CHAPTER 2

BANANA EXPORTING COUNTRIES

2.1 Introduction

Bananas are one of the most important staples in tropical areas and their production for sale in local markets is, together with dairying and horticulture, one of the few activities that provide households with regular income throughout the year. Most bananas are planted for sale in local markets or self-consumption, and only a fraction of all bananas produced are sold in the world market^[6]. The production technologies used for export and self-consumption are so different that analysts prefer to separate them into two distinct economic activities. On the one hand, small-scale production for consumption in the household or for sale in local markets makes a limited use of external inputs and is labour intensive. Production costs are low and comparable to other major staples such as sweet potato, rice, maize and yam (Frison and Sharrock 2000). On the other hand, production for export markets uses external inputs intensively and is technologically sophisticated. Even within banana production for export technologies can vary substantially; for example land yield in large commercial plantations can be as much as 6 times higher than that obtained in small scale production (900 boxes per hectare in small scale Ecuadorian producers compared to 5 400 in the Canary Islands). This chapter describes the production systems of bananas for export in the major banana exporting countries since the mid 1980s and presents their medium term outlook of production.

2.2 Ecuador

Ecuador is the largest exporter of bananas in the world and its share of world banana trade is on the increase. Exports expanded from one million tonnes in 1985 to 3.6 million tonnes in 2000. This is equivalent to an average annual rate of about 9 percent, the highest of the top five exporting countries. This growth was sustained mainly by an increase in the area planted and, to a lesser extent, by rising land yields (Figure 16). Some 18 percent of the bananas traded worldwide during the 1970s and 1980s originated from Ecuador and this share expanded to 30 percent in the 1990s. Banana production and trade in Ecuador gives direct employment to an estimated 380 000 people.

Figure 16 Ecuador: banana exports, area planted and land yields 1985-2001

Source: FAOSTAT

Production is relatively small scale compared to other Latin American banana exporting countries. It is carried out by national companies, while transnational companies control only a small share of production (less than one percent). A census carried out by the Ministerio de Agricultura y Ganadería of Ecuador in the year 2000 revealed that almost 90 percent of the 150 000 hectares of registered banana crops belong to small and medium size farms of between 10 and 50 hectares. The census found a total of 5 000 registered banana producers in the country, and an average farm size of 30 hectares^[7] (Table 7). Production is concentrated in the provinces of coastal provinces of El Oro and Guayas, and in Los Rios. These three provinces account for more than 90 percent of the area planted to bananas and concentrate 63 percent of banana growers (SICA 2003).

Table 7 Ecuador: Share of area planted by farm size

Source: Programa Nacional del Banano and Proyecto SICA-BIRF/MAG-Ecuador

There is a variety of banana production systems in Ecuador. Some plantations have irrigation, drainage systems, cableways and labour requirements of as low as one worker per hectare. Others are rainfed, use few external inputs, have inefficient drainage systems, rudimentary fruit processing facilities, and may employ as much as 5 workers per hectare. As a result, land and labour productivity varies substantially between farms, from 1 000 boxes per hectare in traditional systems to as much as 3 000 boxes per hectare in modern plantations. The gap in land productivity between the two levels of technology is expected to widen following the recent diffusion of technological innovations in medium and large size plantations. Water pumps for drip irrigation, packing plants, draining systems and cableways spread from 24 percent to 71 percent of the total area planted to bananas during the 1990s (Chang 1999). The average land yield for the country in the period 2000-2001 was 1 800 boxes per hectare, compared to 2 600 in Costa Rica and 1 200 in Honduras.

The Ecuadorian banana market for export could be considered a monopsony, whereby a few intermediaries buy fruit from a large number of weakly organized small farms. The government sets a minimum price paid to producer, but this is not always respected (see Table 8). Prices are negotiated differently depending on the nature of the buyer, be it a Transnational Company (TNCs), a large national exporter or a small national exporter.

Firstly, TNCs, as well as a few large national producers and traders, usually have contractual arrangements with farmers. The contracts specify the production technology, the timing of delivery and the price per box. The fruit produced is of high quality and destined mainly for the high income markets of North America and Europe. North America and Europe capture more than 70 percent of all Ecuador banana exports.

Secondly, large national exporters usually own plantations, but the bulk of their trade comes from independent producers. They are less demanding on quality than TNCs and their traditional market is Eastern Europe.

Finally, a number of small export firms buy the high quality rejects of TNCs and the large national exporters from independent producers and sell them to South American countries including Chile, Argentina and Uruguay, where the larger exporters also operate (Espinel 2001). These firms have also successfully entered the Eastern European and Mediterranean markets in recent years.

