In mid-1999, the precipitous drop in wholesale banana prices in the principal northern markets signaled a profound crisis in the international banana industry that will have unforeseen effects on small producers and banana workers throughout Latin America, as production consolidates and, naturally, shifts to lower-wage areas in order to stay within the margins of profitability. The crisis also marks a shift in power away from the US-based transnational banana companies – and independent banana producers -- and into the hands of huge, rapidly consolidating US- and EU-based supermarket chains whose buying power allows them to set the terms of the still very lucrative banana trade. Under increasing pressure from their unhappy investors to cut costs, the US-based transnational banana companies have responded in a variety of ways, including plantation closings and mass firings, modification of production techniques, forced contract renegotiations with unions, large-scale shifts in production from high-wage to low-wage countries (or from relatively high-wage to relatively low-wage areas within the same country), to outright repression of unions.

Of course, the crisis had been brewing since at least 1993, when the EU imposed a new quota system for banana imports. In response to the new EU restrictions, banana companies increased exports to the US (causing downward pressure on wholesale prices), while seeking new markets in the "emerging economies" of Eastern Europe, Russia and Asia. And for a while, these new markets were able to absorb large quantities of banana exports that could no longer be sold to the EU, though not at the same price. However, the economic crises in Asia and Russia in 1998 caused banana exports to these areas to drop dramatically, as many consumers faced the prospect of hunger and could no longer afford to spend scarce income on what had suddenly become a luxury food. Even severe weather phenomena like El Niño, which affected banana production in Ecuador during 1998 and 1999, and Hurricane Mitch, which devastated Honduran banana production and damaged Guatemalan and Nicaraguan production in November 1998, failed to cause more than a minor and very temporary drop in the expanding banana supply. By mid 1999, there was no doubt left: the industry was facing a structural oversupply without historical precedent, with little prospect of relief in the short term.

Much of the current oversupply can be traced to Ecuador, the world’s largest banana exporter, which in 1997, its peak year, exported 4,456,275 metric tons, compared to Costa Rica, the second largest banana exporter, which exported 1,839,514 metric tons that same year. Ecuador accounts for about 34% of world banana exports. Unlike other Latin American banana-exporting countries, Ecuador’s banana exports are not controlled by the US-based transnationals; two Ecuadorian companies, Grupo Noboa and Rey Ban Corp., are the first and third largest banana exporters, respectively, and together account for about one third of Ecuador’s banana exports. That’s not to say that the US-based transnationals don’t participate; UBESA, a subsidiary of Dole, is the number two banana exporter in Ecuador this year, accounting for about 19%. BANDECUA, a subsidiary of Fresh Del Monte Produce, occupies fifth place with about 6.6%. Chiquita has reduced its purchases from Ecuador this year, though in the past it has purchased considerable quantities from Rey Ban Corp. and another company, Brundicorp.

And whereas banana production in Central America, Panama and Colombia is often unionized, less than 1% of Ecuador’s banana workers belong to unions. As would be expected, wages for Ecuadorian banana workers are considerably lower than those of unionized banana workers elsewhere, and the numerous social benefits that banana unions have won for their members through long struggles – including health care, housing, electricity, potable water, education for their children – are almost entirely absent in Ecuador’s banana sector.

What do Ecuadorian banana workers earn on average? In the absence of a thorough study on wages and working conditions, we can’t pretend to give an authoritative answer to that question. But based on the results of a small survey done on behalf of US/LEAP earlier this year on several banana plantations, as well as a series of interviews I did with other banana workers several weeks ago, I think it’s possible to give a rough idea. Keep in mind that production conditions vary widely. The government of Ecuador estimates that about 383,000 people work in the country’s banana industry, but this number includes everything from small producers where whole families labor on a few non-technified hectares, with low productivity on the order of five people per hectare, on up to the large, highly technified plantations which have achieved levels of productivity close to one person per two hectares.

