Crisis in Costa Rican Banana Industry?

Reality or Fantasy

Fr. Gerardo Vargas

In mid 1999, the World Trade Organization (WTO) ruled that the European system for marketing bananas needed to be reformulated to be consistent with policies and directives on free trade defined by that entity. For this reason and the existence of an oversupply of bananas on the international market, some transnational banana companies have begun to cancel contracts of the men and women who work on the plantations and to rehire them on unfavorable terms.

It is important to consider several aspects of what some people refer to as the "banana crisis". In the first place, it is important to recognize that the WTO has ruled that the current European system of quotas can not be maintained. This has forced the European Union to seek a new mechanism for the allocation of banana imports. Several of the sectors involved have made proposals as to how the new system might be implemented, and as is to be expected, each proposal has sought to protect its proponents interests. While Costa Rica has already made its proposal, some are expressing fears about the decision that will eventually be adopted, concerned that our country will not be able to sell all the fruit it produces.

Another important factor that comes into play in this situation is the existence of an oversupply on the international market, generated as a consequence of expansion of banana production in Ecuador, as well as the recovery of areas of production damaged by hurricane Mitch and the enormous capacity for banana production achieved by Costa Rica in recent years with the expansion of the late 80's and early 90's.

It is argued that Costa Rican costs of production are higher than in other countries, requiring that the fruit be sold at a higher price, placing Costa Rican fruit at a competitive disadvantage. Numerous studies have demonstrated that bananas produced in conventional plantations in Costa Rica are more expensive due to the high economic (not to mention environmental) cost of the technological package, especially the agrochemical applications used by the transnational and national producers.

Certainly, in other countries, the costs of production are reduced due to lower levels of social return ((investment/contribution)) –salaries and social benefits– which result in truly deplorable conditions for working men and women. An element of the current situation of which we must keep very much in sight is that at risk are the rights and benefits achieved thanks to many decades of struggles on the part of working men and women of Costa Rica.

It is important to recognize that the price of a box of bananas has fallen on the international market. Nonetheless, it is once again the independent producers and laboring men and women who will suffer the consequences. It was the three big transnational producers and marketers who decided to reduce the price paid to independent producers by 35 cents on the dollar per box of bananas, with the consequent impact generally on independent producers and banana workers. So, it seems to us that this is a "crisis" that the companies themselves have created with their corporate(business) irrationality, and of which they are taking advantage of to eliminate the minimum benefits won through long years of labor struggles.

The foregoing points to the fact that our country, Costa Rica, once again faces a situation of irrational business planning. Much was said some ten years ago regarding the negative repercussions to Costa Rica from the expansion of the banana industry –both geographical and in volume of production. We are now living with one of the manifestations of those prophetic warnings. Faced with the challenges of the situation they face, the banana companies have opted to initiate wholesale firings of their workers or cancellation of their contracts. The majority of these men and women are then rehired, but on terms that have changed completely: with lower salaries (there are (said to be) cases where wage rates are 30% lower), additional tasks, and longer work days. Also eliminated are some of the rights won through union collective bargaining agreements of more than a decade ago which had survived, if barely, under the so called "Direct Agreements" of recent years (e.g. payment of electric bills and cleanup of common areas around worker housing camps).

The firings and the elimination of benefits historically acquired, is justified by the companies in the rubric of the misnamed "banana crisis". Foro Emaus considers that the talk of crisis misses the mark, and is more of a "market adjustment": At its core, what is occuring is a battle between transnationals, fighting for shares of the international market. It is a great irony that these same transnational and independent companies that are currently asking for forgiveness of their debts and exemptions from taxes, scarcely one year ago were spending millions of colones on a publicity campaign (underwritten by the producers group CORBANA) euphorically announcing to the public the record annual export level of 116 million boxes of bananas, generating 663 million dollars in foreign exchange. How is it that it never occurred to them to distribute those profits more widely in their moments of plenty instead of now asking for assistance to minamize their losses ( more precisely, their diminished profits) that they themselves are directly responsible for because of the promothion of the unfettered and unplanned expansion of the industry?

Once again history repeats itself: when there is a bonanza, the riches go no further than the coffers of the banana companies, what is more, the profits are exported. When there is a "crisis" the consequences are shouldered on the backs of laboring men and women and drawn from government coffers, which is to say from the entire population.

Foro Emaus has advanced concrete proposals for ways to improve the agro-industrial production of bananas that is so important to Costa Rica. Recent meetings held with some of the transnationals, with the Environmental Commission on Bananas, with the Ministers of Public Health and of Labor, and recently with the President of Costa Rica, make evident our interest in contributing responsibly with concrete proposals to the solution of the important problems that burden the banana industry.

It is therefore noteworthy that there remains a group of banana producers who continue with a closed mind in regard to diverse proposals. from other sources. They continue to refer to "groups that traditionally have had an interest in discrediting the Costa Rican Banana industry".¹ They insist that they will maintain the rights of workers, but this clashes with what has occurred on the plantations, corroborated by news reports which show evidence of the deterioration of working conditions due to the recent re-contractings.

It is very noteworthy that even Solidarismo –which under the direction of the John XXIII School has always remained faithful to the companies– appears to be in disagreement with what is happening on the plantations. In a recent paid newspaper ad, this institution (took the unprecedented step of making) (made) known its concerns with decisions taken by the transnational corporations: "The decisions taken unilaterally, far from facilitating worker-management understanding, can at times deteriorate labor relations.)²

The banana workers unions had already publicly condemned that selective firings were taking place, particularly of those workers affiliated or in sympathy with the unions. They have also protested the lack of freedom of association, the creation of widespread unemployment and the violation of the basic rights of laboring men and women. They have also made public their disagreements with new work contracts. These organizations are readying a series of actions which seek to defend the rights acquired through long years of labor struggles.

In accord with the analysis laid out above, Foro Emaus proposes:

1. That the municipalities where banana production is centered should begin immediately a program of defense of their interests as local governments, since banana production generates the basic taxes for public works, which must be defended in the interest of their communities.
2. We call on the government of Costa Rica not to give into the banana companies pressures in their quest to eliminate the few taxes they pay.
3. We ask the Ministry of Labor to involve other actors in society – particularly the banana workers unions in those farms where they have a presence– in the negotiation and monitoring of the new work contracts.
4. (Following on its creation of the Fund ..... to compensate banana growers for their losses), The government should create a commission which elaborates programs to compensate those sectors most affected by the "crisis"
5. The Defensoria de los Habitantes (government office of public ombudsman) should take on a leading role in this the present context. This especially since the Ministry of Labor is officially certifying the legality of the firings, despite the real deterioration brought about by the new contracts in the historically achieved social benefits. We must not forget the impact of this agro-industrial sector which directly employs 40 thousand persons and is responsible for some 100,000 indirect jobs.
6. We call on all the organizations of civil society and the institutions of Limon & Sarapiqui (regions where banana production is concentrated) to involve themselves responsibly in this juncture, defending the effectiveness of those social guarantees whose conquest and defense was at such great cost.

Banana production is an activity of great importance for the generation of employment in the Atlantic region, for this reason we need to interest ourselves in defense of the rights of working men and women. This is a grave moment and at the same time, another opportunity to seek adequate alternatives which help to recover social equality in the banana sector.