Bananas (food commodity)

Why are bananas important economically?

$15 billion revenue annually

Provides positive multiplier effect

2 million employed directly / indirectly

Why are bananas important socially

Employs 200 people → money and taxes → spend in country

Bananas are high in calories → helps with LIC diets- Africa get ¼ of calories

Staple food for 500 million people

Why are bananas important environmentally

• Monoculture

• Plantations

• Deforestation

• Soil fertility

• Loss of biodiversity

• Fertilisers

• Largest agrochemical input

• Imported around the world

Where are bananas produced and exported

Produced:

• Ecuador

• India

• Latin america

• Caribbean

Exported to HIC

• UK- Fyfe, Basingstoke area before being redistributed

Where are bananas distributed and imported to

• UK (EU)

• USA

• Africa

• Japan

• Middle East

• East Asia

• Caribbean

Where are bananas consumed

Caribbean- 80% of growth

Africa

India

Brazil

China

Indonesia

UK

USA

Explain the role of TNCs for bananas

• Dominated by 4 main TNCS:

• Chiquita, dole, del monte (USA)

• Fyffes (Ireland)

• Noboa (Ecuador)

• In 2002 controlled 70% of the market

• In 2017 controlled 45% of the market

• Vertically integrated within the supply chain- own plantations or contract them out to other producers- own sea transport and ripening factories and distribution networks in consuming countries

Why did the banana trade wars occur

• 1975 → EU countries negotatied a trade agreement with former colonies (Lome convention)

• Countries given special differential treatment with tariffs free imports quotas to supply EU markets- enable former EU colonies to develop independently without overseas aid

• Protected smaller family farms in the Caribbean and Africa from completion from Latin Africa

• US TNCs controlled Latin American crop and supplied 75% of EU market 7% from Caribbean suppliers→ complaint filed to WTO = unfair trade

• 1997 WTO ruled against EU and ordered discrimination to be ceased

• = war between USA and EU

• USA imposed WTO approved sanctions

How has conflict been resolved

In 2009 compromise with Geneva to reduce tariffs on Latin American Bananas from 2012

EU gradually reduced tariffs from $176 to $75 per tonne

Explain TNCs and vertical integration

TNCs buy part of the supply chain- have more control

Monoculture plantations

Susceptible to diseases- means that larger amounts of pesticides have to be added to crops to protect them

Explain race to the bottom

Because of low prices paid to suppliers from supermarkets, larger companies are relocating to lower labour cost and weaker legislation plantations such as those in west Africa