In the survey performed at the beginning of 2000, economist Carmen Galarza interviewed workers at three large plantations producing for three different exporters. Workers reported earning an average of 1,400,000 Sucres, or US$56.00/month, with few if any benefits. Let’s compare this to what banana workers earn in other Latin American countries. In Guatemala’s Atlantic Coast, workers earn between $120.00 and $150.00/month, and many of them have health care, housing, and other benefits. In Honduras, they earn $150.00 to $200.00/month, with many benefits. In Colombia, they earn on average between $200.00 and $300.00/month, plus benefits. Panamanian banana workers earn more than $500.00/month, plus benefits. Even in Costa Rica, where banana unions have been severely weakened by "Solidarismo" since the mid 1980’s, banana workers still earn more than $200.00/month on average, and some still enjoy many of the benefits left over from when banana unions were strong, though these are diminishing lately as the crisis takes its toll.

While it’s true that the cost of living in these other countries is higher than in Ecuador, we must keep in mind that Ecuador is experiencing the worst economic crisis in its history; last year inflation topped 60%, leading the government to decide to "dollarize" the economy. The wage earned by the typical Ecuadorian banana worker barely covers minimum necessities.

Since "dollarization" went into effect earlier this year, banana workers, like all others, are paid in Dollars. In interviews I conducted with about 25 workers from many different plantations several weeks ago, workers reported earning anywhere from $1.40/day to $5.00/day. It’s hard to calculate monthly wages because most of these workers reported working only 2 or 3 days a week. Furthermore, they said that they must remain "on call" and be ready to report to work on a moment’s notice, making it very difficult for them to find other part-time employment to complement their banana work.

But it’s not only the low wages that distinguish Ecuadorian banana workers. Most large-scale, highly technified producers employ a system of temporary contract labor that severs the formal link between employer and employee. Tasks are carried out by work teams, or "cuadrillas," consisting of 12 to 15 workers who are paid by the day or by the task. The team leader, or "jefe de cuadrilla," may in fact be a formal employee of the plantation, but the rest of the "cuadrilleros" are contracted by him. As such, they are generally not registered with the Ecuadorian Social Security Institute, accrue no vacation pay or legally mandated bonuses, and receive no severance when fired or laid off. If they are injured on the job or fall ill, they are often left to care for themselves with their own resources, if they are lucky enough to have any.

Furthermore, they are effectively denied the right to organize and bargain collectively, because there is no way for them to form a workplace-specific union, the most common form of organization, since they have no formal link to their place of work. FENACLE, a federation of rural and indigenous workers in Ecuador that is affiliated to COLSIBA, the Latin American Coordination of Banana Worker Unions, would like to organize an industrial, or "horizontal" union of Ecuadorian banana workers, but if it is able to do so despite the fear of repression and black-listing that many banana workers feel, it will still be faced with the fact that under Ecuadorian law, there is no legal mechanism that would allow such a union to negotiate a collective-bargaining agreement.

Almost all of the banana workers I interviewed several weeks ago in Guayas Province in Ecuador work on independently owned plantations that produce for Dole, including two plantations that have unions, and perhaps ten or so without unions. On these two unionized plantations, called Hacienda Balao Chico and Hacienda Italia, the union affiliates reported receiving wages and salaries as mandated by law. However, both plantations also employ temporary work teams, whose members are not allowed to join the union because they are not formal employees. In fact, on both of these plantations, the union members are a minority of the total employees, because most employees are temporary.

Only on Hacienda Italia did workers report that they leave the fields and remain out the area for two hours during and after aerial spraying, as mandated by Dole, which maintains a very close working relationship with its independent suppliers, dispensing all kinds of technical advise and imposing strict quality-control standards. On the other Dole-producing plantations whose workers I interviewed, however, this rule is flouted routinely, despite the posted signs with the Dole logo warning workers to remain out of the area during and after aerial spraying – as if it were up to the workers themselves, and not their supervisors, who often care little about such health and safety considerations. Some reported that they leave during the actual spraying, but return to the fields immediately after. Others said they are forced to keep on working while the spraying proceeds. The fields are generally sprayed with a fungicide mixed with oil and/or water in order to combat Black Sigatoka, a fungus that attacks the leaves of the banana plant, reducing productivity and eventually killing the plant if it is not treated.

