Table of Contents

I. INTRODUCTION

II. CONTRIBUTION TO EXPORT EARNINGS IN FOOD SECURITY

III. GHANA CASE STUDY

IV. ECUADOR CASE STUDY

V. CONCLUSIONS

I. INTRODUCTION

1. The production and export of agricultural commodities are activities of major importance for generating foreign exchange earnings, domestic savings and employment, and for providing a material base for national economic growth. Commodity production and trade contribute to food security directly by adding to domestic food availability, and indirectly by permitting access to food supplies through enhanced earnings. In the declaration of the World Food Summit, food security is defined as existing "... when all people at all times have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preference for an active and healthy life". This concept has several dimensions which include food availability, accessibility and stability at different levels of aggregation, namely global, national, household and individual. International trade also has a major bearing on access to safe and nutritious food through its positive effects on economic development and employment. Trade makes it possible for countries to access additional food and allows food consumption to exceed food production.

2. At its First Session the Sub-Group requested that the Secretariat carry out further studies of the relationships in the banana sector between export earnings, income and employment, and the achievement of sustainability and longer-term food security, following the case studies of Costa Rica and Saint Lucia which were presented at that session. This paper summarizes the results of studies on the contribution of bananas to food security through export earnings or as a staple food in Ecuador and Ghana. In the current case studies, the position of plantains in the overall food security situation is also examined, as requested by the Sub-Group.

II. CONTRIBUTION TO EXPORT EARNINGS IN FOOD SECURITY

3. Food security can be measured at various levels, although household food security is perhaps the most common focus. However, attention should also be devoted to security at the national level, since national level food security is a necessary (but not sufficient) condition for household food security. Data readily available from existing secondary sources can help to elucidate food security issues at the national level. However, household level analyses necessary to understand the more micro-level impacts of changes in commodity export earnings on food security typically require primary data collected by household surveys.

4. The results of two country case studies, for Ghana and Ecuador, are discussed here. Budgetary constraints limit the scope for primary data collection so what follows mostly discusses food security at a national level. The Ghana study makes an initial attempt to address household food security aspects, but the results should be considered as preliminary.

III. GHANA CASE STUDY

5. Banana exports play a small but growing role in Ghana's export trade. Bananas constitute about 13 percent of horticultural exports but only about half of one percent of total exports by value. Cocoa continues to dominate Ghana's exports, with almost a 77 percent share of exports by value.

6. Bananas and plantains are among the cheapest foods to produce in Ghana. Among staple foods, plantains have the second highest calorie to price ratio after cassava. On average plantains supply 9.5 percent of total caloric intake among the Ghanaian population (Table 1 and Figure 1).

7. Based on fieldwork in three regions in Ghana - the Volta, Eastern and Ashanti regions - the data indicate that bananas and plantains play a more important role in the two regions with the higher per caput incomes (Ashanti and Eastern). Plantain is an important source of food in the Ashanti region. In the Eastern region, where bananas are grown for export, one of the main sources of income derives from employment on the banana plantations (Table 4).

8. In the case of Ghana the survey tends to lend support to the idea that improving plantain production could contribute to reducing food insecurity at household level in two ways:

1. As a food crop: plantain is the fourth most important starch staple in Ghana. Households surveyed in the Ashanti region, a major plantain-growing area, reported a higher food security status than households surveyed in the other two areas. Plantain is also used as a substitute for cereals and improved plantain production could compensate the deficit in cereal production at national level.
   
   
2. As a cash crop: in addition to its importance for self-consumption, plantain is an important cash crop for farmers in Ghana. Hence, improvements in the production and marketing of plantains could result in increased incomes for farmers, thereby improving food security.

9. While bananas have lesser importance as a basic food item, they have become an important export commodity. Bananas provide jobs and significant incomes for hundreds of plantation workers. The survey showed that these workers have the highest incomes of all respondents. Bananas are also increasingly important to export diversification, potentially enabling Ghana to earn more foreign currencies.

10. However, the export banana industry in Ghana is fragile, as it depends on only one plantation, the Volta River Estate (VREL), which in turn relies on the support of `fair-trade' NGOs in Europe. These NGOs purchase VREL bananas at a so-called `fair-trade' price, which is higher than the average international market price (for more information on `fair-trade' bananas, refer to document CCP: BA/TF 01/5). Moreover, Ghana's export banana industry depends to a large extent on the European Community banana import regime which is in a period of transition, and this implies some uncertainty for suppliers. All these factors have caused significant variations in banana exports. This relatively high variability of export earnings may be a threat to the long-term food security of those who are highly dependent for their incomes on banana exports.

IV. ECUADOR CASE STUDY

11. Ecuador is the largest banana exporting country on the international market. In 2000 Ecuador exported 4.5 million tonnes of bananas. This export activity earned Ecuador more than US$900 million. Banana production, largely limited to the coastal plain of the country covered 143 961 hectares in 2000, which represents a steady growth in hectares since 1994 when the figure stood at 124 400 hectares. Likewise, the number of producers rose from 4 113 in 1994 to 5 983 in 2000. It is calculated that in 2000 there were approximately 1.1 million people benefiting directly or indirectly from the export banana industry in Ecuador, out of a population of some 12.5 million. Ten provinces are producing export bananas, but three - Guayas, Los Rios and El Oro -dominate, with about 93 percent of export production (Tables 5 and 6).

