Bananas: A Powerful Geopolitical Weapon – Analysis

 March 29, 2023  Eurasia Review  

By Matija Šerić

Bananas are one of the most popular food products in the world that can be found in every supermarket today. Many consumers consume them as a tasty foodstuff and because they have numerous health benefits. Bananas were often considered a symbol of a good life (a certain luxury) and during the 20th century numerous countries wanted to provide them to their population.

However, when you look below the surface, you can see that bananas are not a harmless food product, but an important resource and a powerful geopolitical weapon for the possession of which wars and coups were fought. Even today, the banana industry is an important component of the trade war between different countries, it was and remains the source of the oppression of underpaid labor.

Researcher Rebecca Cohen brilliantly described the importance of bananas: “Although bananas look like just a fruit, they represent a wide range of environmental, economic, social and political problems. The banana trade symbolizes economic imperialism, injustices in the global trade market and the globalization of the agricultural economy.”

Popular Chiquita

Although you can find different brands of bananas in most supermarkets, the most popular brand that many people associate with bananas is the Chiquita brand. More precisely, the company Chiquita Brands International Sarl, formerly known as the United Fruit Company (UFCO), had a tragic role in history. That company brought economic destruction, corrupt military dictatorships and slave exploitation to some Latin American countries.

The United Fruit Company of America was the largest and most notorious producer of bananas in Latin America for most of the 20th century. The company was often compared to an octopus (“el pulpo”), because it had its tentacles spread all over Latin America, trying to gain as much influence as possible and secure access to land.

The rapid rise of the banana industry

It all started back in the 19th century. Mass production of bananas as we know them today began precisely in 1834 and exploded in the late 1880s. It had political consequences from the beginning. Before the 1870s, most of the land on which bananas were grown in the Caribbean had previously been used to grow sugar, and at that time bananas were almost unknown in the US.

This quickly changed, and by the beginning of the 20th century, Americans (then a total of 70 million people) were consuming more than 16 million bunches of bananas per year. All the rapid expansions bring enormous profits, and the population that worked on the plantations paid the price.

The banana industry in Latin America seriously began in 1871 with the construction of a railway in Costa Rica, which was carried out by the Americans. In that megaproject, hundreds of workers lost their lives, but that did not sway the American builders, who came up with the idea that they could plant banana fields on both sides of the railway. The cultivation of bananas experienced a boom after the construction of the railroad because they could be easily transported to the American market.

Americans simply went crazy for this new exotic fruit. During the 1880s, several companies emerged in the banana industry. In 1899, the Boston Fruit Company merged into the newly formed United Fruit Company (UFCO) which became the largest banana producing/growing company in the world, with plantations throughout Latin America and the Caribbean, including Colombia, Costa Rica, Cuba, Jamaica, Nicaragua, Panama and Santo Domingo. The company owned 180 km of railway that connected plantations and seaports.

The case of Guatemala

As bananas became more and more popular around the world, the company bought large amounts of land in several countries. The land is often stolen from the local population. While many countries have suffered from UFCO practices, the two most important cases are Guatemala and Colombia.

In 1901, Guatemalan dictator Manuel Estrada Cabrera granted the company the exclusive right to transport mail between Guatemala and the United States. This is how UFCO entered Guatemala for the first time, after which the country will be under its supervision. Dictator Cabrera was a puppet of UFCO, whose management assessed it as an “ideal climate for investment”. The Americans founded the Guatemalan Railroad Company (Guatemalan Railroad Company) as a subsidiary of UFCO and invested capital worth 40 million dollars.

In Guatemala, the UFCO has taken control of almost all means of transport and communication. The company charged a tax for every cargo that entered and left the country through the port of Puerto Barrios. As if that wasn’t enough, the company managed to exempt itself from almost all taxes in Guatemala for a period of 99 years. When the democratically elected president of Guatemala, Jacobo Arbenz, came to power in 1951, he tried to limit the power of the company.