Who can these workers complain to about these abuses? As in many Latin American banana-producing countries, the authorities charged with enforcing Ecuadorian labor laws are known for their corruption, and the labor courts favor the powerful and the rich. Banana workers tend to live in small to medium-sized towns surrounded by large plantations, and in such a milieu it is difficult for a worker to remain anonymous should he or she complain; all of those I interviewed reported that blacklisting is rampant, with the result that few workers dare complain.

So who are the winners and losers in the banana industry restructuring? It is clear that workers and small producers everywhere are the losers. Increased banana exports from Ecuador have not brought any tangible benefits to Ecuadorian banana workers. Indeed, given the fact that only highly technified plantations with extremely high productivity can remain competitive now, it is likely that fewer and fewer workers will be able to find employment in the sector. And as falling prices put pressure on banana companies to shift production away from unionized plantations in Central America, Panama and Colombia, it is clear that workers there are being hurt. It is not always easy for a banana company to reduce production on plantations where workers are organized, because these workers have mechanisms to resist such actions, such as strikes, slowdowns or even lawsuits. That is why banana companies often use more aggressive tactics, as we have seen repeatedly over the last few years in Central America.

I don’t have time here to talk about the many examples of such aggressive anti-unionism that we have seen lately, so let me talk about just one, which happened in Guatemala. On September 27, 1999, BANDEGUA, the Guatemalan subsidiary of Fresh Del Monte Produce, decided to fire almost 1000 unionized banana workers from three of its 14 plantations near the Atlantic Coast. The company had decided that it would be cheaper to lease the plantations to independent producers, and buy the fruit from them instead of producing it directly. When the workers’ union SITRABI, which is the oldest and strongest in Guatemala’s private sector, failed to win their reinstatement through negotiations, it called an assembly for October 13^th at which the membership voted overwhelmingly to exercise a clause in their contract allowing each worker to request 10 days of unpaid absence. This was meant to pressure BANDEGUA into reconsidering.

Later the same evening, a group of 200 heavily armed men, led by leaders of the Morales Chamber of Commerce, forced their way into the union’s headquarters, grabbed two members of the executive committee who were present and forced them at gunpoint to drive to the home of the general secretary, who was dragged out of his house and beaten before being taken back to the union hall. Within several hours, the armed men had assembled more than 20 of the union’s leaders, whom they forced under threat of death to resign from both the union and the company. The leaders were also forced to read statements over the local radio station calling off the job action and encouraging the unions affiliates to return to work. Five of SITRABI’s leaders immediately fled to the capital city where they have been hiding out ever since, while they apply for political asylum abroad. The armed men told the SITRABI leaders that they had been informed that if the workers were allowed to proceed with their job action, BANDEGUA would close its operations in Guatemala, leaving Morales a ghost town.

Thanks to a broad international campaign against Fresh Del Monte, with a key role played by the IUF, to which SITRABI is affiliated, the company was forced to negotiate a settlement with the union. Under pressure from Fresh Del Monte, the independent producers on the three plantations have allowed many of the fired workers to return to work, and they have been allowed to join the union again. SITRABI has negotiated a collective bargaining agreement for them with these producers, and while the new contract is considerably weaker than that which covers SITRABI members working on Fresh Del Monte’s other plantations, it is a much better deal than these workers would have gotten otherwise. Unfortunately, however, the armed men who perpetrated the assault are free, and it is unlikely that they will ever spend time in jail.

The case is not over, though. In the last few days, it has come to our attention that BANDEGUA has proposed that SITRABI accept the terms of this weaker collective bargaining agreement for the rest of its members who still work on the plantations directly run by BANDEGUA. The company has implied that unless SITRABI accept these conditions, it could pull out of Guatemala or turn the rest of its plantations over to independent producers.

The SITRABI case is exceptional, because the union has been around for 53 years and has many international contacts. Other banana unions in the region have not fared so well, and have had to watch as their membership withers, and their negotiating power weakens.

