9 May, 2014

Fighting the banana price wars on World Fair Trade Day

by Tim Aldred, Head of Policy and Research at the Fairtrade Foundation

To coincide with World Fair Trade Day, Tim Aldred, Head of Policy and Research at the Fairtrade Foundation, reflects on the debate generated by Fairtrade’s campaign for Fair Banana Pricing.

World Fair Trade DayWhen the Fairtrade Foundation launched our campaign to challenge unfair banana prices in February, we knew that it might be a tough sell. Would people realise just how damaging low supermarket prices for bananas are for the farmers and workers that produce them? 

We need not have worried.

Over 70,000 people have now signed our petition calling on Vince Cable, the Business Secretary, to act on unfair banana pricing. In Parliament, 54 MPs from across the house have signed an early day motion (EDM 1139) supporting the campaign.

They all understand that cheap bananas have consequences, and want to see action.

The banana industry is worth £700 million every year in the UK alone, but the farmers who grow them are not seeing the benefit. An intense price war between retailers to attract us into their stores has contributed to the price of loose bananas tumbling by 40% over a ten year period. Bananas now cost just 68p per kilo compared to £1.08 in 2002.

Meanwhile the costs within the supply chain – for things like labour, transport, and fertilisers - have doubled for most producers. Many small producers have been forced out of business. Workers  terms and conditions have been eroded in many origins. Many of the people who produce our bananas are not receiving a living wage and struggling to provide the basic essentials for their families.

The drive for ever cheaper bananas also encourages more intensive farming. This undermines biodiversity, and increases vulnerability to diseases like black sigatoka which can devastate crops. Environmentally kinder approaches are perfectly possible, but they cost more.

Banana workerWhen our campaign launched in early February, we wrote to Vince Cable, the Business Secretary, to urge him to take action. In his initial response, he cited the Competition Commission’s view in 2008 which concluded that the “retail grocery sector generally worked well for UK consumers” and that retailers were “not exploiting any dominant position”.  But in the six years since that assessment supermarket banana price wars have continued, and costs for producers have continued to rise. If you are a banana producer, there are only so many buyers out there. This means that it is the large retailers and traders who set the terms of trade. The recent merger of Chiquita and Fyffes is a further sign of concentrating buyer power in the market.

And do consumers only care about price? Are they even aware of the price of the bananas they buy? Independent polling we conducted found that only 7% of shoppers realised that banana prices had fallen. The vast majority thought that prices had risen, or simply didn’t know.

We found that consumers overwhelmingly want those who produce our bananas to be treated fairly. 84% said that they would pay more for their bananas if they knew the extra money would benefit farmers.  Of course, UK consumers want a good deal. But they don’t want this at the expense of producers, and they want bananas to be grown in an environmentally sustainable way.

Our experience of talking with government, supermarkets, the banana industry and NGOs about this campaign, is that most agree about where the main sustainability problems lie, and the kind of changes we would like to see for banana farmers. The Business Secretary told us he wants to see “long-term, sustainable growth that works in the best interest of consumers, suppliers and shareholders”.

But such an aspiration needs to be paid for, and this is where we fail to move forward. Higher wages cost more. Better terms and conditions cost more. Environmentally sustainable farming costs more.  It will be hard to achieve the changes we want to see unless we can find ways to get better prices for the farmers and workers who actually grow bananas. 
We need to protect consumers from companies profiteering, but regulators need to do a much better job of protecting the other values consumers hold dear – for fair treatment and prices for banana producers, for environmentally sustainable production.

The Business Secretary advised us to take our concerns to the Competition and Markets Authority. We’re looking into that right now. But this doesn’t let him off the hook. Tackling the problem will take political leadership.

And whatever action we can convince government to take, the spotlight will inevitably fall again on the retailers. Many are cutting prices right across their ranges in the wake of falling profits. But what about the falling profits of the farmers who produce the food? They deserve to be paid a decent price for their crop, and a living wage. What new commitments will retailers make to protect banana farmers and workers around the world from the impact of cheap food in the UK?

The petition to Make Bananas Fair was handed in to The Department of Business, innovation & Skills on Tuesday 13 May, with more than 70,000 signatures.

You can read more about the hand-in here and view a gallery of the hand-in on our Facebook page here

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