Editorial

Corporate rivals unite to control global banana market

Thursday, March 13, 2014    

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TWO of the world's three multinational corporations that dominate the global trade in bananas — the Irish-owned Fyffes and the American Chiquita — have merged in a deal that will create the world's largest banana trading company.

The new corporate behemoth will handle worldwide sales of 16 billion bananas per annum and is projected to generate US$4.6 billion in revenue. The new company, to be known as ChiquitaFyffes, will employ 32,000 people and its combined share of the world banana market will exceed its rivals — Del Monte, based in Florida, and Dole Food, based in Hawaii.

Corporate competition between US and European banana marketing companies dates back to the earliest years of the trade, particularly in 1900 when the British Government sought to break the monopoly of United Fruit Company.

The competition between European firms has been very fierce at times, eg, during the early 1960s. As output from the Windward Islands expanded rapidly in the 1950s, a situation of oversupply developed in the British market leading to the Windwards/Jamaica "banana war". The corporate competition between Fyffes, the purchaser of Jamaican bananas and Geest, the counterpart for the Windwards, led to a post-War fall in prices until a market sharing agreement in 1986.

Fyffes was one of two corporations handling bananas from the West Indies going to the British market, while Chiquita supplied part of the US market with fruit from Central America. Chiquita has an unsavoury history as it is descended from United Fruit Company that is accused of exploitative labour practices, and of prompting the US Government to intervene against the Arbenz Government in Guatemala.

More recently Chiquita, a large financial contributor to both the Democratic and Republican parties in the United States, was the alleged driving force behind the US action in conjunction with our Latin neighbours to dismantle the EU's preferential banana regime.

Once the World Trade Organisation ruled the EU regime incompatible with its rules, it precipitated the demise of the banana industry in the Caribbean. Fyffes, which was owned by United Fruit Company until 1986 when it was bought by an Irish group, worked in close collaboration with the governments of Caribbean banana exporting countries to try to preserve the EU preferential regime. Chiquita and the Latin "banana republics", having snatched the less than one per cent of the world market which was the preserve of the Caribbean, found that it made them no better off.

The current merger had its origin in the decline in profits, which has resulted from lower retail prices for bananas and higher production costs due, in part, to the effects of Panama disease. In this situation, it is not surprising that the banana industry in Jamaica has dwindled to the point where it could be threatened by cheap imports.

This may not be the worst fate, since the workers and farmers will undoubtedly suffer in these circumstances since only 12 per cent of the final retail price stays in the producing countries, with farmers getting five to seven per cent and plantation workers receiving a mere one to two per cent.

Consumers in the developed countries will probably be the next group to suffer as price-fixing among the three global banana multinational corporations is a distinct possibility.

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