Incidentally, in Guatemala’s other banana producing region, along the Pacific Coast, banana production has been expanding in recent years, precisely because the same conditions one finds in Ecuador are found there: independent producers using "cuadrillas" whose members are not formally employed by the plantation, and who therefore can not form unions. Workers there reportedly earn around $3.50/day with no benefits, and without the right to organize and bargain collectively. Both Dole and Chiquita are buying bananas from these plantations.

So again, it’s clear that workers are losing. What about small producers? In Ecuador, which historically has had a mix ranging from small to medium to large banana plantations, the small and medium producers are suffering, with many going out of business or being bought out by larger producers. First it was the El Niño weather problem, which resulted in widespread flooding damage which hit the small producers particularly hard. With Ecuador’s banking industry already on the verge of collapse – and with the typical neoliberal policies long in place – small producers were unable to get loans and credits that might have allowed them to rebuild after the flooding, and so many had to sell out.

Next came the fall in banana wholesale prices worldwide, which has been the final nail in the coffin for many small and medium producers. The Ecuadorian government sets a minimum price that exporters must pay to producers for each box of bananas. That price has fallen from about $3.50/box after El Niño to $2.18 currently. But just because it’s the law, doesn’t mean it’s being obeyed. Many exporters pay considerably less than the official price, sometimes as low as $1.00/box, which doesn’t even cover production costs. The small producers are afraid to complain, because they could also be blacklisted by the exporters, without whom they would have no access to the market. There is also evidence that the large exporters have purposefully flooded markets, especially in the US, just before the periodic negotiations with producers over the box price are set to resume, intentionally putting downward pressure on banana wholesale prices in order to be able to justify an even lower official price in Ecuador. The result has been increasing consolidation throughout Ecuador’s banana industry, with small and medium producers disappearing and being replaced by large, more technified producers who are the only ones who can squeeze a profit out of the business, aided by a government that looks the other way in the face of routine labor rights violations.

Incidentally, I would like to mention here that Ecuador’s economic crisis has given rise to a new "non-traditional" export: its own people. Until last year, banana exports were the second biggest source of foreign exchange for Ecuador, surpassed only by petroleum exports. But recently the business press in Ecuador reported that family remittances from Ecuadorians living abroad have displaced banana exports as the second biggest source of foreign exchange. More and more of Ecuador’s desperate citizens are willing to risk their lives in rickety boats which carry them towards Guatemala and other Central American countries, from where they hope to be able to reach the United States despite the dangers that await them on their journey north.

Until recently, the US-based transnational banana companies, Chiquita Brands International, Dole Foods (Standard Fruit) and Fresh Del Monte Produce (not to be confused with Del Monte Foods, a separate company), exercised almost absolute control over the banana trade. While their investors sometimes fretted over the effects of price fluctuations and natural disasters on profits, these companies were generally viewed as sound investments over the long term. Even after 1993, when the EU introduced new restrictions for access to its market, a whole range of potential buyers in North America and Europe had to bid against each other for the transnationals’ bananas to satisfy growing consumer demand.

Now however, not only has demand flattened in North America and Europe, and fallen away in Asia and Russia, but also retail consolidation has reduced the number of wholesale buyers considerably and given them much more power. According to the USDA, since 1996 large retailers have purchased some 3500 supermarkets in the US, with annual sales worth $67 Billion. By 1998, just four companies controlled 72% of the market share. In the UK, a similar situation prevails, with the top four supermarkets controlling nearly half of all food sales, according to Ian Bretman of the Fairtrade Foundation. Retail consolidation combined with structural overproduction of bananas has given wholesale buyers the power to dictate prices as never before.

The banana business remains extremely profitable – for the supermarkets. The Fair Trade Foundation states that "bananas are the single most valuable item passed through the checkouts in [UK supermarkets], accounting for about 1% of sales." In the US, it is estimated that bananas account for about 2% of supermarket profits, which is almost incredible, when one considers how many thousands of products are sold in such stores.