Table 8 Ecuador: official recommended minimum price for bananas

Source: SICA

Figure 17 Ecuador: official minimum and actual banana prices Jan 2001 - July 2003

Source: SONICONTI S.A.

Ecuador has expanded exports to all of its markets in the last twenty years. The share of exports to traditional buyers such as the US and Europe have been reduced at the expense of the opening economies of Eastern Europe and Asia. EC import licensing requirements after 1993 have played a role in this trade shift as explained in Chapter 3. Despite these changes, North America and the EC continue to be the most important export markets (Table 9).

Table 9 Ecuador: average banana exports by destination (MT and percent)

^y Switzerland, Iceland, Malta and Norway
Source: FAO

The expansion of banana exports during the 1990s in the face of the low unit value of exports obtained indicates that banana production for export in Ecuador is a competitive activity. However, a strategic plan produced by the National Corporation for the Promotion of Exports and Investment (CORPEI) identified several bottlenecks in the Ecuadorian banana sector that may hinder its future expansion. These included a poor country infrastructure, a complex legal system, lack of knowledge about the environmental impact of current production systems and poorly qualified labour. The strategic plan coincided with the issuing of a Human Rights Watch report (Human Rights Watch 2002) that denounced a situation in which basic labour rights were being ignored in banana plantations. The report indicates that Ecuador banana workers receive the lowest wages of all Latin American banana exporting countries, women are discriminated against and child labour is not uncommon. According to a 2000 study by US/LEAP (U.S. Labour Education in the Americas Project), banana worker's average monthly wage in Ecuador was US$ 56, compared to $500 in Panama, $200 to $300 in Colombia and $150 to $200 in Honduras (Galarza, cited by Perillo 2000).

Nevertheless, prospects appear favourable for banana production in Ecuador. Firstly, the recent opening of a new loading terminal by Dole (Bananapuerto in 1999), and the upgrading of operating terminals in Puerto Bolivar highlight the increasing export capacity of Ecuador. Secondly, the area planted to bananas for export during the 1990s increased at an annual rate of 2.6 percent despite the decline of unit export values of 4 percent per annum. FAO forecasts that world prices may continue to decline this decade but at a lower rate (about 1.5 percent per annum) relative to previous decades, which may suggest that the area planted to bananas would not decrease in the medium term (FAO 2003b). Thirdly, labour productivity and the scale of the plantations in Ecuador are lower than in neighbouring Latin American banana exporting countries, suggesting also that potential exists for productivity gains from economies of scale^[8]. Finally, land productivity of banana export crops has grown at an annual rate of about 4 percent during the 1990s, and it may continue growing this decade if the fungal disease of black sigatoka can be effectively controlled. Black sigatoka (Mycosphaerella fijiensis Morelet, see Chapter 4) reached Ecuador in 1987 and according to some reports up to 20 percent of the area planted to bananas in El Oro province was infested in 2002.

2.3 Costa Rica

With an estimated two million tonnes of bananas exported in the year 2000, Costa Rica is the second largest exporter after Ecuador. Bananas are the single largest agricultural export, followed at a distance by pineapples and coffee. Bananas are produced in relatively large plantations by independent producers and multinational companies that control about 50 percent of the area planted.

Figure 18 Costa Rica: banana exports, area planted and land yields 1985-2001

Source: FAOSTAT

The area planted to bananas and banana production experienced a remarkable growth in the period 1985-1995. Production grew at a rate of 8 percent per annum and the area planted at the slightly higher rate of 11 percent. This growth was due to a large rehabilitation and expansion programme (Ley de Fomento Bananero), implemented in the early 1990s, when both the area planted to bananas and employment in the banana sector doubled in the period 1990 - 1993. However, the expansion in area planted and employment was not matched by production, and productivity declined^[9]. Productivity subsequently recovered from 1993 to 1998 to levels close to those obtained in the late 1980s. However, since the late 1990s depressed banana prices and black sigatoka infestation have discouraged high input use or an expansion in the area planted, with a resulting stagnation of both production and productivity (Tables 2.4 and 2.5). Despite one decade of different phases of declining or stagnant productivity, Costa Rica today continues to maintain its leading position as the country with the highest productivity in Latin America.

