“The tariffs we pay are simply too high; we are ready to sit down and look at any standards the EU chooses to require, but we need to settle an agreement to improve our position,” says Marco Vinicio Ruiz, minister for foreign trade.
Ruiz sits at the heart of one of the biggest debates in the global fresh produce industry, with the banana trade into Europe from African, Caribbean and Pacific (ACP) states and Latin American countries divided by export tariffs.
“We don’t get the zero tariffs [as the former colonies do] that we deserve; they say in the EU that there is a ‘preference erosion’ and that there should always be a differential between Latin American and ACP countries,” Ruiz says.
This highly politicised debate comes against the background of Costa Rica - often referred to as the ‘Switzerland of Central America’ due to its political stability - calmly sitting as the world’s third-largest banana exporter, after Ecuador and the Philippines, with 19 per cent of the European market.
Some 25.7 per cent of Costa Rica’s banana production goes to the UK, with Belgium, Italy and Germany also receiving significant sendings. The US accounts for 45.6 per cent of the remainder of production, with product largely reaching the East Coast.
The export charges come against a tumultuous background, with Fander Falconi, Ecuador’s foreign minister, continuing to put pressure on the EU and, at the same time, Nicaragua pulling out and subsequently rejoining the Central American regional association for bananas.
Jorge Sauma, chief executive of Corbana, the National Banana Corporation of Costa Rica, thinks there has been too much support for producers in countries such as the Canary Islands, which receive subsidies of up to $8 (£5.30) a box. “It is simple,” he says. “We don’t think there should be high tariffs and all countries should be treated the same, as we have social and political problems in several Latin American countries. There should be winners all round, not just in one region - and there can be.”
When broken down, the pricing structure of banana boxes leaving Costa Rica is complex. Eduardo Gómez Bodden, president of Bananera, worked for Chiquita for 40 years before leaving to set up El Esfuerzo farm 19 years ago, and now supplies Dole, among others. He estimates that the producer gets around $8 a box while the retail value is $47. Within this, the importer will have to pay for the export tariff (around $4 for an 18.14kg box), ripening, supply and freight costs amounting to $14.50. Meanwhile, producers pay around $4.65 a box on labour, fertilisation, materials and spraying. “I’m not complaining about the deal as it is, but I would like to see where the remaining money goes. I feel that certain countries should have advantages as their soil and labour is not as efficient as in Costa Rica, but not as much they get at the moment. We are charged $4 a box and they are given $6 a box - a $10 difference is crazy.”
But the Costa Rican industry is a resilient one. In 1985, the country suffered the sudden pull-out of Chiquita from the Pacific production areas in the south of the country, as a result of a labour strike, with 10,000 jobs lost in the process. More recently, last year 10,300 hectares - 24 per cent of production - were hit by heavy rainfall, causing considerable difficulties.
Some 98 per cent of the 156 plantations are now based on the Caribbean side of the country, where the humid conditions are perfect for banana growing, alongside the lucrative pineapple industry, which requires comparatively little labour and has been adopted as an extra revenue stream by some banana growers. Less than one per cent of Costa Rica’s land is used for banana production, illustrating how fertile its land is, while 25 per cent of the country’s land is protected.
This year, due to the inclement weather at the start of the year, Corbana said exports will be down an estimated six to eight million boxes on the 103.1m produced in 2008 - a 9.3 per cent fall on 2007’s export volume.
Corbana is owned equally by the government, three state banks and banana growers and is funded mainly via a five- cent contribution from every exported box of Class I bananas. Independent growers represent 51 per cent of the total banana industry nationwide and the remaining exports belong to international companies in Costa Rica such as Dole, Chiquita, Del Monte and, to a lesser extent, Fyffes, which operate their own farms. The independent producers supply to the exporters, but do not grow on farms owned by these companies. Relations between the two types of farms remain good but the independence is valued when it comes to subjects such as the ‘c-neutral’ programme.
There is a real feeling that Costa Rica, known for the political stability that its neighbours struggle to attain, has the necessary harmony to achieve the government’s goal of becoming carbon neutral by 2020, while the banana industry has set an ambitious separate target of 2012 for its farms, excluding logistics, to be carbon neutral.
The 2012 target, submitted to the department for the environment last August, displays the industry’s commitment to reducing its carbon output, and it is working with the National University of Costa Rica and the weather institute to analyse the effects of fertilisers. There is evidence that bananas are leading the way in this, with the 16-month-old Corbana-funded La Rita eco-research centre confirming that a hectare of banana plantation captures 30 tonnes of CO2, while the equivalent forest captures 8t. Moreover, Dole has moved to offset its transportation emissions, reforesting areas to equal emissions from transferring fruit to the port of Moín, Limón, while some independent growers are already carbon neutral in response to demands from the German market. Corbana itself has a farm, comprising 1,200ha of forest near the Panamanian border, which is used to balance some of the carbon used by the industry.
