chiquita banana

Chiquita Brands International

09PGDM004 Aman Gupta09PGDM016 Divya Sajja09PGDM027 Niraj Todi09PGDM038 Rahul Bhatia09PGDM049 Sonal Goel09PGDM060 Vishnu Sankar

Group-4, Section A

Banana – Fact Sheet

• Globally one of the most commonly eaten fruit with India being the largest producer.

• World’s fourth most important crop after rice, wheat and maize

• Tropical climate most suitable for banana growth

• One fifth of world production exported from developing to developed countries, an example of South – North trade

• Just 20% of bananas are traded on the world market, the rest are used for domestic consumption

Latin American countries

ACP Countries EU Countries

Ecuador Cameroon Martinique

Costa Rica Ivory Coast Guadeloupe

Colombia Dominican Republic Canary Islands

Guatemala Belize

Honduras Surinam

Panama Jamaica

Brazil Ghana

Peru Windward Islands

Nicaragua

Major Banana Exporting Countries

Dominican Republic

Colombia

Peru

Ecuador

Mexico

Honduras

Guatemala

Canarian Island

Map of banana Trade flows (2002)

BACK

Banana Exports - Major Countries 2002 - 2004 (Average)

Latin America – Lots at Stake

Latin America – 80% of the total Exports

US & EU – largest importersBanana Imports - Major Countries

2002 - 2004 (Average)

US and EU – accounts for 75% of total imports

Banana Trade• Controlled by large US and Europe Multinationals

• 6 Companies control 85% of the international banana trade Dole – California, USA Del Monte – Florida, USA Chiquita - Ohio, USA Fyffes - Ireland Noboa - Guayaquil, Ecuador Geest - UK

• Chiquita - a leading player since 1889

Chiquita formation and evolution

1870

•Lorenzo Dow Baker and the Bostonian entrepreneur Andrew Preston join efforts to develop a banana market in Boston.

1871

•Henry Miggs undertakes railroad contract in Costa Rica. Plants bananas to feed workers.

1885

•Baker and Preston establish Boston Fruit Company

1890

•Keith exports bananas from the Costa Rica plantations.

•Keith gets 800,000 acres of tax-free land from government of Costa Rica as it defaults on payments.

Chiquita formation and evolution

• Dominated the banana trade in Central America and along the Caribbean coast of Colombia.

• Assets included plantations, railways, ports, ships and communication networks in Columbia, Honduras, Nicaragua, Costa Rica, Panama, Jamaica.

1897

•Keith enters banana business in Panama

1899

•Keith, Preston and Baker together establish United Fruit Company.

•Expansion in Cuba, Honduras, Dominican Republic, Guatemala, Haiti

Chiquita Growth• Invested in major infrastructure facilities

• Built villages with homes, schools, medical facilities, and factories to support its workforce.

• First to ship its cargo in refrigerated vessels

• First to brand bananas by labeling them with stickers.

• In 1994, created a memorable marketing campaign with Miss Chiquita and “Chiquita Banana Song”

• Termed as “la pulpa” or Octopus - spread of US political and Economic hegemony in region.

• Acquisition of companies- included competitors in US as well as in Latin American countries.

• Exploitation of workers - Poor working conditions. Curbed unionism using its own private army

• Wielded disproportionate power over countries which got called as “Banana Republics”

Extension of Power

Chiquita Controversies• 1911-12- Sent Marines into Honduras

• 1928- Banana Massacre in Columbia- Shooting of striking UFC workers in banana plantations.

• 1952- Overthrow of Guatemala democraticgovernment

• 1974- Bananagate- Bribing of Honduranpresident

• 1998- Cincinnati Enquirer controversy

• 2008- Alleged Payment to Columbian paramilitary groups

• Treaty of Rome , 1957 - Adopted Common Agricultural Policy (CAP)

• Lome Convention, 1975 - Preferential access to banana imports from developing countries in the ACP region

• Germany remained free market since it had no colonies of its own

• Stated Reason : To help less efficient growers in these regions to compete with the U.S multinationals

• Real Reason: Protect EU multinationals Secure the German market

Banana Politics of EU

Banana Industry in early 1990s

40%

35%

15%

10%

World imports by volume

ECNorth AmericaJapan and other Asian ConutriesRest of World

75%

20%

5%

Global Shipments by volume

Latin AmericaACPOthers

Banana Import Policy - 1993

• Effective on July 1993

• Divided banana imports into 4 Categories :

Third Country Imports (Latin American and non-ACP sources)

