Small Farmers. Big Change.

“We were willing to continue selling our bananas to Dole. We just also wanted to develop our own markets and sell to them directly. We wanted to have a choice and be independent and we wanted to be treated fairly. Dole wouldn’t do it. They said we had to sell them all our bananas or they would stop buying from us altogether.”

–Jorge Nunjar Domador, President, APOQ Co-op, Querrecotillo, Peru

Yesterday I went shopping at my local food co-op, the Harvest Co-op Market. Usually they carry Equal Exchange organic, Fair Trade bananas and I cheerfully buy them for my morning cereal. But yesterday they were out of stock. So, I had a choice: Dole or nothing. Sometimes in this situation, I have bought the Dole organic. But this time, I just couldn’t do it. Not after my latest trip to Piura, in northern Peru, where I accompanied the Oke USA/Equal Exchange banana team–Nicole, Bradley and Jessica–to visit our newest small banana farmer partners, CEPIBO and APOQ.

Bananas are the most frequently bought grocery item in the United States, and they have a huge impact on a grocery store’s volume sales and profits. Apparently, shoppers have the price etched in their minds and retailers believe that this one item can influence where someone shops. Consequently, many stores are loathe to raise the price of a pound of organic, Fair Trade bananas above $.99/pound.

This price ceiling poses a challenge to suppliers of Fair Trade organic bananas. Small farmer organizations and independent exporters and distributors wishing to support alternative banana supply chains cannot easily compete with Dole, Chiquita and the three other companies that have dominated the global banana export market for over a half century.  These companies make huge profits and they have the ability to pay high and offer low for temporary periods as a deliberate strategy to squeeze out their smaller competitors.  Our banana team lives this reality on a daily basis, but it was the stories we heard from our farmer partners on this trip to Peru that crystallized  my desire to help transform this industry.

News about the practices of Dole and Chiquita in Latin America, and elsewhere, isn’t exactly… well, news… Chiquita Brands, previously called United Fruit, helped overthrow Jacobo Arbenz, the first democratically elected president in Guatemala, because his very modest land reform ideas threatened to undermine the U.S-based company’s profits. With CIA backing, the coup d’etat led to a 30-year civil war with over 100,000 dead. That was in the 1950s, but these companies continue to sell us their bananas (and we continue to buy them) despite lawsuits and scandals about their treatment of workers and support of paramilitaries who have killed unionists organizing workers on their plantations. Lawsuits are still pending from farm laborers who are permanently ill or disabled from the companies’ use of chemicals long outlawed in the U.S. (For more information about these issues click here, here, here and here.)

Dole and Chiquita Plantations in Costa Rica

It’s not just what I’ve read that upsets me when I think about the limited choices I have when I buy bananas. Years ago, I lived on the Atlantic coast of Costa Rica, downstream from a Dole banana plantation. I can’t forget the pervasive smell of the pesticides they aerially sprayed over the crops. I remember the fish that washed up dead on the shore of the river where I lived (the same river we bathed in and drank  from, as the community had no indoor plumbing or potable water.) Just after my return home, the Costa Rican government quarantined the small community I had lived in, evacuating the tiny population of 25 families because the river had become so toxic people were becoming seriously ill.

And so, in 2006, when Equal Exchange and a few alternative trading partners decided to take part in a new challenge–building an alternative banana supply chain direct from small farmers–I confess that I was elated. (Read more about Equal Exchange’s role in our 2010 Annual Report, on pages 10 and 13.) Others were more skeptical. What was a Fair Trade coffee company doing getting mixed up in produce? What did Equal Exchange know about perishable fruit, ripening facilities, and the nature of the fast-turnarounds and tiny margins of the banana industry? We consulted with a lot of people and got a lot of advice; trying to building an alternative to Dole and Chiquita would be a Herculean task. Still, no one wanted Equal Exchange to succeed in this endeavor more than I did.

An Alternative Model in Northern Peru

Jessica, Nicole and Bradley negotiating a contract with Jorge Nunjar Domador

In March, I traveled with the banana team to learn more about APOQ and CEPIBO, our two newest co-op partners with 1,500 small farmer members between them. We spent a week getting to know their organizations, business and farming practices, and packing techniques. We met with their boards, talked with their members, toured their farms and packing facilities, and visited the port in Paita, where they ship their bananas.

