26 Jan 2022

A banana price crunch is hitting banana farmers and workers hard. Fairtrade’s Silvia Campos explains why

Peru Banana producers 2021 FARMERS Docuseries

On 12 January, the Ministers of Agriculture from seven Latin American banana producing countries came out in vocal support of banana producers, sounding the alarm over a price crunch that is taking a toll on smallholder farmers, agricultural workers, rural communities, and the environment. The appeal – the first of its kind – was extraordinary. Not only did it shine a direct light on the ongoing price crisis affecting banana producers but it also underscored the critical responsibilities shared by all actors in the banana supply chain.

Bananas are hands down the world’s most popular fruit. And with an estimated global export value of $7 billion dollars per year, they’re also likely one of the most essential, as the banana trade remains the cornerstone of many countries’ economies. For more than 450 million people around the world, bananas and plantains are vital staple crops.

But amid spiking production costs for packing materials and fertilizers combined with the economic fallout of climate change, COVID-19, and the fight against plant diseases like Fusarium TR4, banana producers are coming under increasing financial pressure, placing their livelihoods, sustainable farming practices, and food security at risk.

To better understand how the price crunch is affecting banana farmers and workers around the world, we spoke to Silvia Campos Malpartida, Senior Advisor and Global Product Manager for Bananas at Fairtrade.

Tell us a little bit about what is currently happening and why banana producers are concerned?

Producers are currently being confronted with sharp and repeated price increases triggered by the ongoing supply chain crisis and the escalating cost of fertilizers. These increases strongly affect the costs of inputs and services in banana production and both producers and exporters from across Latin America, the Caribbean, and West Africa have confirmed price increases for packaging, fertilizers, pallets, plastic, inland freight, and custom fees.

Where this becomes a problem is that the amount being paid by importers and retailers has risen, but not enough. Global prices were already pushed down because many retailers compete on low-cost bananas, using bananas as loss-leaders in their stores to attract shoppers, and in turn negotiating for lower prices from their suppliers. Now, these low prices are nowhere near covering the uptick in production and export costs. That means that all the burden is falling back on producers who find themselves in a crunch. And that, frankly, is just not bearable for the thousands of farmers and workers whose livelihoods are now on the line.

What are the implications – both for banana producers’ sustainability efforts and for producers’ and farmers’ livelihoods?

This ‘price pressure’ is squeezing producers, farmers, workers, and exporters and ultimately threatens the profitability and even viability of banana production altogether. The banana industry is the source of jobs and income for more than 800,000 families across Latin America and the Caribbean. If banana producers lose out on each box of banana they produce, the financial impact on their businesses and livelihoods will be devastating. It will mean that there won’t be enough income for investments at farm level on everything from efforts to boost sustainability and increase productivity to ensuring efficient water use. At the end of the day, there is a legitimate high risk of families losing their farms and widespread job loss in regions where there aren’t many alternatives for earning an income. In a $7 billion industry, that is fundamentally unjust. That is of course a concern to us, and should be a concern to everyone.

What is Fairtrade calling on companies to do to have a positive impact?

Fairtrade wants the sustainability commitments made by retailers and traders to be matched with real changes to how bananas are priced and traded. Without paying producers a fair price that takes into account all economic, social and environmental costs, any sustainability claim made by retailers and traders is simply not credible. Farmers and workers cannot carry the disproportionate burden of rising production costs – it’s not tenable and not fair.

What does Fairtrade do to support banana producers?

First, Fairtrade sets a minimum price that producers must be paid per box (a little more than 18 kilogrammes each), plus an extra USD$1 per box in Fairtrade Premium, which the producer organizations can use to invest in projects of their choice for their business or community. Fairtrade prices and other required contract conditions give producers stability throughout the year, so they are better equipped to weather other market changes.

In addition, we are working with producers and commercial partners to make real progress toward living incomes and living wages. For workers on banana plantations, we have set requirements that plantations pay at least 70 percent of their country’s living wage benchmark – even if the country’s minimum wage is lower. While other supply chain actors will also need to contribute, for now up to 30 percent of workers’ Fairtrade Premium funds can also be paid out directly to them to further increase their incomes. In terms of quality and value, we have the Sustainable Banana Programme that support producers with other aspects such as productivity, soil health, climate resilience, and more.

Finally, Fairtrade advocates for fairness and social justice in the banana sector. We are raising our voices and campaigning alongside farmers and workers who expect a fair price for their product.

Is there anything that consumers can do?

Continue buying Fairtrade bananas! But also, demand fair trading conditions from retailers not only for the bananas they buy, but for any other regional or imported goods.

Bananas hold a special place in the Fairtrade system. The first Fairtrade banana was sold just over 25 years ago. And we want to ensure another 25 years of fairness by pushing for social justice in the global banana trade.

Silvia Campos Malpartida is Fairtrade International's Senior Advisor and Global Product Manager for Bananas