IBC II - changing bananas for good?
By Iain Farquhar, Banana Link

Dr. Iain Farquhar of Banana Link reflects on the evolution of debate, dialogue and on-the-ground changes between the two International Banana Conferences and at the IBC II event itself. Alistair Smith, editor of the Banana Trade News Bulletin, then goes on to consider what has happened as a result of IBCII and what this might mean for the future of the banana economy worldwide.

In the light of the first IBC in 1998

At the first International Banana Conference in May 1998, there was a widespread recognition amongst the participating governments, companies, scientists and civil society organisations involved in the sector that the social and environmental conditions prevailing in the industry at the time were unacceptable. Given the highly fraught context at the time, there was no agreement as to how to move forwards towards an EU trade regime capable of encouraging sustainability. However, the IBC I was host to the first-ever debate involving all parties since the banana “trade wars” erupted in the early 1990s. Furthermore the organisers did succeed in producing the International Banana Charter, which has provided a framework for civil society action since then, although, not surprisingly perhaps, the key players in the industry did not feel able to sign up to a document which was conceived by their critics. So, what happened then in the intervening seven years?

On the whole, the banana producing and trading companies accepted the diagnosis of IBC I concerning the conditions prevailing in the industry and they made efforts to improve both socially and environmentally, either by themselves adopting a range of voluntary standards (both social and environmental) or as a result of having ‘quality’ standards (mainly environmental) imposed on them by their major customers, notably the ISO 14001 and EUREPGAP standards (the latter controlled by European retailers). In general it appears that the issues were taken seriously by many plantation owners – multinational and nationally owned – but some companies made deeper commitments than others.

Nevertheless, despite the proliferation of voluntary standards initiatives in the sector, achievements on the ground were fairly limited (see IBC 2 paper “Can Voluntary Standards Provide Solutions?”). Overall conditions – especially socio-economic conditions - in the industry appeared to have actually worsened rather than improved in the intervening period between the two conferences.

A new dimension in the lead-up to – and at - IBC II was a recognition of the importance of the big retail companies which distribute more and more of the bananas supplied by the production and trading companies. The retailers had been able to take advantage of the oversupply of the market to push for lower and lower prices from their suppliers. This in turn stimulated changes to the structure of the supply chain, involving relocation to ‘cheap’ countries with lower standards and/or the imposition of new working practices on workers who often ended up working for lower levels of remuneration.

At IBCII, participants broadly recognised that there was a need for a permanent stakeholder forum to halt further declines in standards, to seek to reverse the overall negative trends in the industry (the ‘race to the bottom’) and, notably, to find ways of limiting the growing power of supermarkets to depress prices to even more unsustainably low levels. On the issue of standards in the plantations and pack-houses, the ILO laid down a challenge to the sector, referring to its role as ‘guarantor’ of the Chiquita-IUF-COLSIBA agreement of 2001 as an indicator of the way an international institution could help reinforce the practical application of its own legally-binding standards in a context of continuing and systematic violations in several key exporting countries. No banana producing country and few consuming countries, for example, have ratified ILO Convention 184 on health and safety, the enforcement of which would make a huge difference to the daily lives of working men and women in small, medium and large-scale banana plantations across the tropics.

The conflicts surrounding the proposed reform of the EU import regime were, in one sense, an unwelcome ‘intrusion’ into the ambitious conference agenda, but one which the organisers had to take into account. All the more so, as it turned out that the outgoing WTO Director General announced the composition of the arbitration panel in Geneva only hours after the end of IBC II. The much delayed evaluation of the COM in Bananas (mainly focusing on the internal EU subsidy regime, with a limited focus on third country economic impacts) was handed to the Commission on the last day of the conference, but was not yet a public document at this stage, despite its being originally conceived as a contribution to the reform debate. All these short-term factors tended to conspire against the conference’s objective of focusing debate and proposals on what an EU trade policy capable of encouraging sustainable production and trade might look like.