Supply is down this year and we can’t get enough bananas to provide our customers. So even if we manage to convince food co-ops, and other progressive stores, to purchase small farmer, Fair Trade bananas rather than those coming from companies such as Dole and Chiquita, it is often hard for us to get the supply we need. We learned why it’s particularly hard right now;  unseasonable droughts and other unusual weather patterns are affecting the harvests. “Whether you choose to believe in climate change or not, it is real and it is affecting us,” said Donald Lecarnaque Castro, President of CEPIBO’s board of directors. In the fall of 2010, when average temperatures should have been in the mid 80s, they dropped to all-time lows. The farmers kept waiting for the temperatures to normalize, but the warm spring weather never came. Instead, it went from extremely cold to unseasonably hot. Temperatures hovered around 100 degrees during our visit.

Northern Peru is now suffering from an unusual and very severe drought. Farmers in the Chirra Valley are dependent on their water from a nearby reservoir the government built several decades ago.  Without the usual rains, dam authorities are rationing water. Bananas need water every 15 days, but now they can only be irrigated once a month. As a result, this year’s harvest has been unpredictable and limited. Supply is low, demand is high, and the competition has been brutal.

Despite these market tensions, the two co-operatives are doing some amazing work. The extra dollar per case of bananas that they receive as part of the Fair Trade premium has gone to fund social projects in their communities, such as youth scholarships, health insurance, and social “safety nets”. They have also used the premiums to make production and commercial improvements on the farms and at the packing stations. Fair Trade brings in extra money and the farmer co-op members vote on how to spend it. Investing in their business and in their communities are their two priorities.

Most impressive was a cable system CEPIBO has installed in three communities. For years, farmers would cut down a 100-pound bunch of bananas, hoist it over their shoulder, and carry it long distances from their farms to the washing station. Now the cable runs through their farms and they simply hook up the bunch of bananas and the pulley carries it to its destination. One person can pull about thirty 100 pound bunches. This single infrastructure improvement has saved the farmers tremendous amounts of time and physical injuries. Plans are underway to install this system in many more communities; it was amazing to see how much progress they have already made.

The farmers take pride in their farms, quality control techniques, and export business. They were curious about the U.S. market and asked about our eating habits and preferences. What size banana do we prefer? How many bananas make the perfect bunch? Do our children eat them in school just as theirs do? How do we ripen them once they arrive? In the office, they showed us a large poster comparing the conventional supply chain chart (when they sold all their bananas to Dole) to their current model. CEPIBO’s General Manager, José Maria Lecarnaqué Castro told us, “We’ve reduced that chain by one link. Because now we’re not just the service provider, we’re also the exporter.”

APOQ packing station

These are small farmers with an average farm size about 2.5 acres. But these farms are theirs. The bananas are theirs. And now, the entire business is theirs. They make their own decisions. They grow organically, taking care to protect the quality of the fruit and the land. Many farmers also grow food for their own consumption; corn and beans and other fruit. At the end of the work day, they return home to their families and their communities. Life may not be easy, but it’s integrated and healthy.

This was quite the contrast to what I experienced in Costa Rica in 1989. Bananas were the principle economic activity in the region, and Dole and Chiquita plantations were everywhere. The plantations were lined with endless rows of banana plants, and off in a corner, matchbox housing for the workers. Monoculture, dirt roads and wooden housing prevailed; trees, gardens, and parks were rare. Some workers brought their families, but mostly, the plantations were filled with single men; workers with nothing else to do. Volumes have been written about the social alienation of banana plantation workers, and the drinking, prostitution, and related violence that fills the void. Between the ever-present smell of pesticides and over-ripe bananas, and the dreary, institutional-like atmosphere, banana plantations were nothing less than depressing. Not a place one would want to spend a lot of time, given the choice.

