Bananas are perhaps one of the best examples of an everyday essential, featuring as they do in most families’ shopping baskets. The retailers, of course, know this and regularly attempt to out-do each other by pushing prices down well below most importers’ comfort levels.
As a result, the banana market has experienced a decline of 6.4 per cent in value in the last year, according to the latest figures from Kantar Worldpanel. “Prices tend to fluctuate on a regular basis. Every now and then Asda or Tesco will initiate a price drop on bananas and then all the other retailers have to follow suit, resulting in a price war,” an industry source says. “At the moment Waitrose have an offer of a third off, bringing the price down to 45p a kilo, which is very low.”
The latest figures - volumes are up only 0.6 per cent - underline industry concerns that the price war makes absolutely no difference to consumption levels, as bananas are bought irrespective of price. “All it does is devalue the category, which is a worry. It begs the question ‘why do they do it?’ Because it’s an everyday essential they can, but it devalues the fruit to the consumer and somewhere along the line the chain is going to suffer,” the source adds.
Inevitably, it’s the growers in the developing world whose livelihood depends on the banana trade who will bear the brunt, the source says. “Obviously you’re always looking for ways to be more cost-effective but it’s added pressure on our growers.”
The situation is backed up by the latest Ethical Consumer magazine, which slams the UK’s biggest supermarkets for selling bananas too cheaply and calls on them to set a more realistic price that will benefit workers in the banana trade. “The good news for shoppers is that bananas are as cheap as ever. However this is really bad news for banana workers who are paying the true cost of these bargain prices. On average they earn just four per cent of the money made from the sale of bananas in UK supermarkets,” says co-author of the Ethical Consumer banana buyers’ guide, Heather Webb. “We are now calling on the UK’s biggest supermarkets to abandon their price wars and start charging a fair price for their bananas.”
Alistair Smith of Banana Link, which works for justice within the world banana trade, singles out Asda for particular criticism. “Asda/Walmart’s role in leading banana prices down to unsustainably low levels is a major block to achieving decent working conditions in the banana plantations of Latin America and West Africa,” he says. “Banana Link believes that consumers are prepared to pay a fair price for their bananas. If they knew the damage that the other retailers are doing at the beginning of the chain by playing the price war game they would be up in arms.”
Even supermarkets such as Sainsbury’s and Waitrose, which sell only Fairtrade bananas, come under criticism from the organisation. “A price of 68p per kilo for bananas is not fair and crucially this is sending the wrong message to consumers.”
Away from the shelves there has been progress with the Geneva Agreement on Trade in Bananas, which was signed in December 2009. The treaty was supposed to mark the end of more than two decades of fighting between Latin American and African, Caribbean and Pacific banana exporters - the so called “banana wars”.
Under the 2009 trade deal, the EU would gradually end its preferential treatment of banana exporters in ACP countries. For their part, Latin American countries agreed to drop their complaints against the EU at the WTO and not to seek further tariff cuts.
So has the treaty finally levelled the playing field? “The main achievement has been that legal boundaries have been established for an industry that for more than 16 years was in a constant state of change,” says Jorge Sauma, general manager of Corbana in Costa Rica. “The gradual tax cuts will benefit our banana trade and will continue to reduce the gap between Latin America and the ACP countries in terms of the tariffs.” -
THE RESPONSIBILITY CHALLENGE
Chiquita is one of the biggest names in global fresh produce, and has been emphasising its CSR credentials of late. Tom Bonnett speaks to George Jaksch, senior director of CSR for Europe and the Middle East
This year, Chiquita is celebrating 20 years of working together with the Rainforest Alliance. What have been the main changes that relationship has brought about?
This relationship had in many ways transformed our farming practices and indeed the thinking of thousands of men and women working on our farms and those of our suppliers. We have become particularly aware of the advantages of adopting authoritative external standards and independent assessments. First, the discipline that comes with regular independent examinations of our performance, along with the objectivity of expert external evaluations it allows us. Also the continuous improvement as each assessment identifies opportunities for improvement and verifies that corrective action has been taken, and the process of regular training of employees (required by the Rainforest Alliance standard), which over time creates awareness and changes attitudes.
What are the challenges in producing bananas in an environmentally sensitive and socially responsible way?