Although total consensus on EU trade policy was elusive, the voices of the relatively ‘powerless’ were heard by the relatively ‘powerful’ and policymakers were left in little doubt as to the probable impact of the scenario which they had appeared to assume was more or less inevitable, when they first arrived at the event. Most participants, including some but not all major company representatives, saw ‘tariff only’ as damaging; many argued that a continuation of the current regime – the so-called ‘status quo’ – though not particularly desirable and far from ideal for some other players (such as smaller farmers in South America and some traders of organic and ‘Fairtrade’ labelled fruit) was much better than the proposed reform on the table. EC representatives appeared however, at least in public, to be fairly inflexible about putting the reform process into ‘reverse gear’. It was decided at the conference, with no overt opposition, that participants should call collectively for an independent evaluation of the current regime.

Whatever happens on the trade policy front, there can be no doubt that any further price falls will damage all stakeholders. Even those big fruit companies, which were opposed to the continuation of the current EU import regime in any form, recognised that cooperation both amongst banana producers and with other stakeholders was necessary and valuable if the ‘race to the bottom’ was to be reversed.

In the light of what IBCII set out to achieve

1. Tackling overproduction
The first – and most unexpected – development following the IBC II was the new Ecuador government’s decision to regulate their internal banana market and make voluntary reductions in their export volumes. To what extent this can be directly attributed to discussions about global banana supply management during the conference and its preparations is impossible to say at this stage. What is certain however, is that the Agriculture Minister, Pablo Rizzo and some of the major Ecuadorian exporting companies decided in early May that the series of producer strikes (and almost constant threats of strikes in the last few years) over the price paid by exporters when the international market is oversupplied required innovative action on the part of the government and the industry. Less than a fortnight after the first ‘public’ discussions of different supply management options in Brussels, a tri-partite agreement not only to guarantee payment of the minimum price to producers, but also to manage a reduction in exports had been signed and a Commission of government, producers and exporters put in place.

Given the political instability of a country which is seeing accelerated impoverishment of both the rural and urban majorities, and given the fragility of any attempts to stabilise relations between producers and exporters, Ecuador will almost certainly have to seek allies amongst the other major exporting countries. It is still conceivable that any such move to broaden out this brave unilateral move by Ecuador could take place in conjunction with efforts to present a common producer country position in Geneva. However, it would seem more appropriate in the medium to longer term to hold such discussions in a more formal – and rather less politically charged – forum than the fora in which debate on ‘tariff/s only’ or ‘tariff quotas’ is taking place. It is possible that the forthcoming Inter-Governmental Group on Bananas and Tropical Fruit meeting in Guayaquil in September, hosted by FAO and the Ecuadorian government, would provide an ideal forum.

2. A permanent multi-stakeholder forum
The second development is one which can be justifiably attributed directly to the IBC II process: there is consensus amongst all the key participants in the banana market that a “permanent multi-stakeholder forum” is needed for the sector. However, to be sustainable – in the temporal sense of the word – such a forum would need proactive international institutional support from at least three or four inter-governmental institutions such as FAO, ILO, UNCTAD, WHO and/or the IFC. The organisers of IBC II are currently initiating consultations to explore the form such a forum could take as well as the framework of principles on which it would be founded and would function. Examples from the coffee and textile sectors can be analysed in terms of the lessons they offer for the banana economy.

3. Towards a sustainable EU banana regime?
A third development, and one which is necessarily wrapped up in controversy, is that the majority of governments and companies represented at the conference support the continuation of some form of supply management in the EU-25. Discussions about how such a trade policy regime could be linked to improvements in socio-economic conditions as well as to improved labour and environmental standards were inconclusive, but got a good airing. Some form of tariff differentiation or graduation according to sustainability criteria is a debate which can no longer be kept under the table, in spite of the obvious challenges it poses to existing international trade rules and to WTO member states both large and small.

