Seven Latin American agricultural ministers have expressed concern on behalf of banana producers about the price decline that is affecting everyone in the banana industry. Here’s what you need to know to get a better understanding of the issue.
- There are several reasons why banana producers are experiencing significant financial challenges. (more…)
- There is a negative domino effect in the banana industry supply chain as a result of pricing pressure. (more…)
- Fairtrade International demands companies and businesses make a change. (more…)
- Fairtrade International is creating initiatives to support banana farmers and workers in the current financial crisis. (more…)
Background Information: What is Fair Trade?
Why Banana Producers Are Facing a Financial Crisis
Accounting for approximately $7 billion in global export value annually, bananas are indeed one of the most in-demand fruits globally. But despite their massive demand, banana producers are facing financial challenges. Here’s why:
- When the price of fertilizers rises due to supply chain issues, the banana production supplies and exportation costs increase, such as packing, pallets, plastics, inland freight, and customs fees. These price increases were confirmed by producers and exporters across Latin America, the Caribbean, and West Africa.
- While global banana prices have already been lowered due to low-cost competition in the market, some retailers are still bargaining with their suppliers for even lower banana costs. These low prices are already insufficient to cover the rising production and customs costs. The effects of this crisis are now affecting thousands of farmers’ and workers’ livelihoods.
- Banana producers are affected by other factors that threaten their livelihoods, such as the effects of climate change on the economy, obstacles created by the Covid 19 pandemic, and plant diseases such as Fusarium TR4.
A Negative Domino Effect In The Banana Industry
The profitability and success of banana production may be threatened as a result of the increasing price pressure.
- As banana producers lose revenue on every box of bananas they produce, the entire success of their businesses and livelihoods are at risk. Because the banana industry provides jobs to over 800,000 families in Latin America and the Caribbean, the economic consequences of these losses would be severe.
- If the financial losses persist, banana producers would be forced to forfeit their agricultural investments made to improve their sustainability practices, raise productivity, and even secure effective water consumption.
- Many families are at risk of losing their farms, leading to widespread employment loss, particularly in communities reliant on banana farming for economic stability.
Fairtrade International Demands Companies Make A Change
Farmers and workers are unable to keep up with rising production expenses, which in turn makes adherence to principles of fair trade impossible. Fairtrade International is encouraging companies and businesses to make a difference on the issue.
- In general, fair trade cannot be regarded if banana producers are not fairly compensated for their products, which is why Fairtrade International demands banana retailers and traders commit to sustainability by making major changes to banana prices and how they are traded.
Fairtrade Initiatives In Supporting Banana Producers
Fairtrade is taking necessary steps to support banana producers as a result of the alarming price reductions on bananas. These initiatives include:
- Fairtrade adds $1USD in Fairtrade Premium for every box of bananas in support of the producer’s organization fund, which is used for sustainability initiatives to improve their businesses and communities. Fairtrade also sets a minimum price for every 18kg box of bananas in addition to the extra Premium.
- Banana plantations are set to pay their employees a minimum salary of at least 70% of the country’s living wage. This is a collaborative effort spearheaded by Fairtrade along with producers and commercial partners to secure acceptable wages and incomes for workers.
- Up to 30% of Fairtrade Premium payments are required to be distributed by other supply chain members directly to the workers as an addition to their own income.
- Fairtrade established a sustainable banana program that focuses on the product’s quality and value. Other agricultural characteristics are supported by the program including productivity, soil health, climate resilience, and more.
- In the banana industry, Fairtrade fights for fairness and social justice. The organization is campaigning with farmers to achieve a fair price on their products.
“A banana price crunch is hitting banana farmers and workers hard. Fairtrade’s Silvia Campos explains why.” Fairtrade International, January 26, 2022. https://www.fairtrade.net/news/a-banana-price-crunch-is-hitting-banana-farmers-and-workers-hard-fairtrades-silvia-campos-explains-why