Of all the challenges facing banana growers in Latin America today, including Fusarium TR4 and climate change, the most profound problem is the lack of fair pricing, said the Guatemalan spokesperson for the Latin American Banana Task Force, Julio Mérida.
“It is the issue of the day. If we don’t find a proper mechanism to establish a fair price for bananas, then the expectation that the consumer has of a perfect banana without blemishes or scratches, is not consistent with the pressures that production, and its costs, has put upon the shoulders of the producers.”
Although it's now the worst, Julio mentioned that the pricing aspect does not stem from the current economic dynamic alone, but was an issue already before that. The consortium of banana producers and exporters of Latin America sees that as a call for action and was in Berlin at Fruit Logistica's latest edition to engage with stakeholders on shared responsibility throughout the supply chain and called for an improved price for bananas in the EU market.
Producers overwhelmed
Julio, who is the Executive Director of the Guatemalan Association of Independent Banana Producers (APIB), concludes that so far only Aldi Süd has come forward with a clear position on improving the price of bananas. "Aldi has shown the type of good will that you would not expect from a supermarket that just a couple of years earlier was advocating lower prices. They have understood the inevitable reality that, if they want to continue to provide the best bananas in the world for their consumers, then they have to adapt to these changes."
"We hope that other retailers will follow suit, because producers are being quite overwhelmed by, not only the rise of production costs and overall inflation, which have affected everyone worldwide, but also by the fact that they need to be sustainable and competitive and invest in many different things like living wages or environmental and labour certifications. All that costs money and in the very end the producers are the ones whose margins are getting smaller and smaller. To be compliant is becoming a lot more difficult than it should be."
Julio Mérida and Ferderico Narducci of LATAM Banana Task Force called for attention to the need for shared responsibility in the banana supply chain at Fruit Logistica.
Shared responsibility
The first of the large European retailers having made a commitment to increase the banana price is a positive development to Julio, as well as the due diligence legislation adopted by the German authorities, that is expected to be implemented throughout the European Union as well. The law places an obligation on German companies to identify and account for their impact on human rights and the environment throughout the international supply chain.
"This will inevitably require the retailers to do the type of thing that we are putting on the table now. It is the notion that the entire value chain of bananas has to share in the costs of that have been imposed upon us, all the way up to the consumer. If the consumer, civil society organisations and supermarkets can all be on the same page, it will be just a matter of time before producers start getting the proper prices."
In terms of pricing the LATAM Task Force thinks that the Fairtrade methodology, which already is accepted and functional, should be the default position. "It is a matter of applying that to each country where we produce bananas and then hopefully they will get the price they deserve."
Market dynamic
Julio expects the market dynamic to play a role in the pricing process too. "The bananas will go where the prices are better. Inevitably the Russian market will once again improve and they are willing to pay a different price and don't have as many obstacles as we face in the EU."
He sees other opportunities for Latin American bananas in Asia as well. "Although logistics are an issue there, dwindling production in the Philippines and the Far East due to TR4, may make that an attractive market place." Julio also sees an increase in banana exports from Ecuador to China and from Colombia to South Korea. "It is a matter of just going where the conditions have improved."
Although in that scenario less bananas might be exported to Europe, Julio thinks it need not come to that. "Europe has the ability to react to that, before it even happens and it is not difficult. If something is to be admired of the Europeans, it would be the fact that they understand the social complexities of these matters and they are still at a point where they can act upon them pre-emptively. Let's hope it will not come to a point where market pressures increase unnecessary."
Gigantic social impact
In Latin America many people make their living in the banana industry and therefore the impact of pricing is enormous. Julio mentions that in Guatemala alone, directly and indirectly, 180,000 workers and their families - a total of around 900,000 people - are dependent on bananas for their livelihood. He observes that if plantains are added to that, it amounts to 300.000 sources of employment and 1.5 million people affected. "The social impact of our messages not having traction in the EU, and eventually in North America, is truly gigantic."
Where bananas from Guatemala are mainly exported, three of out four boxes of plantains is consumed domestically, mentions Julio. "Plantains are a staple of Guatemalan gastronomy. So the consequences that we face, whether of unfair pricing, the threat of fusarium TR4 or regulatory decisions that may prohibit the use of crop protection, are impactful."
As an example, he cites Black Sigatoka, a disease that he calls controllable through proper and safe applications of Mancozeb - of which the use for EU farmers has been prohibited since June 2021. "If this agent were to be taken away from us, then the threat of TR4 makes no difference, Sigatoka will take care of it. That is the type of daunting scenario's we are facing."
International cooperation and financing
It is why the LATAM Banana Task Force calls for the different needs of the different latitudes to be taken into consideration when developing regulation. "You can't analyse a tropical climate, volcanic soil and all sorts of other variables that are present in Latin America for bananas and plantains vis a vis apples in an orchard in say Germany. This is just not comparable. Awareness in that field is lacking."
The executive director of Apib identifies Fusarium TR4 as another profound threat to the banana production in Latin America and sees a lack of shared responsibility in that field too. "In parallel to the need of testing resistant varieties, there is also the need for international cooperation and financing for preventive sanitary measures, applicable to both governments and private producers. There is still a lot to be done and perhaps the rest of the world isn't as conscious of the dimensions of this threat because there seems to be very little financing for these types of measures. The expectation is that the producer has to foot the bill for everything. This ties in to the fair pricing of the fruit as well and is becoming more and more difficult," concludes Julio.
For more information:
Julio Mérida
Latin America Task Force
jmerida@apib.org.gt
sanctionsassociation.org