In today’s world, the requirements of environmental and social responsibility have become indispensable, and our customers and consumers increasingly expect evidence of responsible production practices. We have learned that for a worldwide company such as ours to conduct its business in a way that is consistent with those expectations, the most important pre-conditions are clear leadership from the top of the organisation, operational discipline and education of all concerned, from the chief executive to the workers in the fields, packing stations and many other workplaces.
We have been fortunate that our CEOs and leading executives have led by example and established a culture based on our core values of integrity, respect, opportunity and responsibility, which you find on every business card and in every workplace. We have built on that essential foundation, and take much care to maintain it.
What are you working on next in terms of CSR?
The initial focus of our CSR work was on banana farming in the tropics. Now we are looking to expand our CSR work “from sustainable agriculture to sustainable business,” by which we mean that every location and activity participates and contributes. Some examples of our work on environmental sustainability are our partnership with the well-known Massachusetts Institute of Technology (MIT), focusing on carbon emissions measurement and reduction; the new biodigestor built at our banana puree plant in Costa Rica, which simultaneously generates energy from waste water and purifies the water before it leaves the facility; the first carbon-neutral banana ripening plant in the Netherlands, inaugurated recently; our investment in a new fleet of over 3,000 refrigerated containers, with major reductions in emissions and energy use; and changes to our European shipping programme, reducing fuel usage and emissions substantially.
We have learned that partnerships and collaboration enable us to achieve extraordinary results. Our housing programme in collaboration with governments and banks in Central America has enabled 5,000 men and women to become homeowners. And our biodiversity partnerships with major retailers such as Migros, REWE and IPL (Asda), the German government’s GIZ and Corbana in Costa Rica have enabled us to protect valuable tropical habitats, provide environmental education to thousands of schoolchildren and adults, and support small businesses.
We are also founding members of the still new World Banana Forum, where governments, trade unions, NGOs, farmers and scientists are collaborating to make banana farming more sustainable.
Do the ongoing supermarket price wars on bananas in the UK and elsewhere make it difficult to reinvest?
It is an undeniable fact that the unrelenting pressure on banana prices in many countries has forced banana producers, including our company, to make enormous efforts to reduce costs, at a time when retailers and consumers are rightly demanding high social and environmental standards in their supply chains. While the reasons are complex, the results are evident: it becomes extremely difficult to justify investments in improved social and environmental practices. We believe that retailers and consumers need to be prepared to pay a premium for products produced responsibly. This will encourage suppliers to raise standards and will bring about many improvements.
Is it difficult to create new products and excitement on such a uniform product as bananas?
There is still immense potential to develop banana-related products. Who would have guessed a few years ago that smoothie drinks (with banana puree as an important ingredient) would be in supermarkets, or that impeccably ripened bananas would be on sale in petrol stations? Chiquita has led much of that innovative development, and will continue to do so.
Do supermarkets still see the value of branding in the banana aisle?
There is plenty of evidence that brands are important to consumers, and especially to young consumers. Shoppers are attracted by brands they trust, and are often prepared to pay a premium for branded products. This is as true for bananas as it is for running shoes and soft drinks. Undifferentiated, no-name products, even when offered at very low prices, do not bring consumers into the store and have disappointing profit and sales performance. Chiquita remains the best-known brand in the fruit and vegetable department, and that is no doubt one of the reasons why many leading retailers sell Chiquita bananas.
Are you concerned by reports fresh produce consumption is falling?
While we see a negative trend in per capita fresh produce consumption in much of Europe, this is not a global trend. Vast populations in Russia and China, to name but two examples, are changing their consumption patterns and are increasingly becoming aware of the importance of fresh fruit and vegetables in a healthy and balanced diet. In the case of bananas, the sharp increase in banana volumes shipped to Russia is an indicator of this change and we continue to see opportunity to expand into traditionally underserved markets.
We noticed you recently asked people to design a bowtie for the Chiquita Classic. Are you finding customers are engaging with these ideas?
This is just one example of Chiquita’s approach of inserting a little humour and fun into our consumer communications. Even serious environmental and social topics can be addressed in a way which is amusing and raises a smile. In this case, the winning design will be made into a novelty item that will be sold with proceeds going to the top three participating charities of the Chiquita Classic this year. This was a way for us to engage more public participation and awareness of our charitable efforts and to drive interest into raising more funds for the charitable organisations. -
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