The only way is up
By Alistair Smith
Banana LInk International Coordinator
8 November 2019
One year ago Aldi attracted the anger of the world's leading banana exporting countries by deciding that banana growers participating in their first annual global tender had to agree to accept a lower price than in 2018. This was the third year running that Aldi had used its considerable buying power to squeeze banana prices. The major producers said "enough is enough", especially at a time when major industry players are trying to work out how to pay living wages to all their employees and invest in more agroecological systems.
The growers fell short of refusing to sell to Aldi, but only just. If the 2020 contract were to be negotiated at a similar or lower price, we could be witnessing the first ever large-scale refusal to sell at an unsustainably low price.
After a raft of denunciations from across the industry, Aldi agreed to listen and learn. As new members of the World Banana Forum, their peers were hopeful that this was a genuine commitment. The expectation was that the company would understand why their continued downward pressure went against their commitments as members of the Forum, or even against the ethical imperative of global corporate citizenship.
The company's statement on human rights and their internal restructuring were welcomed, although nobody was under any illusions when their pricing policy in their home market in Germany succeeded in undermining their main competitor's new-found commitment in mid-2019 to only sell Fairtrade bananas.
So, might we actually see a historic move in the coming weeks by one of the world's biggest global buyers on their biggest selling food line? Maybe. But a price increase from an unsustainably low base will be judged by how many euro cents per kilo the retailer is prepared to pay, especially in the context of rising production costs, a global disease threating production, a move to lower-emission shipping and, above all, a widely shared commitment to secure living wages for all workers involved in producing this most emblematic of global commodities.
Anything less than a 10 cents a kilo increase will put on hold global efforts to invest in the social and environmental improvements to which most players in the industry have said they are committed. More than that will be a welcome signal that Aldi has indeed listened and learned.
“To grow organic is to think different”
Bananas in the Battle of Ideas
Diverging strategies in Germany
In Germany, and by extension across the whole of the EU, the battle for banana ‘concepts’ is at its fiercest since Lidl announced in 2018 that it was changing its 100% Rainforest Alliance labelling strategy for 100% Fairtrade labelled bananas across Europe. As of February 2019, this strategy is under way or complete in ten of the 28 EU member states where it has stores, increasing the volumes of Fairtrade labelled bananas sold in the EU by at least 50%, once the plan is rolled out.
Meanwhile, Lidl’s historic competitor Aldi has brought together its two companies (North and South) to buy annually for the twenty-two countries where it has stores in Europe and North America in a single annual contract for the first time. The company made headlines around the world in October 2018 when it became known that it was cutting “at least 50-euro cents” off the (already low) price it expected suppliers to accept for the 2019 contract.
Despite huge pressure from the industry in four major Latin American exporting countries, along with civil society organisations, in particular Oxfam, Aldi went ahead and found traders prepared to sacrifice their margins at the new, unsustainably low price.
The German Minister of Economic Development and Cooperation, Gerd Mueller, went as far as denouncing the behaviour of Aldi in the media, now retailing their conventional bananas at prices as low as 0.79 euros/kilo. The Minister compared Aldi’s irresponsible strategy with the move by Lidl in the opposite direction, thereby highlighting this historic divergence in commercial strategy between the two rivals.
Aldi, a fellow member of the World Banana Forum, is now under pressure from the whole industry, including its global competitors, to review its purchasing practices for next year’s strategy. The other two big traditional chains in Germany, Edeka and Rewe, have long since chosen not to compete on banana price with Lidl and Aldi.
Retail consolidation United Kingdom
Meanwhile in the UK, the second biggest European banana market, the Walmart subsidiary Asda is scheduled to buy J Sainsbury, pending a decision by the British competition authorities in the next few weeks. The merged “Sainsda”1 chain would have over 30% market share, overtaking the historic giant Tesco. Between them, the two would control close to 60% of the UK’s grocery market. Although, in the event of the merger proceeding, it is unknown what fate might await the former’s 100% Fairtrade banana strategy, in place since 2007.
In order to keep pace with the banana price wars declared in 2002, when Asda had been bought by Walmart, Sainsbury has been losing money on every box of loose bananas sold since 2012, selling at well below the cost of purchase, a practice not allowed in either France or Germany.
Aldi and Lidl’s UK operations have also taken over market share from all the big four and now have bigger sales than the historically dominant Co-operative Group. Between them, their so-called ‘hard discount’ model now takes third place behind Tesco, Sainsbury and Asda, ahead of Morrison.
