✅Case Study - Bananas as a Commodity

Question 1

For how many people are bananas a staple?

Answer 1

400 million

Question 2

How widely traded are bananas

Answer 2

They are the 5th most widely traded agricultural commodity

Question 3

What 3 TNCs own a total of 45% of the Market share

Answer 3

Chiquita, Dole, Del Monte

Question 4

Which countries are the largest banana producers?

Answer 4

India and China
India produced 30 million tonnes in 2020
They both consume most of what they produce

Question 5

Which countries are the largest exporters

Answer 5

Philippines, Netherlands, Ecuador
Latin America and Caribbean are big exporters, 16.5 million tonnes exported in 2013

Question 6

Which countries are the biggest consumers

Answer 6

USA and EU
EU consumes 50% of banana exports, USA 18%

Question 7

What were the Banana Wars

Answer 7

Lome Convention, 1975 - EU formed a special & differential trade (SDT) agreement w/ former colonies in Africa, Caribbean and Pacific (ACP)
US then pressured the WTO as they thought it wasn’t free trade + as it meant the US TNCs, like Del Monte, would lose out
This was controversial as many in the WTO were employees from the US
2012 EU and ACP agreed to dissolve after 8 lawsuits, and EU lowered the tariffs on the Latin American competitors
Caused their banana price to fall

Question 8

What was US’s opposition of EU’s SDT w/ ACP an example of

Answer 8

Protectionism (over their TNCs business in Latin American banana industry)

Question 9

How much did banana price fall by per tonne

Answer 9

From $176 to $114

Question 10

What do most non-union banana worker get paid

Answer 10

Less than $3/day

Question 11

Why are companies able to pay employees in banana industry so low

Answer 11

Corrupt practices such as contracting by piece work, to avoid paying minimum hourly wage

Question 12

why can’t independent LIC farmers compete with TNCs

Answer 12

TNCs dominate market
Are able to cut costs by paying employees much less, and therefore sell a cheaper product

Question 13

When and why was Fair Trade set up

Answer 13

1992
To ensure producers receive better trading conditions as globalisation has increased exploitation

Question 14

Reasons the Fair Trade is effective

Answer 14

Increases capital to LICs
Involves 71 countries
Raising awareness in HICs
Creates stability for workers
Increases local investment

Question 15

Reasons the Fair Trade is ineffective

Answer 15

UK so far is the only major market
Supply outstrips demand due to higher price so 25% is wasted
Process of getting certified is too expensive for smaller companies

Question 16

What is Fair Trade?

Answer 16

A social movement to try and achieve better trading conditions and promote sustainability. Traditionally, products are exported to richer nations from developing ones

Question 17

What standards does Fair Trade set?

Answer 17

Social, economic and environmental, for both companies and farmers/workers

Question 18

What do Fair Trade standards ensure?

Answer 18

Protection of worker’s rights
Protection of the environment
Payment of the Fair Trade Minimum Price

Question 19

What is the Fair Trade Premium?

Answer 19

An additional price to invest in business or community projects of the community’s choice

Question 20

How do Fair Trade ensure standards are met?

Answer 20

Independent checks

Question 21

What do members of the Fair Trade movement advocate?

Answer 21

The payment of higher prices to producers as well as helping them achieve improved social and environmental standards

Question 22

How are Fair Trade producers organised?

Answer 22

International organisations organise them into co-operatives to combine their produce

Question 23

How do co-operatives benefit producers?

Answer 23

It gives them more influence in governing market conditions and the power to negotiate better deals with suppliers or supply direct

Question 24

What are alternative trading organisations?

Answer 24

Cafedirect, Oxfam Trading etc, other organisations which focus on application of Fair Trade

Question 25

What is the main goal of Fair Trade?

Answer 25

To achieve better trading conditions and promote sustainability, empowering the poorest people

Question 26

What does Fair Trade focus on?

Answer 26

Social, economic and environmental standards, trade among individuals

Question 27

Who does Fair Trade primarily benefit?

Answer 27

Farmers, workers, comunities in LICs

Question 28

What are some of the criticisms of Fair Trade?

Answer 28

Interferes with free market, ineffective, impact too small scale

Question 29

What are the major actions of Fair Trade?

Answer 29

Long term relationships, higher labour and environmental standards

Question 30

What are the key advocate organisations of Fair Trade?

Answer 30

Cafedirect, Oxfam Trading, World Fair Trade Organisation

Question 31

What are the benefits of Fair Trade?

Answer 31

Raises labour and environmental standards
Forms long term relationships with producers
Encourages community development
Benefits the poorest people and prevents exploitation

Question 32

What are the issues with Fair Trade?

Answer 32

Encourages higher prices for consumers
Interferes with free market
Inefficient
Impact is small scale
People don't buy as much of a product