In practical terms, the Costa Rican banana business is impressive in its approach to plantations. With most farms certified by the Rainforest Alliance and GlobalGAP at least, and some packing more than 960 boxes of Class I fruit a day, there is a slick efficiency which is not seen in some of the country’s other industries.
The family-owned Corporación Surá is one such company on the ball. It has 614ha of banana production, exporting both through Chiquita and increasingly through its revived own brand, Surá. It produces 3,000 boxes per ha compared to a national average of 2,500 and is aiming to reach 2m boxes in 2009, employing almost 300 workers at its Balatana farm. But potential fears over soil issues have been allayed, as Surá is renovating areas of its plantation at a cost of $11,000-$18,000 per ha, to replace old plants with new, which Corbana believes have eight years good production in them before quality and yield begin to slip. The average bunch is hung for three months and protected by a ventilated blue bag with the plant supported either by ties between plants or overhead cables. Surá also indicated that it may take Corbana’s lead on biological control implementations. “First, we have to decide what our need and emissions are, wait for the research, and look at what we can do - there is no doubt it is a beautiful goal,” says Gilberto Rojas, administrative manager at Corporación Surá.
In response to growing demand for pesticide-free product for consumers and importers, producers around the world are rapidly trialling and implementing biological control - the use of natural creatures to control pests such as nematodes and black Sigatoka, which are the main crop scourges. Integrated management of insects such as banana weevils and adult whitefly has proved successful in the early stages and several growers, backed by Corbana and government funding 18 months ago, have converted to the method. After seeing production levels leap by up to 20 per cent, more growers followed the initial few, with 35 per cent of independent growers at a stage of implementation and several of the international companies showing interest in the project.
Sauma says criticism of the country’s industry has been unfair. “Costa Rica is open to any type of labour organisation: trade unions, ‘solidarista’ associations, permanent committees, co-operatives and other types of associations,’’ he says. ‘‘This is guaranteed by our constitution. It is not only the type of organisation that matters, but also workers’ conditions - that is, the need for wages to guarantee a decent living for workers: food, health, education and also leisure. All this is guaranteed by the salary that banana workers earn in Costa Rica, between $16 and $18, compared to wages of around $1.50-2 a day in some African countries.’’
The social housing programmes run by some farms within the industry show a unity and responsibility between the administration and workers in several companies. José Herrera runs the Corporación San Alberto, which consists of 690ha of production across three farms and supplies Chiquita. “Our mission is to sell bananas, but our vision is to make the conditions of the workers a priority,’’ he says. ‘‘The best asset we have as a business is our people - by taking responsibility for them, we will have a better business. The health of the workers is very important to us, both on a personal front and also to prevent contamination of the fruit and packing water.”
Herrera’s La Estrella farm illustrates this well. Beyond the plantation lies a village that houses a sizeable proportion of the workers and administrative staff, a school for their children and an on-site doctor, who has cut work-related accidents by 250 per cent. Herrera hopes this can be an inspiration and a working model for the Costa Rican industry. “The security the workers get from this improves their lives, and also their feelings about work,’’ he says. ‘‘It is a very social way to live. We give the field workers flexible hours to suit them, as well as a lifelong career.”
But Gómez Bodden, who is in the process of providing 90 homes near his El Esfuerzo farm for workers to acquire, sounds a note of caution “There is a problem that, if you live in a company-owned home, then you are tied to the job,’’ he says. ‘‘I have had an experience where we were tied to a house through a job and when the job went, so did the house.
“I have been working with different authorities to provide these houses for the workers, which includes a government grant so they can own and run a grocery store and build their own community. I donated the land, so I don’t own it, and let the workers form an alliance to take it up. I feel that I owe the labourers something: they work hard, so if I can help them I will.”
There is little doubt that Corbana and the banana industry are tackling a number of issues admirably on several fronts and are harnessing the natural unity of a country that gained independence in 1821 and has had little conflict since. This has put it near the forefront of the world market, a position Ruiz believes it will retain through the recession. “The banana industry is down around 10 per cent, but we are confident it will return,’’ he says. ‘‘We were growing at a rate of 16 per cent in exports before the crisis and we can continue this in the future. I have seen that many companies have recognised their most important asset is the workers and we have seen very few redundancies (unemployment is around 4.5 per cent) through the crisis, although there has been some reduction in the working week. We continue to face the struggle on banana exports as the EU clearly favours the ACP states, but we believe that the issue can and will be resolved in the next year and we can be the cleanest and most attractive banana-growing country in Latin America.”
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