Fairtrade Fights Banana Price War

Increase in Fairtrade Banana Prices counters Supermarkets Race to the Bottom

27 October 2009

Fairtrade Labelling Organizations International (FLO) is raising the Fairtrade minimum price for bananas to its highest level to date despite downward spiraling supermarket prices.  FLO considers the move necessary to satisfy producer needs in the face of rising costs of production.

“We had to act to protect our producers,” says Rob Cameron, CEO of FLO. “This price floor helps Fairtrade farmers and workers cover their expenses while shielding them against the worst impact of the current banana price war, which is threatening to drive hundreds of thousands into even deeper poverty.”

The latest round in the banana price war was launched in early October by a large UK discounter who cut banana prices to £0.38/kg – the lowest real price to date, just one-third the value seven years ago.  Commercial banana prices have been in long-term decline as supermarkets will sell this core product below cost of production in order to draw customers.  Meanwhile, banana producers are now facing higher expenses on fertilizer and packing due to rises in oil prices.  FLO experts warn that shifting the loss down the supply chain to producers will threaten the livelihood and existence of banana farmers and workers around the globe.  

As part of its aim to maximize income to Fairtrade producers and secure their livelihoods, FLO is increasing the Fairtrade Minimum Prices for bananas by an average of 21.2% over 2006 levels, effective January 1st, 2010.  For the key indicator country Columbia, this means companies must pay producers at least US$8.50 per 18.14 kg box for Fairtrade conventional bananas, up from US$6.75/box.  In addition to country-specific prices, FLO has now also set minimum prices for all banana-producing regions - a move that opens Fairtrade to banana producers across the world who meet Fairtrade standards.  Meanwhile, banana producer organizations will continue to receive an additional US$1.00/box in Fairtrade Premium on top of the price to invest in social, environmental or business development, and to supplement incomes.

CEO Rob Cameron is calling on continued consumer support for the increase.  “That way, shoppers not only make a conscious decision to actively help the most disadvantaged farmers and workers to help themselves – in addition, the also buy the higher quality product,” he says.

The Fairtrade standards include provisions for climate protection and the environment, and call for producers to avoid herbicides in favor of manual weed control.  This not only leads to a “better banana”, but also provides jobs in times of financial and economic crisis.

“We would have liked to increase our minimum prices even more,” says Cameron.  “However, we have to balance the thin line of what consumers are willing to pay in light of below-cost rock-bottom supermarket prices and the urgent needs of those who have joined the Fairtrade system to combat dire poverty.”

With the price increase, FLO is also calling on the banana industry and governments to undertake steps to end the price war and to develop long-term strategies that result in fairer trading conditions and sustainable prices, thereby securing supply and the livelihoods of millions of banana producers around the world.

ENDS

For more information on the new banana standard, see our Banana Factsheet
For the complete table of new banana prices, see our Banana Announcement

For further information, please contact:
Reykia Fick, External Relations Coordinator
+49 228 949 2314, r.fick@fairtrade.net

Note: FLO sets the standards for Fairtrade. The organization unites national Fairtrade organizations across Europe, North America, Japan, South Africa, Australia and New Zealand, as well as producer networks representing Fairtrade certified producer organizations in Latin America, Africa and Asia.  Today, more than five million people - farmers, workers and their families - across 59 developing countries benefit from the international Fairtrade system.

 
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