Meanwhile, though, investors have turned sour on the transnational banana companies, whose stock prices have fallen precipitously over the last couple of years – and keep falling every day – even as index funds like the S&P 500 have risen steadily. In mid October 2000, all three US-based transnational banana companies have seen their stock price fall to record lows: $12.13 per share for Dole, $3.38 for Fresh Del Monte, and $1.69 for Chiquita. As a point of reference, Chiquita’s stock was worth more than $50.00 per share in 1993, before the EU introduced its new quota system. As Don Wiener, a consultant to US/LEAP, has said, any fund manager who pushed banana stocks before the crisis is looking like a fool now. Investors are mad, and demanding drastic action to reduce costs and raise the stock price. And these companies are capitalist institutions who must answer to their investors.

Why should we worry about these companies? It’s their workers we should be worried about. The banana industry is the most unionized of any in the private sector in several of Central America’s countries. And given that the neoliberal governments of the area have tried to privatize everything in sight, that means that the banana unions are often the strongest unions in absolute terms too, because the public sector unions, formerly the strongest, have been weakened or have simply disappeared. If these worker organizations are destroyed, it does not bode well for Central American unionism, or for civil society in general.

The controversy surrounding the EU’s banana-import rules has focused primarily on so called Dollar bananas versus ACP bananas, many of which are produced on small family farms using a minimum of agrochemicals, especially in the Caribbean. Now however, with the EU ministers having proposed a First-Come, First Served scheme without a specific country quota for Dollar bananas, we need to look at the possible effects within the Dollar zone itself. The Ecuadorian government has announced that it will support First Come, First Served, because it estimates that under such a scheme it will be able to double its banana exports to the EU. Dole, by the way, has also announced that it supports First Come, First Served, which should come as no surprise given its position within the Ecuadorian banana industry. Chiquita and the Central American banana-exporting countries, with Panama and Colombia, oppose it. If this scheme is approved by the EU parliaments and goes into effect in early 2001 as planned, the likely result will be an increase in highly technified banana production in Ecuador, and massive layoffs of banana workers in the more unionized areas of Central America, Colombia and Panama.

Indeed, both Dole and Chiquita have already announced drastic cutbacks in purchases from independent suppliers in Costa Rica and Nicaragua since the crisis began, and Chiquita has only rehabilitated about half of its banana production in Honduras after Hurricane Mitch.

Under the current scheme of things, it’s very difficult for banana workers and their allies in the market countries to reverse this race to the bottom. While the banana industry players and governments scramble to negotiate a set of rules that will best protect their interests while hopefully satisfying the WTO, no one mentions the possible effects on Latin American banana workers. If someone were to propose using labor rights or environmental standards as a criteria in designing a new set of rules, such a proposal would likely be met with scorn or laughter; in fact such criteria would be illegal under the WTO.

But it’s just possible, perhaps, that we could find a strategic ally in one or more of the transnational banana companies that are desperately seeking a way to increase the value of their product and stem the slide of their stock value. What if banana workers and their allies were to propose a negotiated agreement that would force one or more of these companies to respect labor rights both on their own and on their suppliers’ plantations, in exchange for support in the marketplace? The idea would be to reward good behavior and introduce social criteria through citizen action – and of course, such a scheme would not work without significant support from conscientious consumers and activists in the EU and North America. Nor would it work without a strong verification mechanism controleed by the workers themselves. On the other hand, those banana companies who refused to sign on would be subject to ongoing investigation and pressure campaigns designed to hurt them in the marketplace until they came around. Again, the idea would be to reward the company or companies with the most labor-friendly policies..

COLSIBA and the IUF have been involved in a series of exploratory meetings with the US-based banana transnationals this year. It’s too early to say if such an agreement could emerge from these very preliminary discussions. And were such an agreement to be reached, implementing it and monitoring its functioning would be a daunting task. But such an agreement may be the only hope for thousands of unionized workers, as well as for many thousands more who would like to exercise their right to free association and collective bargaining, but who find themselves unable to exercise these rights thanks to an international economic system that refuses to even recognize these basic rights as a fundamental criteria in international trade.