GG: World Trade In Bananas Flashcards
Whats the world trade in bananas?
Banana trade raises a variety of environmental, economic, social and political problems. They are the 4th more important food product within LICs - the staple food for around 500 million people.
- they are the most internationally traded, generating revenues of over $15 billion per year.
- globally, bananas are 5th most traded agricultural commodity with global exports, primarily from Latin America and the Caribbean, estimated at 23.3 million tonnes.
- are an important cash crop, although 80% of bananas that are produced are for local or national consumption.
What is the banana industry?
Bananas are grown in predominately hot, rainy lowlands of tropical regions. Global production of bananas in 2019 was 120 million tonnes. The top four producers, India, China, Indonesia and Brazil, are also the 4 largest consumers as their output is mostly domestic, as is most of the production of African Countries.
The main regions that produce commercially for export are concentrated in Latin America and the Caribbean. Some countries in this region are highly dependant on banana exports (e.g. Ecuador, Costa Rica and Guatemala). The Philippines have become an increasingly important producer and exporter.
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How does the banana industry affect the environment?
Banana varieties are susceptible to diseases and almost all bananas are treated with chemicals throughout the production cycle. Commercial plantations by large TNCs apply around 30kg of active ingredients per hectare, per year of, e.g. fungicides, insecticides and herbicides. Fertilisers are also applied regularly, and once harvested, they are washed with a disinfectant. – with the exception of cotton, the banana industry has the largest agrochemical input into the environment.
Banana plantations also cost the environment in terms of deforestation, soil fertility (because of contaminants) and loss of biodiversity (especially aquatic life as pollutants run into water courses).
What is the pattern of exports in the global banana trade?
there is the ACP group (Africa, Caribbean and Pacific), which includes mainly small and medium sized producers.
Yet most bananas for exports are grown on large monoculture plantations, especially in Latin America and increasingly in Africa. production in Caribbean is controlled less by TNCs and more by small/medium scale growers on family farms and co-operatives.
– Philippines and Africa had a similar structure, but there is now more TNC involvement in both regions.
—>Trade follows the traditional pattern of developing regions exporting low-value primary product to more developed countries.
- Exports are dominated by Latin America and the Caribbean countries, which produced 17m tonnes of bananas for the market in 2018. The leading producers are Ecuador, Costa Rica, Columbia and Guatemala. Smaller countries in Central America, e.g. Panama, are now exporting at a faster rate. In Asia, which produces 17% of the export market, the main commercial producer is the Philippines, while in Africa (smaller exports) the two main producers are Cote d’lvoire and Cameroon.
What is the pattern of imports in the global banana trade?
The largest importers are the EU and the USA. Around 85% of the price paid by the end consumer stays in the richer country and never reaches the producer, who has most of the risks. The largest slice is taken by retailers and bananas are one of the biggest profit-makers in supermarkets. Workers, on average, receive 5%-9% of the total value of bananas, while retailers get 36%-43%.
What is the ‘race to the bottom’ in banana trade?
Due to the low prices paid by suppliers (supermarkets), many of the larger companies are relocating their plantations, increasingly to West Africa, to search for 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. The work involves long shifts in unbearable heat and many workers don’t earn enough to cover their basic needs
What is the role of fair trade and organic bananas?
There has been as steady growth in sales of ‘sustainable’ bananas, both fair trade and organic produce. This helps smaller-scale producers in the Caribbean and parts of Africa, and will counter the deterioration of conditions in banana production. Theres 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 may disease impact bananas?
There are many different banana varieties around the world, but the Cavendish Cultivar, which accounts for 47% of bananas grown, makes up 99% of global trade. It had been grown commercially since it was discovered to be resistant to tropical race 1 (TR1), a fungus which took the previous most popular variety of banana (the Gros Michel) to the brink of extinction in the mid-twentieth centuary. There is now a new disease TR4 that is raging through plantations throughout South East Asia and Australia and is spreading to Africa.
What was the banana trade war?
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 reached, coming into effect in 2012.
- Started in 1975, when EU countries negotiated a trade agreement with former colonies. The agreement was the Lome Convention and was made with 71 African, Caribbean and Pacific countries (ACP countries), many of whom were banana producers.
- These countries were given special and differential treatment with preferential tariff-free import quotas to supply EU markets. The intention was to enable these former European colonies to develop independently without having to use overseas aid.
- The agreement was extended to a list of suppliers including Cameroon, Dom Republic, etc.
- This protected mainly smaller, family-run farms in the Caribbean and Africa from competition with the large Latin American producers, whose bananas were produced more cheaply on mechanised plantations.
- At the time, the US TNCs that controlled the Latin American crop were supplying around 75% of the EU market, while only 7% came from Caribbean suppliers. Despite this, in 1992, the TNCs filed a complaint to WTO that the practice constituted unfair trade. In 1997 the WTO ruled against the EU and ordered the EU to cease the discrimination.
- This led to a trade war between the USA and the EU. As a result, the US gov imposed WTO-approved sanctions on a range of EU products.
- A compromise was eventually reached in Geneva in 2009 with the EU agreeing to gradually reduce tariffs on Latin American bananas from 2012 onwards
- Tariffs came down from €176 to €75 per tonne between 2012 and 2018. Following EU trade agreements, the deal now also applies to other Latin American countries. This increases the chance of over-supply in the EU market so, to safeguard other producers, the EU will not reduce the tariff further.