The Sainsbury board chair, David Tyler was quoted earlier this month as saying, “If we don’t get the Asda merger, you’ll hear our rivals cheer from Germany!”2. Commenting in the same interview that “my main motivation is to create value for shareholders and to make a difference to people’s lives”, calls into question the company’s self-vaunted ethical lead as the first major retailer in the world to convert to 100% Fairtrade.
Could the ‘difference’ that Tyler refers to be the livelihoods of small banana growers and plantation workers, if the company’s Fairtrade policy and sustainability standards are ditched in the rush to compete with companies working on much tighter margins?
“Vive la difference” in France
In France, the situation is quite different: consumer prices have remained much higher and, on average, are still close to double the UK retail price and around 50% higher than the German average, leaving much more room for manoeuvre when it comes to a fairer distribution of value along the chain.
Banana price promotions in French stores only tend to last a week or two, although they have become more common in recent times. The industry body that brings together all the players from the French Caribbean producers through to the powerful retail association FCD is currently seeking to stop such promotions being at the expense of growers and other operators nearer the beginning of the chain.
The international Carrefour group, with stores in 30 countries on five continents (from Indonesia via Senegal to Argentina) is now rolling out a different and far more visionary strategy than some of its global rivals, with around one third of its sales now being organic and Fairtrade certified. It is leading a process of agroecological conversion with all its international banana suppliers, including the traditional big three multinationals that still own big plantations across Latin America3. By 2022, all the group’s banana suppliers worldwide will need to produce credible conversion plans that include radical agrochemical reduction, with technical support from the world’s leading tropical fruit research institution, CIRAD.
This follows the move of France’s Compagnie Fruitière group, which declared its intention in June last year to shift all its production to agroecological systems, organic and diversified where possible, by 2025. In Ghana and Ecuador in particular, this strategy is already paying off, with over 1,500 hectares already in organic production and Fairtrade certified.
The game is already changing
Carrefour, along with Morrisons in the UK, is showing the way by introducing bananas produced by organisations of small farmers in South America in ‘polyculture’ systems (farms also growing cocoa, mangoes, avocados, citrus, as well as food and tree crops). Banana Link’s call to explore production systems “beyond monoculture”4 has been heard by these visionary retailers who are determined to help generate a positive social and environmental impact in the farms and communities supplying the bananas they buy and resell.
At the same time, the banana world is witnessing the birth of a new consciousness in relation to the importance of the big family of bananas and plantains that are crucial in the staple diet of some 400 million people across the tropics. Big tropical fruit companies like Chiquita and Compagnie Fruitière are now exploring the role that they will have as economic citizens in contributing through production, research and communication to the future of tens of millions of smallholders whose households depend for their food security on the very fruit that the exporting companies have been bringing to the world market since the late 19th century.
Could it be that, finally, nearly 15 years after the second International Banana Conference “Reversing the Race to the Bottom” - co-organised by the alliance of plantation workers’ unions, small farmers’ organisations and the European Banana Action Network – we are on the brink of real systemic change in this most emblematic of globalised industries? Could a real “Race to the Top” be emerging as we reach 2020?
1. As the potential new giant merged retailers has been billed in the British fruit trade media.
2. The Times, 9th February 2019. The quotation in the text was used in the title of the newspaper feature, but is a paraphrase of Tyler’s words. The actual quotation from Tyler used in the text of the article was "If the Competition & Markets Authority give us a really hard time, the cheers in the two schlösser where Mr Aldi and Mr Lidl respectively live will be heard in London."
3. Fresh Del Monte, Dole Food and Chiquita Brands
4. Banana Link, with support from Agrofair Europe, organised a Round Table with this title in Haarlem (NL) in February 2018. The participants from the Eastern Caribbean, Latin America, France and the Netherlands spent the day around ten thousand dried banana skins that are part of a social sculpture installation by Shelley Sacks. See: www.exchange-values.org
International Women’s Day Celebrations in Guatemala
8 March 2019
GMB witnesses historic moment in Costa Rican labour history
By Bert Schouwenburg
Former International Officer of the GMB Union, and Non-Executive Director of Banana Link
11 February 2019
Trade Union leaders are no stranger to hyperbole but when public sector union, ANEP’s General Secretary, Albino Vargas told delegates at the annual general assembly of SITRAP (Agricultural Plantation Workers Union) that the event came at a historic moment in Costa Rica’s labour history, he was not exaggerating.
The assembly was held on January 20th in the heart of Limón’s banana growing zone at the Pococí Expo Centre in Guápiles. The 700 SITRAP members and their families were bussed in from all over the region during an operation that, for some, commenced at 3.30am to ensure that everyone was present for breakfast and an 8am start. Previous assemblies had been held at a much smaller venue in Siquirres where SITRAP have their premises, and before that in the main hall of their building itself when active membership of the union was at its lowest ebb.