The economy of Limon was dictated by the banana industry, and the industry was controlled by Dole and Chiquita, everything from the workers’ salaries; products at the company stores and their prices; housing and its costs; availability of education and health services; all the way to the ownership of the railroad and shipping lines. The farmers in the community where I lived were the lucky ones. They didn’t live on the plantations; they just went there every morning to work. Still, no one in the community really knew each other as they’d all migrated from other parts of the country solely to work on the plantations.

I experienced an overriding sense of despair and fatality. There was no individual motivation or collective vision to develop their community or transform their lives: just a lot of poverty, alienation and frustration. Don’t plant a garden because someone will come along and steal the vegetables. Don’t raise chickens because they’ll probably just die. Don’t go near the plantations after dark. Don’t walk alone on the roads, especially on a Friday night. Fridays are paydays; and all-night drinking, machete brawls, rape, domestic and other forms of violence were a daily part of life’s fabric. It was depressing. When I learned that the government had evacuated the families, it didn’t surprise, or particularly sadden me. There didn’t seem that much to mourn.

Small Banana Farmer Co-ops and Dole

The banana farmers we met in Piura, Peru, and the reality of their lives and level of investment in their businesses, co-op organizations, and communities, could not have felt any different. Unlike Central America, where Dole and Chiquita have been around for half a century, Dole only entered Chira Valley in 2001. Thanks to a government agrarian reform program tied to the dam project, farmers now owned small parcels of land and were growing bananas and other produce for the local market. With their own land, and fruit to sell, the relationship between Dole and the Peruvian farmers was different from the outset. Dole provided training and technical assistance to the farmers to improve the fruit quality for export. The company installed washing stations and packing facilities. The relationship was straightforward: the farmers produced and Dole took care of the rest.

CEPIBO - AMPBAO Association

Things went well for a while. But the farmers had an alternative vision. Many were already working in co-operatives and they heard about Fair Trade, with its higher prices, social premiums, and direct relationships. There was a demand for organic, Fair Trade bananas in Europe and the prices were better selling direct. The farmers already knew how to produce high quality, organic bananas. Why couldn’t they also handle the washing and packing? Form their own relationships with international buyers and sell directly? Why shouldn’t they own and manage the entire business themselves?

“It wasn’t that we necessarily wanted to compete with Dole; we just wanted to export some of our bananas on our own,” Jorge Nunjar Domador said. CEPIBO and APOQ saw the Fair Trade co-op model as a way to help farmers stay organized and empowered and they wanted to give it a try. Dole wasn’t so enthusiastic. The company had invested money in infrastructure and wasn’t interested in letting go of control or in competing with small farmer organizations. By the late 2000s, both APOQ and CEPIBO had succeeded; they were managing their entire businesses and were exporting directly to the European market. Dole responded by cementing the wells they had dug and ripping out their packing stations.

Now at the table for the first time, small farmer co-ops were forming direct relationships and negotiating prices with their buyers. Certified organic and Fair Trade, the bananas brought in additional premiums which the co-ops invested in social programs and business improvements: they built new washing and packing stations; CEPIBO installed the cable system; APOQ bought its own administration building. Both organizations hired agronomists, accountants and other staff to help run the businesses. They were creating jobs, making business decisions, planning for the future. For small farmers, this opportunity to invest, make profits, and grow their businesses as they see fit, is true economic, social, and political development.

Small Farmer Bananas Enter the U.S. Market

In 2009, Equal Exchange was buying five containers a week from El Guabo, a small farmer co-operative in Ecuador, and supplying bananas to a handful of food co-operatives and grocery stores in the U.S. But due to the temporary suspension of its organic certification, El Guabo had to dramatically reduce its sales volume. Apparently, a plantation located near El Guabo’s farms was aerially spraying pesticides and the winds had carried them over some of El Guabo’s farms. When organic certifiers tested their bananas and detected traces of the pesticides, they suspended the co-op’s certification.

It was a difficult moment: after slowly and painfully building up a demand for small farmer bananas and a clientele committed to carrying them, we suddenly couldn’t get enough supply. Our search for new partners led us to APOQ and CEPIBO, two organizations that share our political vision and social mission and had come highly recommended through friends at CEPICAFE, a small farmer coffee co-op and long-standing partner also located in Piura. By the fall of 2010, both co-operatives were selling us bananas. Our supply worries were diminished and the co-ops were thrilled to enter the U.S. market.