Table 10 Costa Rica: Banana land and labour productivity 1990 and 2000

^† FAOSTAT; ^‡ Ministerio de Agricultura y Ganadería, Secretaría Ejecutiva de Planificación Sectorial Agropecuaria (2002); ^y Computed from FAO (1999)

Table 11 Costa Rica: changes in technical efficiency during the 1990s

^† Efficiency is measured as relative multi-factor productivity to 1990
Source: Computed with data from FAOSTAT, CORBANA and Banco Central de Costa Rica

By the end of the 1990s the banana industry was employing more workers than any other single agricultural activity. Approximately 33 000 people worked in farms and packing plants, and an additional 63 000 were directly and indirectly employed in related supporting services. Most of the labour employed is low skilled and the salaries are about twice the national minimum wage. Workers usually receive (in addition to their wages) other benefits such as housing, water, sanitation and electricity. In the majority of cases women working in the banana industry provide a second source of household income. FAO indicates that the number of women per 100 workers in the banana industry is higher than the national average of 29.4, with most of them working in packinghouses (FAO 1999b).

Bananas in Costa Rica have been produced and exported commercially by multinationals since 1880. Their importance for Costa Rica cannot be underestimated: according to the National Banana Corporation (CORBANA), bananas are the second export earner of the economy after textiles (excluding high-tech export oriented industries), and generated in 2001 almost 500 million dollars in export revenues.

Table 12 Costa Rica: exports by destination (MT and percent)

Banana exports from Costa Rica expanded at a rate of 5 percent per annum in the period 1985-2000^[10]. As with area planted and production, exports stagnated in the second half of the 1990s. The United States and the EC have traditionally been the major importers, but eastern European countries began to capture a share of its exports in the 1990s. The main exporting companies are Cobal (Chiquita), Bandeco (Del Monte) and Standard Fruit Co. (Dole), which together constitute over 80 percent of Costa Rica’s banana exports.

The medium term outlook for banana exports is uncertain. This decade Costa Rica could take advantage of its strict environmental standards of production to expand trade in high income markets. However, this will depend on its ability to reduce production costs, in particular labour costs and black sigatoka control. The latter seems unlikely as experts claim that black sitagoka has recently developed resistance to systemic fungicides, and therefore their use needs to be intensified (Guzmás 2002).

2.4 Colombia

Bananas in Colombia are, after coffee and flowers, the third most important agricultural export. Over 90 percent of the estimated 1.9 million tonnes of Cavendish bananas produced in year 2000 were exported. Banana crops in Colombia occupy approximately 60 000 hectares, or 7 percent of the total area planted to fruit crops. About 16 percent of the area planted to bananas is “banano criollo” grown for the domestic market^[11] and the rest is bananas for export. Production is concentrated in Antioquia and Madgalena^[12], which are conflict areas. Antioquia contains almost 70 percent of the area planted to bananas and the bulk of plantains for export. Gros Michel dessert bananas are still grown successfully in Colombia in highland areas and are sold in the domestic market.

Figure 19 Colombia: banana exports, area planted and land yields 1985-2001

Source: FAOSTAT

Table 13 Colombia: production, area planted and land productivity 1985-2000

Source: FAOSTAT

The area planted to bananas in Colombia increased almost linearly from 1982 to 1994, after which the industry entered a phase of decline. Productivity and production, however, behaved differently. In 1985 productivity fell sharply following damages by Sigatoka, and could not recover until the end of the decade. Some productivity gains were achieved during the early 1990s due to a more intensive use of inputs and probably also to economies of scale (as suggested by the fall in the number of farms). However, productivity has since stagnated (Figure 19). The evolution of production throughout the 1990s was a reflection of events in Antioquia. Production fell from 1992 to 1997 due to violence returning to Urabá (Antioquia) after peace agreements were not honoured, but recovered in subsequent years and rose above the 1992 levels. In Magdalena, where low input technologies and smaller farming units prevail^[13], productivity was affected by crop diseases and weather-related problems, and productivity has slowly declined.

Table 14 Colombia: Banana production, area harvested and yields in Antioquia and Magdalena 1992 and 2001

Source: Ministerio de Agricultura y Desarrollo Rural, Colombia

Banana exports from Colombia have not stopped growing since Gross Michel varieties were substituted by Cavendish in the early 1970s. Banana export revenues were about $450 million in year 2000, representing 4 percent of the total value of exports from Colombia. Banana exports went to the EC 62 percent and 32 percent to the US, its main trading partner. As with Ecuadorian and Costa Rican exports, Eastern European countries have slowly been capturing larger shares of banana exports since the 1990s (Table 15).