Until then, 2.2% of the population owned more than 70% of the land. Only 10% of the land was available to 90% of the population, most of whom were natives. Most of the land owned by the big landowners was unused. Arbenz proposed redistributing part of the unused land and making available 90% of the land for the cultivation of agricultural crops. This greatly upset the United Fruit Company, which was one of the large landowners of the unused land. UFCO officials appealed to the US government for help. They contacted President Eisenhower and Secretary of State John Foster Dulles (whose former New York law firm, Sullivan and Cromwell, represented the UFCO), saying that Guatemala had become communist and under Soviet influence.

So with great fervor the State Department and the United Fruit Company embarked on a massive PR campaign to convince the American public that Guatemala was a “Soviet satellite state” whose government needed to be overthrown. The US government and the CIA staged a coup d’état in 1954 and overthrew Arbenz and brought right-wing dictator Carlos Castillo Armas to power. It was the beginning of military dictatorships where the leaders changed several times, and they lasted more than 30 years. The result is the death of around 200 thousand civilians in the civil war.

The case of Colombia

In the winter of 1928, plantation workers in the Colombian city of Ciénaga went on strike demanding better working conditions and higher wages. This demand was nothing new, as it was known that the working conditions of the employees on the banana plantations were appalling.

On December 6, when the strikers gathered to listen to speeches, the Colombian army, on the orders of the United Fruit Company, massacred about two thousand protesters. The exact number of deaths is still unknown. In 2018, during the peace process in Colombia between the government and the FARC, the Chiquita brand was accused of funding paramilitary death squads back in 2004, showing that illegal practices were not reserved for the last century. These examples show how powerful the United Fruit Company was and how much influence it had in many policy decisions of the US government.

African market

The African banana market presents a special paradox. In the lowlands of the Congo basin, farmers grow the most diverse varieties of bananas in the world. Crops are mainly used for domestic consumption, but at the same time West African countries make up almost all of Africa’s exports.

Production in this region has grown rapidly in the last 20 years and accounts for about 5% of the world’s banana trade. The vast majority of these bananas are sold in Europe, mainly in France and Great Britain. Since 1975, African and Caribbean countries can export as many bananas as they want to the EU market. The official explanation for this was that the European Union (then the European Community) hoped that it would enable the economies of such developing countries to grow independently, without dependence on foreign aid. Some economists, however, question the logic behind it.

First, if the EU really cared about Africa’s economic development, it would remove barriers to the import of a wide range of agricultural products. Currently, only bananas can be sold on the EU market without entry restrictions, while at the same time there are measures to discourage the import of some African products: a duty of 30% on unprocessed coffee and 60% on processed coffee.

Second, the production of bananas and pineapples in Africa is dominated by American multinational companies. In any case, US companies that control Latin American banana crops hold 67% of the EU market, even though the US itself does not export bananas to Europe. This perhaps shows the extent to which the removal of barriers to access is motivated by the US-EU alliance rather than Africa’s development problems.

Banana war between the EU and the USA

The Caribbean is a special story (former European colonies) because small domestic producers predominate there and they export bananas to Europe with privileges. Despite Europe’s subservience to the US, Washington filed a lawsuit against the EU at the World Trade Organization (WTO) and won in 1997.

The EU was instructed by the WTO to change its rules that favored Caribbean producers at the expense of competition from Latin America, whose bananas are cheaper because they are grown on large, mechanized plantations run by giant US corporations.

After the WTO ruling, the US government continued to claim that free trade in bananas had not been restored, while the EU claimed that it had changed its rules. The US then imposed 100% import tariffs on European products, “covering everything from Scottish cashmere to French cheese”.

The US government was under pressure from its powerful multinational companies that dominate the banana industry in Latin America. The Bill Clinton administration launched the “banana wars” at the WTO within a day of Chiquita Brands, a former Republican supporter, donating $500,000 to the Democratic Party.

The banana wars ended only in December 2009 with an agreement between the EU and the countries of Latin America. With this agreement, the EU maintained duty-free trade with former colonies in the Caribbean, but reduced its tariffs on bananas from Latin America by 35% from 176 to 114 euros per ton.

Top 10 banana producing countries

The top 10 countries for banana cultivation in 2021 were: India (33 million tons), China (11.7 million tons), Indonesia (8.7 million tons), Brazil (6.8 million tons), Ecuador (6 .6 million tons), the Philippines (5.9 million tons), Angola (4.3 million tons), Guatemala (4.2 million tons), Tanzania (3.5 million tons) and Costa Rica (2 .5 million tons). India is the leading country in the cultivation of bananas, which are grown on 800,000 hectares in the states of Maharashtra, Tamil Nadu, Karnataka, Gujarat, Andhra Pradesh and Assam.

