Waitrose’s TV campaign for Caribbean bananas at 99p a kilogram paints a utopian picture of a lush heartland of banana production - where aside from the occasional hurricane, the sun beats down all day and farmers are well paid and fairly treated.
That may be the case for the happy few who supply the likes of Waitrose or work under the Fairtrade umbrella, but it could not be further from the truth for the many more who have already been reduced to a hand-to-mouth existence by the banana wars. Now even that desperate existence appears to be under threat.
On January 1, 2006, the EU is expected to abolish quotas and adopt a single tariff. The move, which was agreed by the EU at World Trade Organisation talks in 2001, is expected to open the European market to cheaper bananas from Latin America.
That’s good news for the Americas - and on the face of it for consumers, who in theory will have a wider choice both in terms of price and quality.
However, for the Caribbean producers it could mean nothing less than economic and social disaster, warn industry experts - unless they can find a point of difference other than price.
The volume of bananas supplied to the UK by the Windward Islands has dwindled from two-thirds to 19% over the past decade as the supermarkets’ low pricing agenda, coupled with a comparatively cheap Latin American banana, have transformed the fruit into a commodity despite the quotas intended to protect historic trade links between the UK and its former colonies.
Trade organisations such as the Windward Islands National Farmers Association, Banana Link and the European Banana Action Network, a loose grouping of more than 30 European NGOs and trade unions in 12 countries, have been stepping up calls for variable tariffs that reflect the individual needs of the countries the fruit comes from (Market Edge, The Grocer, August 28, p44). But even if they succeed, the feeling is that the Windward Islands banana still needs to raise its game.
So far, the tried and tested way to avoid getting sucked into the deflationary spiral has been to seek shelter under the Fairtrade umbrella, with its promise of better prices and premiums for growers. The Windward Islands now sell 17% of their bananas to the Fairtrade market, while supermarket support for fair trade in general increased by 58% last year alone.
Nevertheless, says Harriet Lamb, executive director of the Fairtrade Foundation: “We are
very concerned about the price war on bananas. It has created a downward spiral that has put huge pressure on producers. Demand for fair trade is driven by consumers, but it’s up to supermarkets to meet that demand. They should dramatically increase their offering of fair trade. They can do it easily and it’s clear that people want it.”
She highlights the major impact supermarket support can have on a banana growing country. Two years ago, Tesco decided to source all its Fairtrade bananas from the Dominican Republic.
Lamb, who met some of the farmers involved, paints a bleak picture of life before the supermarket’s involvement. “The Dominican Republic was undergoing social disintegration. There was an exodus from the industry, gangs with guns started roaming the streets and the whole economy was going down the tubes,” she says.
“After Tesco decided to have Fairtrade bananas from there, it transformed the whole economy and stopped the social unrest. It shows the importance of Fairtrade.”
It also presents a sobering glimpse of what could happen when the tariff comes in. Unfortunately, fair trade is a niche market and the commercial reality of Every Day Low Pricing dictates that it will remain so - particularly with the likes of Asda underscoring the price imperative by switching to single sourcing, from Del Monte, and Chiquita striking another blow for the dollar banana by declaring its intent to increase its share of the UK market from 15% to 25% in the next three years.
But fair trade, which has perversely opened the supermarkets to accusations that they are deliberately exploiting the marque to generate higher profits, is not the only way forward, suggests David Southwell, director of communications at the British Retail Consortium. “If one retailer sources dollar bananas, someone else will want to take advantage of saying they’re taking their stock from the Windward Islands. It’s going to be a competitive issue. What we’re likely to see is a segregated market. There will be those that buy on value and those that buy on the perception of taste and quality or origin.”
Take Waitrose’s current ad campaign. The supermarket supports 105 producers in St Vincent and St Lucia and has taken the unusual step of actively marketing the Windward Islands banana on the grounds that it is better quality than its larger Latin American cousin.
Gordon Fairbrother, central fruit buyer, says: “We go out of our way to support the Windward Islands banana in what are difficult times. We like the quality: they are smaller and sweeter. And we wanted to maintain a choice. It’s also about loyalty to people who’ve supported us for a long time.”
The retailer now sources about half its bananas from the Windward Islands, despite the 15p per kilogram price premium over Latin American bananas.
Taking up the story, Waitrose head of press and PR Christian Cull, says: “The message we’re trying to convey is that it’s wrong to think of bananas as all the same because the farmers growing them are growing them under different circumstances.
“The St Lucian and St Vincent farmers we support are running small farms in hilly terrain that can be struck by hurricanes at any time. They’re up against massive economies of scale from the Central American boys. I think it’s right we should support them and be prepared to pay more for bananas they supply..”
Of course the Waitrose customer expects to pay slightly more. But Cull questions the EDLP philosophy that customers want the cheapest possible banana at whatever cost to the grower. “When you put the price of bananas up, you’d think that sales would go down, but that just hasn’t happened.”
That said, he does not expect the price wars to end soon. “Our competitors are happy to look on the banana as a basic commodity. The Caribbean producers have been forthright in their call for a fairer deal, but I think they’re up against it. It can’t be good news for them.”
The big question is whether the consumer will swallow the higher prices of the Windward Islands banana - be it for ethical reasons, because they think it tastes better or through straightforward loyalty to the banana they grew up with.
If the banana is marketed cleverly, the outlook may not be so bad, says Southwell: “It’s going to be tough, but there’s potential to see a diverse range of banana suppliers catering for different markets. Five years ago there wasn’t an ethical banana or an organic banana. It will come down to customer choice and preference.”
Joycelyn Trumpet is a farmer and a representative of Spring Village Fairtrade Group, St Vincent.
“I have been doing Fairtrade for four years now, ever since we started selling from this village. I cut about 25-35 boxes a week At the moment, it is down because the fertiliser is not so good. Fairtrade is trying to import better fertiliser.
“There are 15 members in the group. We have used the premium to help the school and the clinic. The community centre is our next project.
“The good thing about Fairtrade is that we help each other out. We exchange ideas and suggest ways to work together.
“If we stick to the criteria, I think we can help save the industry. I ain’t giving up. If the boat goes down, I go down with it.”