Chiquita-Fyffes merger sparks fears for banana workers

Giant deal comes on top of cost-cutting in the sector

A banana exporter that has previously been fined for paying off Colombian terrorist paramilitary groups and once admitted to price fixing has just agreed a $1bn (£600m) deal with Fyffes, the world’s oldest fruit brand, to create the largest banana exporter globally.

When the deal between Ireland’s Fyffes and the US giant Chiquita is completed, it will create a $4.6bn banana behemoth, based in Dublin and listed in New York. It will operate across 70 countries, selling more than 180 million boxes of bananas a year, employing 32,000 staff and will own or lease 24,000 hectares of land across Central America.

But questions have arisen over what the deal means for workers, smaller producers and the price of the humble banana on the supermarket shelf.

Chiquita is already the largest exporter in the Americas and Fyffes the biggest exporter in Europe; the mega-merger is regarded as good news for shareholders on both sides. When the merger is completed the combined group could save more than $40m over three years and Chiquita will be able to reduce some of its large debts. The merger is not a surprise to an industry that has seen consistent consolidation in the quest to slash costs.

Alistair Smith, international co-ordinator for Banana Link, an NGO supporting a fair and sustainable banana industry, said: “The news is doubtless a reflection of the way the banana market has been going for the last 15 to 20 years. Two big fruit companies have felt the downward pressure of the big retail buyers on their margins and consolidation appears to them to be a strategy for survival.”

When the 20-year banana trade war between the EU and Latin America finally ended in 2012, prices plummeted. The trade row centred on Latin American banana exporters protesting against EU tariffs, which were put in place to protect small growers in former European colonies in Africa and the Caribbean.

The truce saw prices fall further – the supermarket price of bananas in the UK has halved in the past 10 years. Grocers have used the fruit to lure in customers with a consistently cheaply priced product – a loss leader. But production costs have increased and banana production costs have doubled over the same period. The cost of a banana is now roughly half the price of an apple grown in the UK, despite the bananas having travelled thousands of miles to get here.

The food expert and writer Joanna Blythman argues that British supermarkets have forced suppliers to provide bananas at a price so “unfeasibly low that they cannot possibly be grown in a decent” way. This has forced consolidation and cost-cutting in the sector.

The banana industry has also been hit by disease and fungus. Black sigatoka (a leaf spot disease) and Panama disease (a disease of the root) have damaged crops.

The entire banana export industry globally is valued at around $7bn, with South and Central America the largest producers, and smaller quantities being produced in Asia and Africa.

Exports from the Americas to EU countries have fallen recently as production in French Caribbean islands and the Canary Islands has risen, according to the UN. In the UK, via tie-ups with the retailers Sainsbury’s, Waitrose and the Co-operative, an increase in the consumption of fairtrade bananas has meant that now one in three bananas sold in the UK is fairtrade.

The reason for the consolidation in the industry, like the Chiquita-Fyffes mega-merger, has been laid at the door of grocers forcing producers to cut costs, but some argue that the $1bn deal will make the group so powerful it will become too large to control.

Andrew Simms, chief analyst at Global Witness, said: “This is all about big dollar banana producers versus small trade producers. As with any major commodity market, too few have too much control. The question with this deal is will the group become too big to regulate?

“This deal is not healthy for the market, for the small producers, or the workers.”

Chiquita-Fyffes, along with the number two and three exporters in the world – Fresh Del Monte and Hawaii-founded Dole Food Company – have around 80 per cent market share of the global banana export industry, according to the UN, while Fyffes had the largest market share in exports in Europe.

The Chiquita-Fyffes deal still needs competition approval, including the go-ahead from regulators under US antitrust laws, and it is likely that the merger will mean some job losses.

The outlook for banana plantation workers and producers still doesn’t look great, but the 75-year-old Fyffes brand has ripened up to become a global player in the face of continued pressure from the powerful supermarkets.

News
The surrealist comedian at the Q Awards in 2010
people
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
PROMOTED VIDEO
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to American media group
Extras
indybest
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidate on the verge of tears as they were ejected from the boardroom
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
ebooksAn unforgettable anthology of contemporary reportage
News
Wilko Johnson is currently on his farewell tour
people
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?