GMB’s relationship with SITRAP began in 2003 under the auspices of NGO Banana Link’s ‘Union to Union’ programme aimed at establishing direct links with workers in Latin America’s tropical fruit plantations. SITRAP was in dire straits, its membership decimated by a sophisticated and ruthless campaign, headed up by the Costa Rican government, to drive trade unions out of the banana industry altogether. In the early 1980s, the then powerful unions’ fight for better working conditions prompted the employers to close down all their farms on the Pacific coast and throw thousands of people out of work. In a sustained propaganda exercise the closures of what were uneconomic plantations was blamed on trade union militancy and intransigence.
To this day, criticising the unions for the Pacific coast closures is an integral part of the banana producers’ strategy to dissuade workers from forming and joining them. Aided and abetted by the San José dioceses of the Roman Catholic Church, who have described them as being the work of the devil, they have spread the doctrine of ‘Solidarismo’, a concept enshrined in Costa Rican law whereby workers are encouraged to elect representatives to ‘permanent committees’ who then conclude ‘direct agreements’ with management to the exclusion of independent trade unions. Needless to say, these agreements are presented to the committees on a take it or leave it basis with no room for negotiation. Solidarista associations have been formed throughout the length and breadth of not just the banana industry but also in plantations growing pineapples of which Costa Rica is the world’s number one exporter. Where union organisation appears, workers are harassed, intimidated and, if they do not renounce their membership, are sacked and blacklisted.
One of GMB’s first initiatives was to raise funds so that SITRAP could complete much needed renovations to their building in Siquirres, a successful project that led to the assembly hall being dedicated to the late Brian Weller, a much loved activist from London, in whose name the money was collected. This was followed by a memorandum of understanding between the unions and a two year funding agreement that kept SITRAP afloat and gave them breathing space to build their organisational capacity in an extremely hostile environment.
Slowly, but incrementally, SITRAP built its membership base in hostile multinational company farms belonging to Chiquita, Del Monte and Dole and also in plantations owned by vehemently anti-union national companies such as the Acon Group who made sure that the union could not make the sufficient inroads needed in order to reach the density required to trigger recognition, by sacking members under any pretext. However, a significant breakthrough occurred in January, 2016 when, after an 18 year struggle, the Labour Reform Process Law was put onto the statute book. This landmark piece of legislation dramatically speeded up the glacial pace of Costa Rica’s labour code and enabled workers to bring claims of unfair dismissal to court within days and empowered judges to order immediate reinstatement pending a full merits hearing. At a stroke, the legislation deprived employers’ ability to arbitrarily dismiss trade unionists at will, safe in the knowledge that cases brought against them could take years to be heard. Unsurprisingly, private sector employers are lobbying furiously to have the law overturned.
The cumulative effects of SITRAP’s continuing membership drive, the space afforded to it by the passing of the new law, and the pressure being brought to bear by motivated consumers in European markets allowed the union to make members to such an extent that, after 9 months of negotiation, it was able to sign a recognition agreement in a Del Monte plantation just before the assembly, the first such agreement to be concluded since the 1980s. It was this that prompted ANEP’s General Secretary to comment on the historic significance of the moment.
Banana production in Costa Rica, and elsewhere in Latin America, faces an uncertain future. The purchasing power of European and North American retailers has squeezed the margins of the multinational producers who are no longer the dominant force that they once were. The downward pressure on costs has been passed on to workers who find themselves the victims of a race to the bottom as producers react to the price wars of major supermarkets, particularly in the UK. The huge mono-crop plantations, drenched in pesticides, are environmentally disastrous and are prone to disease. So far, the deadly fusarium wilt virus has been kept at bay in Latin America but if it takes hold, that could be the beginning of the end for the industry as we know it and explains why serious thought is now being given to multi-cropping and diversification away from the ubiquitous Cavendish banana that is intensively farmed throughout.
For the thousands of workers in the Costa Rican banana industry, it is essential that they have a collective voice that can be heard, however the industry develops. SITRAP’s re-emergence as a significant player is therefore vitally important and they deserve the continued support of unions like GMB, and UNISON who have also given valuable assistance, especially as so much of the fruit their members produce finds its way into the UK’s fruit bowls.
ANEP have produced the video report of the event below, which includes contributions from the General Secretary of SITRAP, Didier Leiton, Alistair Smith of Banana Link, and Bert Schouwenburg, who represented the GMB at the meeting.