Table 15 Colombia: exports by destination (MT and percent)

Source: FAO

The public and private sectors are engaging in a collaborative effort to improve the competitiveness and productivity of bananas as well as the living conditions of the working population. The public sector is improving infrastructure directly related to banana production and exports, including roads, ports and airports. The private sector is developing environmentally friendly technologies, including techniques that would reduce the use of chemicals, improve water management and control soil erosion^[14]. So far the programme has achieved some success in Urabá, and efforts are being made to expand it to Magdalena. However, a significant factor influencing future growth in banana production and exports is likely to be the political situation, as bananas are produced in conflict areas.

2.5 Other Latin American Countries

Bananas in Guatemala, Honduras and Panama contribute substantially to their economies and are an important source of employment and exports earnings. However, aggregate production in these countries was relatively stagnant in the last 15 years (1985-2000) due to the detrimental influence of weather-related events, industrial disputes, crop diseases, increasing production costs^[15] and depressed banana prices. A strong recovery of production and exports is observed after year 2000, especially in Guatemala and Honduras, that were hit in late 1998 by Hurricane Mitch. Exports also expanded significantly in 2002 and the outlook for 2003 is for an abundant crop.

Figure 20 Guatemala, Honduras and Panama: banana production 1980 - 2002

Source: FAOSTAT

Figure 21 Guatemala: area planted to bananas and land yields 1985-2000

Source: FAOSTAT

Figure 22 Honduras: area planted to bananas and land yields 1985-2000

Source: FAOSTAT

Figure 23 Panama: area planted to bananas and land yields 1985-2000

Source: FAOSTAT

Table 16 Guatemala, Honduras and Panama: banana export earnings as a percentage of total agricultural exports (000’US$ per annum and percent share)

^† Honduras was hit by a category 5 hurricane (Mitch) in October 1998
Source: Computed from FAOSTAT

Table 17 Guatemala, Honduras and Panama: exports by destination (MT and percent)

Source: FAO

Throughout the decades Guatemala has had the most stable area planted of all the Latin American banana exporting countries. The area planted during the last four decades has remained approximately constant at 20 000 hectares and land productivity has increased marginally. From the 1960s to the early 1990s production increased at the moderate rate of one percent per annum, but it expanded rapidly during the 1990s at 5 percent per annum. Notable has been a more recent shift of the area planted to banana production on the West Coast in ex-sugar land for easy access to US West Coast markets.

Bananas in Guatemala are the third most important source of agricultural export revenue after coffee and sugar. Banana exports have consistently expanded at a rate of 5.4 percent per annum since the 1960s, but most of the increase happened during the 1990s. The outlook for future expansion of banana production and exports is mixed. The most important constraints for expansion in production and exports are transport and communications infrastructure, which are not anticipated to improve this decade due to the poor performance of the economy.

In Honduras, banana plantations are located predominantly in the northern coast and the largest producers are subsidiaries of Chiquita and Dole. One third of the land dedicated to bananas for export is cultivated by independent producers and peasant co-operatives mostly under contractual arrangements with TNCs. Banana production and exports have been decreasing at a cumulative rate of 4.5 percent per annum since 1985, and were severely disrupted in October 1998 when hurricane Mitch destroyed close to 70 percent of the crop. Exports fell to 109 000 tonnes in 1999 from some 500 000 tonnes in the previous year. However, an intensive campaign of replanting took place and within three years exports were at pre-Mitch levels in 2002, demonstrating the strong capacity of this crop for recovery where investment funds are made available for rehabilitation. Preliminary estimates of exports for 2002 indicate that exports are currently over half a million tonnes, slightly higher than pre-Mitch levels.

Panama used to be one of the leading banana exporters in the world, but production decreased rapidly in the last decade. Rising production costs, black sigatoka and industrial disputes have affected production, and Chiquita, the main exporter of the country, has recently sold its large plantation on the Pacific coast to a workers group.

Figure 24 Honduras, Panama and Guatemala: banana exports 1980 - 2000

Source: FAOSTAT

Note: The fall in exports in Honduras in 1999 was due to damages caused by Hurricane Mitch in October 1998.

Despite decades of efforts to position itself as a major producer, Nicaragua has never made bananas an important agricultural export. Banana exports have consistently fallen in the last three decades at a rate of 3.7 percent per annum, from a peak of 130 000 tonnes in 1974 to 44 000 in year 2000. Exports declined rapidly after Standard Fruit (Dole) left Nicaragua in 1982. Banana export revenues in year 2000 were some $8 million, or 1.3 percent of total exports.

