Chiquita-Fyffes merger sparks fears for banana workers
Giant deal comes on top of cost-cutting in the sector
Tuesday 11 March 2014
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.
- 1 Technology company Alibaba posts job advert asking for 'stunning' women with qualities of adult film actress Sora Aoi
- 2 How the language you speak changes your view of the world
- 3 'Fire at every person you see': Israeli soldiers reveal they were ordered to shoot to kill in Gaza – even if the targets may have been civilians
- 4 Italian police 'reveal' what Jesus looked like as a young boy
- 5 Uploading pictures to find out how old you are gives Microsoft the right to post them wherever they want
'Fire at every person you see': Israeli soldiers reveal they were ordered to shoot to kill in Gaza – even if the targets may have been civilians
Italian police 'reveal' what Jesus looked like as a young boy
Who should I vote for? The Independent quiz matches best political party for undecided voters ahead of the general election
First-time buyers in London 'need to earn at least £77,000'
General Election 2015: Photographic history of Bullingdon Club tracked down - including new picture of David Cameron in his finery
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...