The conference declaration calls on the EU to undertake a full evaluation of the impact of the “Common Organisation of the Market in Bananas” in place since July 1993. This call will be partially answered when the much-delayed EC-commissioned evaluation report is finally published this summer. The Commission is now exploring the possibility of organising some kind of broad forum to discuss the report’s findings this autumn and points out that it will also be seeking feedback from most of the key European institutions – Parliament, Council of Ministers, Committee of the Regions, Economic and Social Committee, etc. However, securing a full impact assessment of different ‘tariff only’ proposals is not yet on the EU agenda, but many of the participants at IBC II are committed to trying to ensure that this happens. In the light of the radical impact which either a low, medium or high tariff would have on the whole banana economy, it would be astonishing if the EU could not agree to such an assessment before making the reform it has announced and which is currently subject to costly and time-consuming arbitration in the WTO. Would a full evaluation of past and present import policies and their impact on real people and real places not be the best way for the EU to lower the banana political temperature as governments prepare for a testing WTO Ministerial Conference in Hong Kong in mid-December?

4. Regulating the new ‘lords of the chain’
The fourth development has caused some large companies in the sector a certain amount of consternation, but may set a precedent for inter-governmental policy action in the longer-term. The “dawn raid” on the European offices of Chiquita, Dole, Del Monte and Fyffes in early June may well not have gathered evidence sufficient to prove any kind of “price-fixing cartel”, but it sends a signal that competition authorities can use their teeth – teeth which some thought had fallen out. This surprise “raid” could also be taken as advance notice for other bigger companies in the chain that sooner or later – although it is not going to happen just yet – anti-competitive behaviour upstream from the banana suppliers, notably abuses of buying power rather than just of supplying power, will be put in place along with effective regulation in order to protect all those back down the supply chain - from supermarket warehouse back to the fields, factories and homes of those whose lives and incomes they increasingly control. It was noted at the IBC II that there is currently a complete vacuum in the domain of adequate policies to control abuses of buyer power.

The UK banana market, which has gone from being a high-price-high-profit market for suppliers to a low-price-low-or-no-profit market in just three years, provides an interesting case in point, where the big four retailers sell three bananas in every four consumed; but it is unlikely that the competition issues posed by this phenomenon – notably the absence of any legal provisions for controlling ‘oligopsony’ – will be resolved at the level of one nation-state alone. However, participants at IBC II were close to unanimous in identifying the need to collaborate across the sector to help fill this policy vacuum. Could we not imagine fruitful cooperation between corporate lawyers and civil society interests, rather than the traditional mutual suspicion or open conflict?

5. Sustainable production and fair trade
The fifth area in which the ‘post-IBC II’ banana world is demonstrating constructive progress is more practical and immediate from a workers and farmers point of view: the gradual shift of sustainable production methods and production to ‘Fairtrade’ standards from the margins to the mainstream of the world banana market is accelerating. On June 8th, an agreement was signed between the Latin American Banana Workers’ Union Coordination COLSIBA and Transfair USA, the leading Fairtrade labelling organisation member in North America (see the “Issues: consuming countries” section of this Bulletin). This agreement and the shift in trading patterns which it heralds are of vital importance to Latin American plantation workers and, of course, of great significance to US consumers. The former have been struggling to make Fairtrade a meaningful option for them for over a decade, whilst the latter have started to arrive relatively recently at the conclusion that they want the option to buy bananas which do not support the race to the bottom in standards and prices looming over the rest of the continent to the South.

Alongside this, the Windward Island industry in a single voice – governments, companies and farmers themselves who led the initiative back in the late 1990s - has declared its intention to shift the whole of production towards Fairtrade standards, as one of the instruments in its tool-kit for survival. Some voices worry, understandably, that the small farmers who have led the Fairtrade labelling movement could stand to lose out as large-scale plantation volumes are required to meet rapidly growing demand from consumers in national markets as diverse as Finland, Italy, the United States, the UK and Japan.

On the broader area of sustainable production methods, although many areas where organic or biodynamic production for export is possible have already converted – or are in the process of conversion to – these certifiable systems. FLO’s environmental standards are also leading producers in that direction, partly because of the standards themselves, partly because of the additional guaranteed price incentive of ‘double’ certification. However, when it comes to publicly available research on low external input and non-chemical systems, the banana world remains a virtual desert. Despite regular appeals by the International Network for the Improvement of Banana and Plantain (INIBAP) including, and despite a rather unfruitful and now defunct World Bank-backed Banana Improvement Programme, the industry itself – or at least the fruit multinationals who dominate the industry – has proved remarkably resilient to what too most observers looks like simple good sense.