Traditional ACP imports

Non Traditional ACP imports (exceeding the traditional quota amounts)

EC imports

Restrictions

Third Country imports

Traditional ACP imports

Non Traditional ACP imports

EC imports

2 million ton quota

Free access 2 million tonne quota free of duty

30% share of “third country” imports

in quota volumes dutiable at 100 ECU/mt

Above it 750 ECU/mt

Excess dutiable at 850 ECU/mt

Licensing provision

Licensing provision

Two Panels under GATT

• 1st Panel- initiated on 8th Feb 1993 by Colombia, Costa Rica, Guatemala, Nicaragua & Venezuela against the national regimes concluded in May 1993 when national regimes disappeared

• 2nd Panel - initiated by same 5 countries, against the EC common banana market on 28 April 1993 conclusions - inconsistencies in specific duties on banana

imports, preferential tariff rates to ACP countries, allocation of import licenses

EC cannot discriminate between the GATT contracting parties - ACP and Third country banana exporting countries

• Despite this, 4 countries, excluding Guatemala signed the Banana Framework Agreement

Banana Framework Agreement• Four complaining parties - Colombia, Costa Rica, Nicaragua

& Venezuela reached an agreement with EC

Not to request adoption of the panel

Permitted to issue export certificates

Quota expanded to 2.2 million tonnes from 2.1

Country specific quotas as follows

Country ShareCosta Rica 23.40%

Colombia 21%

Nicaragua 3%

Venezuela 2%

Others (1995) 46.51%

Dominican Republic and other ACP countries concerning non-traditional

quantities90,000 tonnes

Germany’s Banana Love

• Pre Reunification

– Post World War II, bananas symbolized luxury to both West and East Germans.

– Special Provision "Protocol Number 10” in Treaty of European Economic Community (EEC) – unlimited access

– Post Lome Convention, Germany was the only free market in Europe.


Germany36%

UK13%

France13%

Italy15%

Belgium5%

Nether-

lands4%

Other Europ

e14%

% Volume of Banana Trade in 1991-92

• Post Reunification – 1989– West Germans referred Eastern countrymen as “Bananen”.

– By 1992, Germans, consumed twice as many bananas as do citizens of any other EC nation

– With no colonies, wanted special, duty-free treatment for German banana imports

– EC ‘s “banana split”, exposed the sharp political tensions underlying the move toward a single, borderless European market.

– Germans preferred Latin American “DollarBananas”-to “ EuroBananas” from EC overseas territories and former colonies.


EU policies and Chiquita (1994-present)

1994

•The company accused the European Union quota policy as unfair.

1995

•Running in losses, Chiquita sold John Morrel, the meatpacker subsidiary.

1996

•EU policy challenged by Guatemala, Mexico, and Honduras in WTO

1997

•WTO ruled EU’s trade policy as illegal.

1999

•WTO finds EU unlawful and sides with US. EU refuses to change quota system.

2000

•US imposes economic sanctions on EU as a part of banana war.

•Ecuador imposed sanctions on EU

2001

•EU and US settled their differences. New tariff to be implemented from 2006

2002

•Chiquita started restructuring its debt, protected by the US bankruptcy legislation.

2003

•Chiquita acquired Atlanta AG Group, a leading banana company and decides to focus on its fresh fruit market

2004

•Company sells Colombian division to Banacol for $52 million.

2005

•Chiquita acquired Performance Food Group's Fresh Express division.

2006

•EU agreed to reduce the import tariff to 176 euros per tone on bananas imported from countries enjoying MFN status.

2008•After the EPA, between EU and ACP countries, ACP producers obtain an important tariff preference without limitation of quantities. Customs duty for MFN is still 175 euros/ton.

Now•Chiquita in a diverse range of fresh and value added food products. Bananas still constitute a major portion of the revenues.

2008

•After the EPA, between EU and ACP countries, ACP producers obtain an important tariff preference without limitation of quantities. Customs duty for MFN is still 175 euros/ton.

Now

•Chiquita in a diverse range of fresh and value added food products. Bananas still constitute a major portion of the revenues.

“no one laughs at the banana in its areas of origin. It is too serious a business, on which jobs and lives depend.”

(Jungle Capitalists, Canongate Books, 2007)

Bananas are serious business

Thank You

Map of banana Trade flows (2002)

Dominican Republic

Colombia

Peru

Ecuador

Mexico

Honduras

Guatemala

Canarian Island

BACK

chiquita banana

Documents

country banana

divided banana imports

banana plantations

banana growth

banana business

banana massacre

total imports banana

banana import policy