Brazil, where Del Monte has recently made major investments, is rapidly becoming a noticeable exporter. Its banana exports in 2002 are expected to exceed 220 000 tonnes, which compares to 105 000 tonnes in 2001 and 72 000 in year 2000. The recent expansion was due to its ability to compete with Ecuador in Argentina and Uruguay. Brazil producer prices were on average US$3 per box in 2001 and US$2.8 in 2002, while prices in Ecuador (its competitor) were US$2.95 in 2001 and US$3.4 in 2002. In effect, Brazil has not only become the main supplier of MERCOSUR, but has also entered the US and European markets.

2.6 The Caribbean

Bananas are, together with sugar and rum, the most important agricultural export product of the Caribbean states of Windward Islands (St. Lucia, Dominica, Grenada and St. Kitts-Nevis, St. Vincent), Jamaica, Belize, the Dominican Republic and Suriname. In the WI, Jamaica and the Dominican Republic production is mostly small-scale, relying heavily on family labour. Production costs are higher than those in the “dollar banana” area, as are export prices (see Table 18) due to the trade preference granted by the EC, which captures more than 90 percent of banana exports from these islands. Bananas are also important for the economy of the French Antilles, in particular the départements of Martinique and Guadeloupe, but they are not included in this publication because their produce goes solely to France and does not enter international trade.

Table 18 Caribbean: Unit value of exports in year 2000 and value relative to ACP exporter countries

Source: FAOSTAT

The small scale of banana production in the Windward Islands and Jamaica relative to neighbouring dollar banana countries, gives the industry a key role in the preservation of the social and economic fabric of these islands. Average farm size is one hectare and yields about 11 t/ha. Banana production increased during the 1980s and early 1990s, but has since progressively declined. Firm prices at the end of the 1980s fostered a significant expansion in the number of smallholders and by the early 1990s there were some 25 000 windward island farmers involved in banana exports (Smith 2000). However, during the first half of the 1990s a fall in world banana prices was accompanied by a decline in production of 7.5 percent per annum, plus a 6 percent decrease in the area planted.

The Dominican Republic, however, behaved differently and has become the largest exporter of the Caribbean. Of the approximately 280 000 tonnes of bananas exported in 2001, 47 percent originated from the Dominican Republic. The Dominican Republic gained the status of an ACP State in 1990 and has benefited from the duty free export of bananas into the EC. Exports to this market grew rapidly and by 1993 it was already exporting 62 000 tonnes, representing more than 80 percent of the total banana exports. Over 60 000 tonnes of organic bananas were exported from the Dominican Republic in 2002, which has successfully managed to control black sigatoka by virtue of being planted in relatively dry areas in combination with integrated pest management techniques.

The cultivation of organic bananas in the Dominican Republic started in 1982, when Mark Freedman established a demonstration plot in Río Limpio. The government and many private organizations were involved in its early development, including the Centro Regional de Estudios de Alternativas Rurales (CREAR), the Centro de Agricultura Sostanible con Tecnología Apropiada (CASTA), the Centro de Agricultura con Tecnología Apropiada para la Comunidad (CAOTACO) and the Escuela Campesina de Agricultura Sostenible (ECAS). Notwithstanding the high cost of certification, the transition to organic agriculture was straightforward because most farmers were already using few external inputs. In this respect the largest companies (Savid S.A. and Horizontes Orgánicos) provide technical and financial assistance to growers (FAO 2001e). The main markets for organic bananas are Germany, The Netherlands and the United Kingdom.

Since the mid-1990s, banana exports and banana export revenues from the Windward Islands and Jamaica have observed a declining trend similar to that in production. In Saint Lucia, for example, banana revenues declined at an annual average rate of 11 percent in the period 1990-2000, while the unit value of production fell at a rate of 4 percent per annum (Figure 26). The share of Caribbean bananas in world trade fell from 4 percent in the 1970s to 3 percent in year 2000. Yet, the banana industry is still a key economic activity of these Islands, accounting in St. Lucia for 12 percent of its GDP and about 40 percent of the total export revenues in year 2000. They provide employment directly or indirectly to about 30 percent of the working population, or some 57 000 people, and represent a valuable regular monthly income to rural households. The international community, including international NGOs, has repeatedly emphasized the importance of maintaining banana trade preferences in the EC market on this account (see Chapter 3).