However, in many of the mentioned countries, bananas are intended for the domestic market. The leading banana exporting countries are: Ecuador (24% market share), Costa Rica (12.9%), Philippines (7.8%), Colombia (7%) and Guatemala (6.5%). Just five companies – Dole, Del Monte, Chiquita, Fyffes and Noboa – control about 80% of the international banana trade.

The war in Ukraine, the banana market and inflation

Certain geopolitical scenarios strongly influence the banana market. A good example can be taken of the Russian invasion of Ukraine in 2022, which consequently resulted in the introduction of Western sanctions on Russian oil and gas, which led to an increase in global energy and food prices.

Rising oil and gas prices have spilled over into food supply chains, including banana supply chains. For consumers in North America and Europe, bananas have a long journey from the plantation to their table because they can only be grown in tropical environments, such as those in Asia, Central and South America.

The banana is a temperature-sensitive fruit that goes through three stages of development: 1st stage of “green life” (when bananas are the most unripe); 2nd stage of ripening and 3rd stage of “ripeness for consumption”. This process is controlled by artificial ripening to ensure that the highly perishable fruit can reach its far-flung destinations within the stipulated period. As a result, banana supply chains are one of the most resource-intensive chains compared to other food products: refrigeration, ripening centers, and sophisticated modes of transportation and distribution.

The journey of bananas begins at the plantation, where they are picked at the right ripeness. For long-distance transport, bananas must be kept in the “green life” stage by refrigeration so that they can be artificially ripened later. Bananas are washed, labeled and packed in local processing facilities. Then the distributors haul them into trucks and finally into refrigerated containers where they will be for several weeks during sea transport.

When the bananas are close to their final destination, they are stored in forced ripening centers at temperatures between 13 and 18 degrees Celsius for up to a week before being transported by truck to supermarkets. Ships, trucks and refrigeration equipment consume significant amounts of energy (oil, gas or electricity).

Every link in the supply chain is vulnerable to events such as the war in Ukraine. However, it is not entirely clear how energy price increases affect the price of bananas, because traders keep the price of the fruit relatively low. Given that bananas have a short shelf life, traders are reluctant to raise prices. Globally, the price of bananas is estimated to have increased by only 5% in 2022 compared to 2020. T

raders often pass the rising costs of production onto small farmers and banana plantation workers. In translation, this means that small banana producers and plantation workers won’t benefit at all because they will work for the same money as before, while raw materials and energy will become more expensive. It should be known that children and women often work on plantations in poor conditions with wages that do not cover living expenses.

The uncertain future of bananas

While Chiquita has lost control of Latin American politics, the modern banana industry is not without its problems, which concern end consumers. Like oil, bananas are an endangered resource whose future is uncertain. Banana production requires strong pesticides that can be dangerous to the environment.

The future of bananas as a resource is threatened by a fungal disease known as Panama disease or Tropical Race 4 (TR4). Panama disease attacks the root of the banana tree and slowly colonizes the lower parts of the plant, blocking the xylem the tree uses to channel water and nutrients, leading to the slow death of the entire plant. This is a serious concern for the entire banana industry because the Cavendish variety, which accounts for about 40% of world production and dominates the global market, is under attack.

This is not the first time that the banana industry has faced the threat of destruction. In the 1950s, the Gros Michel (Big Mike) banana variety dominated the world market and an earlier variant of the Panama disease almost destroyed it.

TR4 disease appeared back in the 1990s in Taiwan and spread to 20 countries. This is of particular concern for Latin American countries that base their economies on the cultivation and export of bananas. Once the fungus enters a plantation it is almost impossible to eradicate and can remain hidden for years before reappearing. In the spring of 2022, the Peruvian government announced the discovery of TR4 in the Piura region and immediately declared a state of emergency, as the Peruvian economy relies heavily on organic banana production. Banana producers must find a solution to control the rapidly spreading disease. For the banana industry, it is important to work to preserve biodiversity by finding new solutions such as new varieties.