12. Over the past decade Ecuador has experienced several economic shocks with large fiscal and balance of payments deficits. Despite government efforts to promote economic growth, poverty and unemployment have increased. Continuous devaluations and high levels of inflation have led to increased hardship among large segments of the population. The external debt has also increased. The banana sector has not escaped any of these adverse economic factors. High levels of inflation accompanied by regular devaluations and very high interest rates have reduced the ability of the industry to invest. Higher energy costs resulted from the removal of subsidies in pursuance of structural adjustment programmes. Real salaries have fallen behind price increases and poverty levels have risen. Unemployment is registered at 20 percent, while underemployment is about 60 percent. Between 1990 and 1999 per caput income declined during three years, with the highest decline of 8.8 percent in 1999. Based on an index of 100 for 1994/95, real salaries declined to 78.7 by 1999. This rather gloomy context provides the background to linkages between banana exports and food security in Ecuador.

13. Direct agricultural employment on banana farms peaked in 1995 at 314 000 workers. In 2000 the figure stood at 204 800 (Table 8). The average number of days of work for a labourer is 121. The minimum monthly wage for those employed full time in Ecuador is calculated at US$49, based on an exchange rate of 25 000 Sucres to the dollar in 2000. This converts to US$588 per year, compared to US$1 128 in 1999 and a per caput income of US$1 164 in the same year.

14. Based on a 121 day work year the average banana worker earning US$3.90 per day earned US$472 in 2000. On banana farms with advanced technology and high yields, workers are employed an average of 128 days per year, which would indicate incomes of close to US$500 per year. Ecuadorian Government statistics indicate that an average family (five persons) would require about US$2 150 per year for a basic basket of daily needs in 2000. Consequently neither the minimum wage nor the banana worker's income meets the minimum standard for a family basket.

15. Unfortunately, data are not available concerning alternative income sources for those employed on banana farms, nor on food crops produced by those working on the farms for their own use, such as in backyard gardens or on their own plots of land. Data on non-monetary incomes, such as housing or other social services from plantation owners, are also not available. Therefore, it is difficult to adequately evaluate the food security situation of the banana worker in Ecuador based on the data available.

16. Plantains form part of household garden plots, mainly as shade for coffee and cocoa stands. Plantain production is spread over the entire country, covering 68 433 hectares, generally in small plots, oriented to subsistence production and for internal consumption. Total production has reached 945 500 tonnes. However, one area, El Carmen, in an area of about 10 000 hectares under 739 producers, now produces for export. In 1998, 37 440 tonnes of plantains were exported, which is below the peak reached in 1997 of 55 391 tonnes.

17. Apart from the 4.5 million tonnes of bananas exported in 2000, there are some two million tonnes available for internal consumption. About 800 000 tonnes go to animal feed, 150 000 tonnes are processed, 500 000 tonnes are consumed in Ecuador and an estimated 540 000 tonnes are wasted. Curiously, inhabitants of the coastal region where bananas are produced are not significant consumers of the fruit according to the country study carried out. Even workers on banana plantations consume little of the fruit readily available every day. On the other hand consumption in the highland areas, particularly among indigenous groups, is much higher. This would indicate some substantial internal trade and considerable transport of fruit around the country. The use of the 540 000 tonnes which are now wasted each year could potentially provide a further food source to the considerable portion of the population which is experiencing shortfalls in caloric intake (Tables 11 and 12 and Figure 2).

18. Current caloric intake per caput in Ecuador is estimated to be 1 930 calories. As 100 grams of banana contain 94 calories, an increase in consumption of three bananas each day can add almost 430 calories to this intake. Although supplies would be available to achieve this modest goal, weak demand and enhancement of the distribution system would need to be addressed. Promotional campaigns might help boost domestic consumption, although such measures may be difficult to stimulate in a highly export oriented industry.

V. CONCLUSIONS

19. The case studies suggest that there are important linkages between earnings from the crop and food security at national, household and individual level. The impact of these earnings is particularly important given the large number of people involved in the industry, particularly in Ecuador. Plantation workers in both countries clearly find these earnings the key to their survival. Smallholders, of whom there are many in both countries studied, are also dependent on banana or plantain production and sale for food security.

20. Based on the limited data available, plantains play an important but not overwhelming role in food security for segments of the population in Ghana. In Ecuador the size of the export-oriented banana industry gives it a locomotive role in the overall national economy. The industry consequently plays a role in economic growth, price stability and changes in real wages. In 1999 bananas earned 22 percent of all export earnings, just behind the 28.7 percent coming from crude petroleum. Increases in areas harvested and in export volumes have resulted in a general growth in earnings from bananas even if the growth has not been consistent year on year. In an Ecuadorian economy which had a Gross Domestic Product (GDP) of US$13.6 billion in 1999 exports of bananas alone contributed about 6.8 percent to that total GDP.

Table 1 - Ghana: daily calorie supply per capita

Source: FAOSTAT

Figure 1 - Ghana: share of plantain in daily calorie supply per capita (%)

Source: FAOSTAT

Table 2 - Ghana: estimated calorie-price ratio of plantain and other staples

Table 3 - Ghana: sources of income (percentage of households reporting incomes from each source in first column)

Table 4 - Ghana: contribution to household diet and income

Table 5 - Ecuador: main exports in millions of dollars

Table 6 - Ecuador: banana production and exports

Source: FAO

Table 7 - Ecuador: structure of banana area planted

Elaboración: Ing. José Riofrío Sáenz

Table 8 - Population benefiting from banana production

Area and producers: Subsecretaría del MAG (Unidad de Banano)
Elaboración: José Riofrío Sáenz

Table 9 - Cost of production structure for bananas (%)

Elaboración: Ing. José Riofrío Sáenz

Table 10 - Ecuador: labour requirements for various types of plantations based on technology levels

Table 11 - Ecuador: banana production utilization 1994-2000 (metric tonnes)

Table 12 - Ecuador: daily calorie supply per capita

Source: FAOSTAT

Figure 2 - Ecuador: share of bananas and plantains in daily calorie supply per capita (%)