Figure 25 St. Lucia: unit value of banana production (real EC$ per kg)

Source: Windward Islands Banana Development and Exporting Company

During 1999-2001, Saint Lucia was the lead banana exporter of the Windward Islands with a share of 58 percent. Saint Vincent and the Grenadines had a share of 42 percent. Grenada is the smallest producer and has progressively reduced its exports since the 1960s. Exports from Grenada to the EC were recently disrupted because of quality import requirements. Exports are carried out by Banana Grower Associations (BGAs), coordinated by the Windward Islands Banana Development and Exporting Company (WIBDECO), funded in 1994 and formerly known as the Windward Island Banana Growers Association (WINBAN). WIBDECO is a joint undertaking between the governments of Dominica, St Lucia, Grenada and St Vincent and the Grenadines and the official Banana Grower Associations of the islands. In 1996 it acquired the banana operations of Geest (with a turnover of US$ 300 million) in partnership with the Irish-based Fyffes, and became responsible for marketing. Almost all WI bananas exports go to the EC (Table 19), where their market share is of about 10 percent.

The UK is the largest market, where WI bananas captured a market share of about 65 percent in 2001. Banana trade is regulated under exclusive contracts between exporters and Great Britain. A major problem of WI has been its poor record of delivering quality bananas, but despite this problem they have gained marked share due to its product differentiation based on taste attributes (small and sweet) and fair trade (see Chapter 5).

Table 19 Caribbean: exports by destination (MT and percent)

Source: FAO

In Jamaica, the bulk of bananas for export originates in a few large plantations and marketing is carried out by the Banana Export Company (BECo) that ships mainly to the UK. After a steady decline in banana exports that lasted for 20 years and resulted in a record low in 1984, there was a period of significant growth from 12 500 tonnes in 1985 to a peak of 89 000 tonnes in 1996. During 1995 - 2000 poor weather conditions and a fall in farm gate prices in real terms of 5 percent per annum resulted in a fall in banana exports and export revenues of some 15 percent per annum. Efforts are currently being made by the government and the EC, through the Banana Support Programme, to make the banana industry more competitive through higher productivity, reduced overhead and operating costs, improved fruit quality and better handling and marketing of bananas.

Figure 26 Jamaica: banana exports 1965-2001

Source: FAOSTAT

Most Caribbean bananas are produced in lands of steep topography prone to run-off erosion, within a system that is not ecologically sustainable^[16]. Small scale farmers are not insured against weather-induced losses, and although the crop has a strong capacity to recover, inputs are nevertheless required for replanting after a disaster such as tropical storms and hurricanes which are common in the region. For example, following the destruction caused by Hurricane Lili in 2002, small farmers in the Windward Islands relied partly on foreign based firms (UK supermarkets) providing cheap credit for the purchase of production inputs to remain in business^[17].

An increasing number of Caribbean producers are turning to organic production and fair-trade. Lobby and advocacy work by NGOs has played a prominent role in rising awareness of the importance of UK banana consumption for the environment and the livelihoods of smallholders, both within the general public and the international community at large. UK consumers appreciate distinctive qualities of size and taste in Caribbean bananas, and their purchase now also offers them an ethical dimension. However, the premiums received by organic farmers are falling and prices are converging to those of conventional bananas, and the high rate of growth of demand for fair-trade bananas of the past five years is weakening (see chapter 5).

Prospects are not favourable for the medium term future of small - scale banana production for export in the Caribbean. Firstly, producer organizations claim that the trading strategies of large retailers may push prices down to levels uneconomic for the technology used in the Caribbean. The Caribbean Banana Exporters Association (CBEA) which represents growers in Belize, Jamaica and the Windward Islands has reported that the UK supermarket chains are releasing banana trade to competitive tenders and handing over the business to fewer suppliers. These are TNCs importing dollar and Cameroonian bananas into the EC, which can beat Caribbean suppliers with lower prices. Secondly, the market protection currently awarded in the EC may be eroded in the medium term when the EC starts applying a tariff-only import regime from 2006 (see Chapter 3). Whether or not a zero tariff preference continues to be granted to ACP countries, and regardless of the magnitude of the non preferential tariff, the system in the long run is expected to result in a reduction in the export prices of Caribbean bananas. Finally, almost 90 percent of WIBDECO profit comes from license rents in the EC, which would evaporate if the tariff-only system is accompanied by a reduction of tariff preferences. According to some analysts no small-scale Caribbean farmer could compete unless they receive subsidies, add value to the produce through organic agriculture and deliver top-quality products (Reid 2000).

