Not On the Label: What Really Goes into the Food on Your Plate by Lawrence Felicity

Author:Lawrence, Felicity [Lawrence, Felicity]
Language: eng
Format: epub
Publisher: Penguin Books Ltd
Published: 2004-05-06T04:30:00+00:00

The battle of the bananas is a classic example of the dynamics of retail concentration at work.

In 2002, Wal-Mart, the world’s largest retailer which owns Asda in the UK, renegotiated its banana buying. It invited the biggest distributors of bananas to bid for a global contract to supply its stores in several countries. Control of banana trading had been taken over by the end of the 1990s by an oligopoly, with more than three quarters of global trade in the hands of just five companies, Chiquita (26 per cent of the market), Dole (25 per cent) and Del Monte Fresh Produce, Fyffes, and Noboa (8 per cent each).

Bidding for the international Wal-Mart contract was ferocious. The size of the contract meant that it alone would dramatically alter market shares in favour of the winners. Del Monte Fresh Produce, sourcing bananas from Latin America, won a large chunk of it and, because of the scale of the business on offer, promised Wal-Mart a deal that would enable the retailer to slash its prices to customers, including its Asda shoppers.

Bananas are British retailers’ largest-selling and most lucrative item. According to the fairtrade non-profit organization, Banana Link, for every £1 of bananas sold at retail, the supermarkets keep 40p while growers receive just 10p. Bananas are, like bread, ‘known-value items’, one of the few items whose price shoppers remember and use to make comparisons between different shops and whether they offer good value or not. So if you cut prices on bananas you put intense pressure on your competition. As the price of bananas in Asda shops fell from £1.08 per kilo in the summer of 2002 to 81p per kilo in March 2003, other retailers were forced to scramble to keep up.

Sainsbury’s said it was losing £22 million a year on bananas as it tried to match Asda prices. Its orders could not touch the scale of Wal-Mart operating globally, and it could not extract the same deal from suppliers. Moreover, it had been sourcing many of its bananas from the Windward Islands, where the fruit is produced on family farms with fewer chemicals but correspondingly greater labour costs. The Windwards could not match the prices offered by Latin American countries, where bananas for export are produced on large-scale plantations which depend on routine aerial spraying of pesticides and where infringements of labour rights and environmental abuses are both notorious and well documented. Nowhere have abuses been greater than in Ecuador, from where some of the bananas for the supermarket price war were to come. Banana Link calculated how much money would be left for other links in the food chain if bananas were being sold in shops in the UK at 81p per kilo. At this price it is impossible for a grower in Costa Rica to be paid the set legal minimum for a box of bananas, and impossible in turn for that grower to pay his labourers a legal minimum wage. ‘International buyers are in effect obliging all banana-exporting countries to reproduce Ecuador’s poor labour and environmental conditions,’ it says.

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