7 May 2021

AgroFair celebrates 25 years of Fairtrade bananas

It’s a quarter of a century since Fairtrade bananas first appeared on supermarket shelves in Europe. They were imported by AgroFair, a pioneering trade justice company set up by Dutch NGO Solidaridad, the same organization who founded Fairtrade Netherlands (then known as “Max Havelaar”). AgroFair - which is 40 percent owned by small-scale banana producers - still accounts for more than a tenth of the global Fairtrade banana market. CEO Hans-Willem van der Waal reflects on 25 years of partnering with Fairtrade - and why, despite the challenges, he’s optimistic about the future.

How did AgroFair come about?

Hans-Willem: Max Havelaar started with coffee, and then wanted to get into bananas. Solidaridad talked to all the multinational banana companies, but none of them was interested in the concept of fair trade. So they decided to start their own banana company. That was easier said than done, because at the time you needed an import licence for bananas, and licences were only given to companies with an existing track record - so for a newcomer it was nearly impossible. But we persisted, and AgroFair acquired a licence through a French company.

Twenty-five years ago we were pioneers, we were the only ones and everyone praised us for what we were doing. Today Fairtrade is an enormous success - but back then, the major banana multinationals didn’t want to know. Then some of the big retailers switched to 100 percent Fairtrade, and suddenly the big companies couldn’t afford to ignore it because we were talking about such massive volumes.

Why do you describe the banana trade as an ‘agro-industrial exploitation model’?

Hans-Willem: You have to go back to the origins of the banana industry in the late nineteenth century. It was deliberately constructed to provide cheap fruit to the US market - the bananas had to be half the price of apples grown locally in the US. To achieve that, the companies grew bananas on very dense plots with very cheap labour. They used a lot of chemical fertilisers, made using cheap energy from cheap oil. It was exploitation of natural resources and exploitation of people. The industry expanded to countries where the labour was cheapest and labour organisation weakest.

Of course much has changed, and the roughest edges have been polished here and there, but it’s essentially the same business model today. If you grow around 1500 plants per hectare in a very high density planting system you get a lot of diseases that can only be managed by spraying - in some countries they spray more than once a week. Now add cheap labour - often migrant workers such as Nicaraguans in Costa Rica or Haitians in the Dominican Republic - and you get an agri-industrial exploitation model. The spread of Fusarium TR4 (a deadly disease of the banana plant) is also a clear sign of the vulnerability of this model.

How can we get to a living income for banana growers and workers?

Hans-Willem: We been talking about it for years, and there has been some progress, but it is far too slow. Even now, with so much debate about the legacies of colonialism and slavery, we apparently accept that exploitation is happening right now on our doorsteps. Every banana that we eat comes from by exploiting people who are simply not being paid enough. It’s essentially a moral question: What gives us the right to buy a kilo of bananas for 99 euro cents while at the same time the people growing them don’t even get enough money to cover their basic needs? What right do we have to exploit a family in Nicaragua earning US$120 a month?

I hear people saying, “Yes, but it’s complicated, it’s difficult, we need to study it more deeply, it will take many years.” We talk about initiatives “towards” a living wage - but it’s not going fast enough. Give me one good reason why this should persist and why the growers must continue to live in poverty so that we can eat cheap bananas. When people ask how we can move faster towards a living wage, it’s quite simple - I say: “Buy more Fairtrade bananas.” If retailers are serious, they should convert to 100 percent Fairtrade. That wouldn’t solve all the problems, but it would be a really significant step.

The multinationals and retailers say it’s difficult to increase the price of bananas to enable producers to earn a living wage. But let’s look at the calculations. In Nicaragua, for example, if you want to reach a living wage, you need to pay around US$0.50 extra per box. Last year, because of lower oil prices, the cost of shipping fell by the same amount - US$0.50 a box. The trade partners could have said: “If we pass on that 50 cents saving to the workers, we won’t lose any money but they will reach a living wage.” Immediately you raise the bar, no-one in the supply chain is any worse off - it could have been done without any cost to anyone. And if shipping costs increase again in the future, everyone will pay a little bit more and no-one notices. It’s simple logic.

Is that why you decided to give your producers an extra premium last year?

Hans-Willem: Fortunately, the COVID-19 pandemic did not really impact banana production and sales. Consumers in the US and Europe continued to eat bananas, and growers were able to continue, albeit with some additional protective measures in place. But they did experience higher costs and everything was more complicated for them. So when shipping prices went down, we wanted to share that cost saving with our producers - we had an advantage, they had a disadvantage. Our producers own 40 percent of the shares in the company, so they share in our profits and cost savings anyway, but this was a way to give them back a little extra immediately. Five cents a box isn’t much, but when you consider the volumes it was quite significant - in total we paid US$225,000 in voluntary Covid compensation in 2020.

On top the pandemic, there’s been an outbreak of the banana plant disease, Fusarium TR4, in Peru. How worried are you?

Hans-Willem: I’m very worried. The first reports of Fusarium in South America were in a very remote part of Colombia last year, and I did not expect it to travel so quickly, so far - Peru is the most southerly banana growing country on the continent. It may have been carried by migrant workers, and there is a high chance that before the end of the year we will see it in Ecuador as well.

Everyone hoped it would stay out of Latin America, but now it is there it cannot be cured and it cannot be treated. It’s essential that Peru introduces measures to stop the spread of the disease but that’s complicated because bananas are mostly grown by small-scale farmers, with plots of around a quarter of a hectare. Their livelihoods are at stake. If you only have a small plot and bananas are your main source of income, and suddenly you have a disease that cannot be treated, then your income is gone. There’s a danger that if farmers do identify a diseased plant, they may not report it to the authorities because of the impact on their income. The chances of containing it are not very good, and I believe over the next few years the Peruvian banana industry will be significantly affected.

What challenges do you see for Fairtrade?

Hans-Willem: Fairtrade has done a great job on improving the social and economic prospects for banana farmers, but of course it can always do more. Some retailers might prefer other standards because they feel Fairtrade doesn’t pay sufficient attention to the environment - of course that’s not accurate but I think Fairtrade does need to emphasize and elaborate that ecological aspect more. Ideally, when a retailer chooses Fairtrade, it should be confident of covering all the essentials of sustainability - ecological, social and economic - so they can buy the whole package.

The Fairtrade Premium is also a difficult area. More needs to be done to train Premium committees and co-ops about effective investment and sound financial management - the use of the Premium is not equally effective everywhere. It depends a lot on leadership - some organizations have visionary leaders who encourage Premium investment in innovative, transformative projects. Others less so.

I know retailers who are unclear about Premium use, and use that as an excuse for them not to go for Fairtrade - which is a shame because it means they miss out on all the other benefits like building long-term relationships, robust social standards and so on. We also need to be honest that the Premium has kept some producer organizations afloat long after they have ceased to be viable businesses.

How do you see the future for Fairtrade bananas?

Hans-Willem: I am more optimistic than ever about Fairtrade bananas! Change always takes more time than you think, but people are definitely now less tolerant of unethical buying behaviour, and there is EU legislation in the pipeline requiring companies to source ethically, to be more socially responsible and accountable. Fairtrade still has a very strong case.