In Belize, banana production is carried out in relatively large plantations that use high input and modern technologies^[18]. Bananas have played a key role in the development of Stann Creek and Toledo districts located in the south of the country where the incidence of poverty is relatively high^[19]. Following a period of stagnation in the period 1972-1984, banana production has grown substantially since the mid 1980s to become the third most important agricultural export. Production grew at 8.6 percent between 1985 and 2000, until hurricane Iris (category 4) hit the southern coast on October 2001 and damaged extensive areas of banana plantations. Exports fell by 24 percent in 2001 and by a further 26 percent in 2002.

Banana exports from Belize are heavily dependent on preferential access to the EU. The industry is vertically integrated, with farmers selling their produce to Fyffes, the only buyer and exporter. The industry has shown that it can expand production rapidly and analysts believe that potential exists for improved banana yields and acreage beyond the record level of year 2000 (Hubbard 2000). However, suggestions of unfair pricing strategies by Fyffes, and conflicts over workers’ rights in plantations are not creating a positive image of Belize bananas, potentially affecting their preference among European consumers (Moberg 2000).

2.7 The Philippines

Bananas are an important food item for Filipinos, a source of income for local farmers and a foreign exchange earner for the country. They are the leading Filipino fruit crop in terms of area, volume and value of production. About 400 000 hectares of bananas were harvested in 2000, compared to 100 000 hectares of mangoes, the second most important export fruit.

Many different varieties of bananas can be found in the Philippines. The apparent growth of domestic consumption in bananas in the last decade appears to be due to an expansion in the production and trade of local varieties. Latundan, Lakatan and Bungulan are the most popular, but small scale producers prefer to cultivate the first. Planting of the latter two has not increased because of the high costs and technical expertise required to control black sigatoka, banana bunchy top virus and fusarium, to which they are susceptible. The preferred varieties for export are Dwarf Cavendish, Giant Cavendish, Umalag and Grand Naine^[20]. The Philippines is the main world exporter of banana chips and world demand is on the increase. Chips are exported to 30 countries, with US and the EC being the major importers.

Table 20 The Philippines: Farm size, land yield and destination of produce of small and large size plantations

Source: Bureau of Agricultural Research 2002

Production is predominantly small scale and some 6 million households rely on them for part of their income. Three quarters of all banana producers concentrate almost 90 percent of area planted to this crop. These are small family farms where banana is cultivated in small yards together with other staples and cash crops. Their produce is consumed at home or traded locally. Only a relatively small percentage of the total land planted to bananas is intended for export markets, and this is cultivated with high input/output technologies. While the average annual land yield for the country is 9.4 t/ha, big plantations produce about 40 t/ha. Yield in small farms is low due to the prevalence of disease (viruses, and the Bugtok bacteria) and the use of low input technologies. Small scale farmers find it difficult to produce and deliver a product for export, and claim that this is due to the low availability of good quality planting materials, the high influence of pests and diseases, post-harvest loses, inadequate support infrastructure, market and lack of credit access and transportation costs (Espino et al. 1999).

Bananas used to be grown only as a staple or for sale in local markets. They were not exported until transnational companies arrived in the late 1960s looking for low production and low transport costs near Japan. Banana production and exports have expanded in the last twenty years at some of the fastest rates among world banana exporters. An estimated 1.4 million tonnes of bananas were exported in 2002 for close to US$300 million. The Philippines ranks 4^th among all banana exporting countries, and contributed with almost 10 percent of the world supply in year 2000. Its proximity to China suggests a favourable outlook, but China is rapidly increasing its domestic production of bananas and may become a net exporter in the medium term. Its main markets are Japan (66 percent), China (12 percent), Republic of Korea (7 percent), Taiwan Province of China (6 percent) and United Arab Emirates (6 percent). Saudi Arabia and Iran are also growing markets for Philippine bananas. Two thirds of the bananas exported are grown in Mindanao Island, which also produces 95 percent the pineapple exported.

2.8 Africa

Bananas are important staples in much of Central, Western and Eastern Africa. Unlike Latin American countries where the Cavendish predominates, African farms cultivate local and exotic varieties. Most farms are low scale, use little external inputs and obtain lower productivities compared to dollar banana producers, while transnational companies have also a strong presence with large and technologically sophisticated farms that produce for export.

