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International Trade in Bananas - Coggle Diagram
International Trade in Bananas
A Fairtrade Commodity
Fairtrade aims to : pay a fair and guaranteed price for a product, improved working conditions, money reinvested into the community
Bananas are UK’s most popular Fairtrade product, accounting for over 40% of bananas sold - due to supermarkets like sainsburys who only sell fairtrade bananas
The Fairtrade price is typically higher than the market price to cover the costs of sustainable production and fair prices for farmers
Fairtrade aims to empower producers by promoting better trading conditions for farmers who have been disadvantaged by the global trading system - by ensuring producers receive fair prices for their products, improving working conditions and investing in community projects
Facts
Bananas are one of the most produced, traded and consumes fruits in the world
Each year : 50 million tonnes are produced, 20 million tonnes are exported
Bananas are grown in tropical regions with high temps and rainfall
Bananas are a staple food for 400 million people (dominant part of the diet, eaten regularly)
80% of exported bananas come from Latin America
Domination by TNCs
The global banana trade is dominated by just a few TNCs such as
Chiquita, Dole and Del Monte
Often own or control large plantations - allows then to dictate terms and prices to smaller growes who depends on TNCs for access to the market
Have considerable marketing power, influencing customer preferences
E.G The USA banana market is dominated by Chiquita and Dole which together account for around 70% of the market
Vertical and Horizontal integration enables the TNCs to control the entire supply chain from production to transportation and marketing - gives them an advantage in terms of economies of scale, allowing them to undercut smaller competitors
Economies of scale = As quantity of output increases, the cost per unit decreases, when mass producing a good results in a lower average cost
Undercutting = ability to offer goods at a lower price than competitors
Positive impacts of banana trade
Bananas provide lots of nutritional benefits and are a staple food for many people in LDE countries such as Uganda where they account for over 60% of calorie intake
Employment opportunities throughout the world - over 300,000 people are employed by the industry in the philippines
Export earnings support the economies of major banana producing countries such as Costa Rica
Development of transport and communication infrastructure enables trading
Negative Impacts of banana trade
Most bananas are treated with pesticides and herbicides - affects health and safety of workers, the local community and the environment, After harvesting the Bananas are then washed with disinfectant too
Deforestation takes place to clear the land for plantations which are monoculture - loss of biodiversity
The exploitation of workers due to low wages and poor conditions
Child labour - children as young as 8 have been found on banana plantations
Issues with World Trade in Bananas
Trade War
Bananas were the subject of one of the longest trade disputes in history
1975 - EU countries negotiated a trade agreement with former European colonies to enable independent development without overseas aid. Special and differential treatment was given with preferential tariff-free import quotas to supply EU markets
Effects: To protect the smaller, family run farms in the Caribbean from the large Latin America producers
1992 - TNCs filed a complaint to the World Trade Organisation that the EU practise was unfair trade
1997 - The WTO ruled against the EU and ordered the EU to cease discrimination - trade war began between EU and USA
2009 - A compromise was reached where the EU agreed to gradually reduce tariffs on Latin America Bananas