversity (especially aquatic life as pollutants run into water courses).

Question 10

Who is the biggest exporter of bananas?

Answer 10

Ecuador is the biggest exporter of bananas in the world, at 5,778,171 tonnes of bananas exported.

Question 11

Who is the biggest consumer of bananas?

Answer 11

India is the biggest consumer of bananas in the world, at 27,534,080 tonnes of bananas imported.

Question 12

Who is the biggest importer of bananas?

Answer 12

USA is the biggest importer of bananas in the world, at 3,831,239 tonnes of bananas imported.

Question 13

Who are the two groups of producers who dominate world trade of bananas?

Answer 13

• The ACP group (Africa, Caribbean and Pacific)
• The “dollar producers” of Central America (primarily Ecuador and Colombia) which are controlled by large US TNCs.

Question 14

Percentage of money per banana sold

Answer 14

Transportation: 19.5%
Plantation: 12%
Retailer: 42%
Ripening and wholesaler: 15%
Taxes/duties: 11.5%

Question 15

Who are the big 5 TNCs who dominate the banana trade?

Answer 15

• Chiquita
• Dole
• Del Monte
• Fyffes
• Noboa

Question 16

Are the big 5 TNCs vertically integrated?

Answer 16

Yes - these firms are vertically integrated as they own their own plantations, sea transportation, distribution and ripening facilities.

This supply chain allows them to operate with economies of scale, so they can lower their costs of production and sell bananas in the USA and EU.

Question 17

How has the organisation of the banana trade changed in recent years?

Answer 17

The big 5 TNCs have** freed themselves of direct ownership of plantations**, in favour of guaranteed supply contacts with smaller producers.

Question 18

Trade wars and the banana trade

Answer 18

1. The trade wars were a long trading dispute lasting 20 years from 1992 until it was settled in the 2009 Geneva Banana Agreement, which came into effect in 2012.
2. The dispute started when EU countries negotiated a trade agreement with former European colonies (now ACP banana producing countries). These countries were given preferential tariff-free trade. This agreement later extended to include other countries who supply bananas to the EU, including Cameroon, Jamaica, Ghana and the Dominican Republic. The aim of this deal was to protect the (mainly) smaller, family-run farms in the Caribbean and Africa from the large Latin American producers, whose bananas could be more easily producers through the use of economies of scale and mechanised plantations.
3. US TNCs (who controlled the Latin American production) filed a complaint to the WTO in 1992 that the EU practice was unfair trade. The WTO ruled against the EU and ordered them to cease the discrimination.
4. However, the dispute continued as the US government retaliated (under pressure of TNCs) and imposed WTO-approved sanctions on a range of EU products.
5. The dispute was resolved in the 2009 Geneva Banana Agreement, where a compromise was reached between the EU, US and Latin American Countries. The EU agreed to gradually reduce tariffs on Latin American bananas. The agreement was ratified in 2012.