According to FAOSTAT, since the 1960s banana production in Africa has increased at about 2.2 percent per annum, and the area harvested has grown at a slightly reduced pace of 1.7 percent. In the same period land productivity has increased slowly, at less than one percent per annum. However, land yield has not been the same in all countries. In East African countries (Uganda, Rwanda and Burundi), where bananas are produced as a staple or for domestic consumption, productivity has fallen from 30 to 40 t/ha in the 1970s to about 15 t/ha in year 2000 due to the combined effects of pests, declining soil fertility and reduced input use. INIBAP reports that the decrease in productivity is related to shifting from traditional to commercially oriented banana production. As a result of the higher production of bananas due to increased demand from urban centers, and the lack of soil conservation measures and fertilization, soil erosion increased, soil fertility deteriorated, and the crops became more susceptible to pests and diseases. Production is shifting away from being close to the main cities to areas of higher soil fertility further away. Bananas are now planted in lands close to the main roads with varieties more resistant to low fertility, including beer producing types.

Figure 27 Cameroon and Côte d’Ivoire: banana exports 1985-2001

Source: FAOSTAT

Export-oriented banana producers use a relatively high supply of external inputs. Côte d’Ivoire and Cameroon are the most important banana exporting countries, and their markets are Europe and, to a lesser extent, neighbouring Burkina Faso, Mali and Senegal. Banana exports from Côte d’Ivoire and Cameroon, which in 2001 accounted for 98 percent of all banana exports from Africa, have increased in the period 1987-2000 at a sustained rate of 10 percent per annum. This contrasts sharply with the steady decline in banana exports in the previous period 1960 - 1986 when exports decreased by 2 percent per annum.

In Cameroon, banana exports declined steadily since the early 1960s from some 140 000 tonnes in 1961 to little more than 20 000 tonnes in 1987. Exports recovered during the 1970s with the support of the Organisation camerounaise de la banana (OCB) that helped farmers to fight Panama disease. However, sigatoka and weather-related problems affected production during the 1980s and exports declined to a record low in 1987. In 1987 foreign companies began to take a leading role in the development of banana for export. That year Del Monte engaged in a joint venture with the Cameroon Development Corporation (CDC). Today CDC and Del Monte plant some 2 100 hectares of bananas: CDC provides land and labour, Del Monte credit, technical assistance and markets the produce. CDC is currently the largest employer after the state, and the government allows the company tax exemptions for the importation of banana production inputs.

In 1990 the Organisation camerounaise de la banana (OCB) was bought by the Compagnie frutière, the retail company in charge of selling OCB produce in Europe. At present Compagnie frutière is controlled by Dole. Both Dole and Del Monte made large investments into irrigation, fruit handling facilities and sanitation equipment. Today bananas in Cameroon provide direct employment to some 10 000 people in rural areas and exports in 2002 reached almost 260 000 tonnes, having grown at a rate of 10 percent per annum since 1988. Of these, an estimated 215 000 tonnes went to the EC and the rest to Eastern Europe, North Africa and neighbouring African countries.

Bananas in Côte d’Ivoire are, together with pineapples, the most important fruits exported. Bananas for export are produced by farms of different sizes and under different production techniques, from small farms using low input technologies to large and input intensive plantations. However, smaller farms which are usually located in poor soils, with steep slopes and limited water availability are finding it increasingly difficult to compete and are slowly disappearing. The increase in banana production in recent years (5.4 percent per annum in the period 1987-2001) was accompanied by an increase in the scale of production, which in turn was caused by the closing down of smaller farms (OCAB 2000).

Increases in production were accompanied by an expansion of exports in a pattern that resembles that of Cameroon. Following a period of steady decline from the mid 1970s to the mid 1980s, 1987-2000 saw a sustained growth in exports of 9 percent per annum, from 82 000 tonnes in 1987 to 240 000 in year 2000. The increase coincides with a stronger participation of multinational companies and the dissolution by the government of the Cooperative de producteurs pour la commercialization des fruits el legumes de la Côte d’Ivoire (COFRUITEL) in 1985, an organisation that had since 1978 grouped banana producers and was in charge of marketing. Nowadays banana production for export consists of an integrated system whereby a few large operators specify the production technology to be applied and market the produce internationally. The government is no longer involved in production and its role is limited to monitoring the phytosanitary situation of the exported fruit. Almost 80 percent of all exports go to the EC, and the rest to North Africa and the Near East. The bulk of bananas are produced in 65 plantations covering an area of approximately 5 500 hectares, and provide employment to about 20 000 people. Producers are grouped in the Organisation Centrale des producteurs Exportateurs d’Ananas et de Banane (OCAB), created in 1991. The largest export companies are the Société pour le développement de la culture de la banane (SCB), a subsidiary of Dole and with a share of about 50 percent of all banana exports, Banador, a subsidiary of Chiquita with a share of 25 percent, and Canavèse, with a share of 10 percent.