Bananas are one of the most widely consumed and traded fruits worldwide and they are the fifth most traded agricultural product.
Ecuador produces 30% of the world market supply of bananas which constitutes around a quarter of non-petroleum exports of the country. Two million direct and indirect jobs are attributed to the industry in Ecuador.
Following international pressure and development policies, the banana industry in Ecuador has been cleaning up its act. A senior trade consultant for the EU in Brussels reports, “Efforts have been made [in Ecuador] to eradicate child labour, the concept of a living wage is in the constitution and there is a focus on sustainability.”
Unsurprisingly, raising standards comes at a cost and Ecuador is seeking to establish a Minimum Support Price (PMS) for 2021 to ensure compliance. The scheme is novel and would enable the industry to implement long-term productivity and sustainability measures for small and medium-sized producers.
Unfortunately, in direct contradiction with their sustainability policies, large EU-based retailers have baulked at the scheme. A regional trade representative for bananas with knowledge of the discussions states, “There is a serious problem with Aldi, producers are escalating the issue to the diplomatic level.”
“There is a serious problem with Aldi, producers are escalating the issue to the diplomatic level.”
Banana trade representative
The EU has been projecting its sustainability agenda through trade negotiations around the world, but EU companies and consumers must buy into this.
There is also growing co-ordination amongst producers in Latin America. Ecuador, Colombia, Costa Rica, Panama and Guatemala are in discussions about working together to deal with the threat from EU retailers. Together, these countries represent 65% of the worldwide banana supply.
“The EU is an unfair trading partner, it wants luxury bananas at low prices.”
MD, Ecuadorian banana producer
The managing director of an Ecuadorian producer summarises, “The EU is an unfair trading partner, it wants luxury bananas at low prices. Only Latin America can produce bananas all year round but the EU has a dominant geopolitical position. If we can’t reach an agreement with the EU we will have to look at expanding in the Middle East, Russia, more to the US.”
EU retailers appear to be in an untenable position: well-organised regional producers with government support are asking for a fair pricing scheme to ensure compliance with EU standards. We are watching closely.