Trade in a food commodity - Bananas

Question 1

Describe the scale and the distribution of the world trade in bananas:

Answer 1

• Bananas are the 5th most traded agricultural commodity.
• 16.5 million tonnes traded in 2013.
• India is the largest producer however most are consumed domestically with other exports being to Asia and Middle east.
• The largest importers are the EU and the USA consuming 9 million tonnes mostly from the caribbean and Latin America.

Question 2

Explain why large scale banana production has significant environmental impact:

Answer 2

• Impacted the environment due to the large areas of land needed to be cleared in order to produce large quantities.
• Chemicals are used at all stages of the production process as banana are susceptible to disease which has lead to them being the second largest agrochemical input to the environment.
• This has therefore lead to a loss of soil fertility an biodiversity as chemicals have leaked in the ground and river.

Question 3

Describe the role of TNCs in the production of bananas:

Answer 3

• Previously 80% of trade controlled by 4 TNCs who had vertically integrated in order to own every step of the production and distribution channel.
• Allowed them to benefit from EOS to sell at the lowest possible price while still making the most profit.
• Recently TNCs have freed themselves of direct ownership and are now using guaranteed supply contracts, share has fallen from 60% to 45%.
• Still have huge influence over labour standards in plantations they source from.

Question 4

What are special and differential agreements?

Answer 4

These are made to allow the poorest countries access to the worlds markets by allowing LICs to trade with HICs.

E.G. ‘Everything but arms agreement’
- EU allowed LDCs tariff free access tDo EU markets on all products except ammunition.

Question 5

Describe the role of the WTO and SDTs in the banana trade:

Answer 5

• Lome agreement in which EU agreed to give 71 countries SDTs so they could supply with tariff free import quotas to these markets to protect them from competition from large TNCs.
• TNCs in USA said that the SDTs were not fair as it made them harder to compete.
• WTO decided to rule against the SDTs as it was not are trade as the USA still had to pay tariffs. They showed that they felt free trade was more important than fair trade.

Question 6

Describe the role of TNC retailers in the banana trade:

Answer 6

• TNC retailers are becoming increasingly important in the supply chain as suppliers have little choice but to accept their low prices or they risk losing important contracts.
• This allows retailers to make highest possible profits as they increase the price of the bananas by 45%.
• Some large retailers are now also taking part in vertical integration in order to control every step to benefit from EOS.

Question 7

Outline how banana production could be made more sustainable:

Answer 7

• Fair trade bananas helps small scale produces keep trading and allows them to compete with TNCs.
• Would also reduce the amount of chemicals used on the produce as all chemicals used have to be approved which reduces impact on the environment and increases biodiversity.
• Would allow small scale producers to increase local economy as it creates employment and pays a higher wage instead of the money coming back to the HICs.

Question 8

What is fair trade?

Answer 8

• Windward islands earn around 20% of their total ext earnings from bananas.
• 4000 Banana producers in the Windward islands with the average farm a little under a hectare.
• 85% of bananas which are grown here are now fair-trade.

Question 9

What are some social impacts fair trade has had on the Windward islands?

Answer 9

1. Social premium has helped to build schools - gives children education and career options outside banana trade.
2. Farmers get 4.67c more for each lb of bananas which helps to boost their quality of life.
3. Child labour is not allowed which keeps children in school to help development of islands and improve literacy rates.

Question 10

What are some economic impacts fair trade has had on the Windward islands?

Answer 10

1. Tourism is a major employer but fair trade has given people a choice which improves job opportunities and boosts the local economy.
2. Wages go to workers instead of TNCs so they can spend it in the local area and boost their economy.
3. Farmers are earning more money which enables them to compete with large TNCs which they otherwise would not have been able to do.

Question 11

What are some environmental impacts fair trade has had on the Windward Islands?

Answer 11

1. Farmers are educated and are encouraged to help to protect the environment.
2. Bananas are no longer planted as close to the rivers which means that any chemicals used are less likely to reach water supply and kill wildlife.
3. Farmers cannot use chemicals without authorisation which improves the environment and increases wildlife.

Question 12

How can fair trade help an LIC develop? -

Answer 12

• Provides farmers with higher wages which will be spent in the local area and help to boost the overall economy, it also boost number of jobs as farms can grow as they are now able to compete with TNCs.
• Social premiums have helped to improve local infrastructure which boosts development and opportunities with in the area.

Question 13

Are there any arguments which could be made to say that fair trade schemes make little difference?

Answer 13

• Some say that it is not enough as some farmers are still unable to compete with large TNCs and have had to leave in order to work elsewhere for potentially a reduced wage.
• Not everyone will always buy fair trade items as they are usually more expensive which may be particularly difficult for those on low incomes.