If we want a sustainable industry, surely it has to be based on the sustainable use of varieties which are not only acceptable to consumers, but which are also not under threat from systemic disease problems. Industry and governments seem to agree that the exceedingly high human, environmental and economic costs associated with the dependency on one variety for nearly all bananas entering the international trade, but so far they have failed to put their money where their mouth is. For the conference organisers, this needs to change and there are international institutions and scientists just waiting for the right financial signals. Such research should surely be a product of public and private collaboration. This could become one of the key areas of work for a future multi-stakeholder forum.

6. Workers, farmers and gender equity
The four million or so people who depend directly on the international banana economy for their livelihoods were well represented at IBC II. Trade unions, farmers’ organisations and other civil society organisations from 20 producing countries or territories made their voices very clearly heard at IBC II. No participant can have been left in any doubt about the depth of the multiple crisis facing workers and small producers in particular. The catalogue of labour, trade union, social, housing, health, safety and environment issues has grown since 1998, just as efforts inside the sector and from international solidarity have started to be mobilised. However, the understanding of these issues, as well as the transnational capacity to deal with them, has grown very considerably.

Nor should anybody have gone away with the idea that the role of the women on the frontline’ of the industry is secondary. Women banana workers and small farmers have been highly organised since the first IBC and held their own international conference in Germany in 2000. The women workers’ agenda and analysis of the sector - not just in relation to the range of problems facing those employed in the industry and their families, but also in relation to their growing leadership role in negotiations over labour relations and trade arrangements affecting their employment – is often clearer and more coherently presented than those presented by many of their male colleagues from the industry itself and from their national governments.

As far as our objective of “securing commitments from governments and companies to respect/enforce labour and trade union rights and standards” is concerned, no conference could be expected to achieve such an ambition in itself, but there are some signs of hope that in the follow-up other banana companies will follow the lead taken by Chiquita following IBC I. Pacific Fruit/Bonita and Dole have both initiated meaningful dialogue with trade union organisations in the weeks and days leading up to the conference. Only time and practical results will tell whether these important discussions will lead anywhere. Del Monte also stated for the first time at IBC II that it is open to direct bargaining with the independent trade union in their plantations Cameroon.

On the government side, the new Ecuador government has given initial signals since IBC II that they might become more serious than their predecessors about enforcing labour and trade union rights, and it is to be hoped that the detailed submission by the International Confederation of Free Trade Unions to the WTO Country Review in June will be incorporated in the recommendations from that organisation to Quito. Although the US Administration was not represented at IBC II, the US and UK embassies in Quito have been playing quite a constructive role in trying to get successive Ecuadorian Labour Ministers to enforce existing legislation and make progressive reforms to reflect fully the core ILO conventions.

7. Fair prices and living wages
On the complex issue of “defining a fair price” (to producers) and exploring how “living” wages might be paid, there was no evident consensus emerging from IBC II, but then this was a set of issues which the organisers of IBC I had felt we had to skirt around in order to bring people to a first international forum. At IBC II the economics of the sector took centre stage and debate was surprisingly mature and coherent. The development of fair and alternative trading arrangements, especially their arrival in the mainstream in Switzerland (over 50% of the market), has helped to clarify at least one definition of “fair price” at one crucially important stage of the chain. FLO’s fair pricing system has set a challenge to all traders in their business relations with producers. A fair price for shipping or distribution is another matter not easy to broach at this stage of dialogue.

As for a “living” wage, which if paid to all (whatever the technical definition chosen) would make a greater tangible difference to currently impoverished banana exporting communities than any other single change, there will be little movement as long as the market remains oversupplied and power relations between buyers and producers on the one hand and producers and their employees on the other remain so one-sided. The challenge is huge, but not insurmountable. Central American workers have pointed out that the most stable period of labour relations they can remember, when most workers received what they deemed to be a living wage, coincided precisely with the short period in the mid-1970s when the Union of Banana Exporting Countries (UPEB) was functioning efficiently to the benefit of producer governments. Is this just coincidence, or one of the more seminal lessons to be learned from our three days together in Europe’s political capital?

Source: Banana Link