Bananas

Economic Costs of the Banana Trade

The High Cost of Cheap Fruit

    When you go to the store to buy bananas, you are not only purchasing a sweet, cheap tropical fruit, but also contributing to global environmental problems. Many billions of pounds of bananas are produced and consumed every year in nations around the world. According to the United Nations, the United States alone consumes 6.4 billion pounds of bananas per year.1  Since most bananas are not grown in the United States, they all have to be shipped here. The average shipment of bananas is approximately 250,000 40-pound boxes, which totals around ten million pounds of banana.2  This means that the United States consumes roughly 640 loaded with bananas per year. That’s 640 refrigerated cargo vessels traveling back and forth between mostly Latin American countries and the United States yearly. Because these ships can run on bunker fuel, the leftovers from the refining of crude oil, it is extremely cheap for the companies to transport the bananas. Unfortunately this cheap transportation (and the cheap bananas that we all consume) is in fact incredibly expensive when you consider the ecological cost of the fuel consumption. A single container cargo vessel creates more than 2,000 times the pollution of a diesel truck.3  Multiply the number of ships by 642 and add the pollution created by the refrigeration, and that’s over one million trucks driving thousands of miles just to transport bananas. Every time you as a consumer purchase a banana, you support the industries that cause this pollution.
   
    For all the bananas that are shipped, however, far more never see a boat, much less a different country.  Over 87% of bananas that are produced are consumed locally.4  In fact, the top three banana producing nations were not even in the top ten banana exporting nations.5  Many bananas are sold at local markets or eaten by their growers. As such, bananas are generally marketed as a normal good, one which people purchase more of as their income rises or availability increases.
   
    Most banana producers do not grow nearly enough bananas to influence the price paid for them, so they rely on a high demand for their product to set the price.6  Because there are few regulations governing banana trade, larger companies can sell as many bananas as they choose at a very low a price, which maximizes profits in the long run.7  This lack of restrictions allows the banana industry to market bananas in a manner that generates the greatest cash flow possibly for fruit companies. Interestingly enough, even with high profits for the companies, banana workers in Top Banana Producing NationsCentral America make as little as $1.20 per day.9 While this lack of restrictions would generally mean higher profits for the banana farmer, workers actually see very little of the money that is spent on the product. Most of the money goes to the fruit company, which maintains low wages in order to make more money. When you purchase a bushel of bananas for less than a dollar, only pennies make it back to the people who worked the hardest to get it to you. In the end, it is truly only the company and industry itself that benefit from the global fruit trade.


1 FAOSTAT: ProdSTAT: Crops. UN Food & Agriculture Organisation (2005).
2Smith, Jeremy N. “Making the Exotic Ordinary,” World Trade; Vol. 19 Issue 7, (2006) 146.
3Schmidt, Kara, “Kara Schmidt, Bluewater Network”, Grist, http:// www.grist.org/ comments/dispatches/2000/07/24/schmidt-bluewater_network/index.html
4INIBAP, “Sustainable Production,” Banana and Plantain Section of Biodiversity International, http://bananas.bioversityinternational.org/content/view/67/ 97/lang,fr/.
5
FAOSTAT: ProdSTAT: Crops. UN Food & Agriculture Organisation (2005).
6INIBAP, “Processing and Marketing Banana Biodiversity,” Banana and Plantain Section of Biodiversity International http://bananas.bioversityinternational.org/content/view/70/100/lang,fr/.
7United Nations Conference on Trade and Development, “Banana” http:// www.unctad.org/infocomm/anglais/banana/prices.htm
9Prieto-Carrón, Marina “Corporate Social Responsibility in Latin America” Journal of Corporate Citizenship; Issue 21 (Spring 2006) 85-94.