The Battle is Being Fought in Northern Peru

Today, the panorama is shifting once again. Rains in Colombia, excessive flooding in Guatemala and Honduras, and organic certification issues in Ecuador have all combined to create fierce competition for a limited supply of organic, Fair Trade bananas.  Dole has decided to regain its lost ground in Piura. While the company can no longer control the market by owning the entire supply chain, it is now attempting to regain supply by driving up prices. By consistently offering the farmers a price just higher than what the co-ops can afford to pay, Dole has the power to destabilize the market and eventually break the co-ops.

To make matters even worse, in search of supply, Chiquita is also trying to move into the Chira Valley. Dole and Chiquita have begun a price war between themselves and the fledgling co-ops are caught in the middle. While logic might have it that rising banana prices could only benefit small farmers, the additional pressure is pushing the co-ops to their breaking point. If the farmers sell their fruit outside their co-op, these organizations will eventually fold: Dole will regain its market dominance and soon be back in control. The farmers are smart enough to know that if that happens, today’s prices will not be in effect tomorrow.

What impact is this having? The co-operatives are losing some of their members who can’t resist the temptation to sell to the highest bidder. Already, one of CEPIBO’s twelve member associations has left the co-op to sell exclusively to Dole. We asked José Maria Lecarnaqué Castro, what he thought would happen and what the co-ops were doing to survive these predatory strategies. Jose told us that so far, most of their farmers have remained loyal to the co-op because they understand the motivations behind Dole’s seemingly generous offers. They also remember the differences between being a “supplier” and an “owner.”

“Dole offers higher prices and hand outs which they’ll drop once they regain market control,” José said. “But the co-op belongs to the farmers. We’ve made infrastructure improvements, built packing stations, and installed cables to improve our own business. The co-op provides technical assistance to the members. That translates to knowledge and knowledge is power. That’s more important to our members than today’s higher prices.”

His words were reassuring, but it was obvious that despite these truths, the co-ops are worried. They have reason to worry. We share their concern as well. While we were in Peru, the team negotiated new contracts with CEPIBO and APOQ, which included higher prices to help them compete. In the short time since our return, we have already learned that Dole has raised its prices twice more.We are trying to support our partners by doing what we can and our small margins are shrinking further; but there’s a limit and that moment seems imminent. We are now paying $2 more per case of organic, Fair Trade bananas; in the meantime on the grocery shelf, the price remains steadfast at $.99 a pound.

Predatory Practices: Buy High, Sell Low

But it’s not just in producing countries that the big companies play with the market. Here in the U.S., they are controlling demand by offering lower prices to retailers. Whatever the going price is for a pound of bananas, these companies offer theirs for a little bit less. So small farmer co-ops like CEPIBO and small, independent suppliers like Equal Exchange are both in similar positions: how does a business motivated by a social mission survive against a handful of multinational businesses that control the entire industry?

We can continue to pay higher prices to our farmer co-op partners to help them compete against the likes of Dole and Chiquita, but in the end, retailers and consumers will have to decide. How much do we value small farmers, co-operative organizations, independent suppliers, and their social missions? How important is an alternative supply chain where farmers and consumers have a choice? Are we willing to pay a higher price – one that reflects the true cost of a bunch of bananas – for that choice?

CEPIBO members loading our bananas at the packing station

What Can be Done?

Dole and Chiquita know that time is on their side. Farmer co-ops like CEPIBO and APOQ are trying to stay afloat, keep their members, and develop their communities. Oke USA and Equal Exchange are also trying to survive in a difficult, crazy industry where everything is going against them. Are retailers ready to take a risk and raise the price of organic, Fair Trade bananas? Are consumers ready to pay the true price for a bunch of bananas? That is the only way we can ever offer an alternative to the current system… otherwise we get a system which perpetuates the “bigger is better” mentality: no competition and no choice; not for farmers and not for consumers.

I know that a one-person boycott of Dole bananas will accomplish nothing, but I just can’t look the other way anymore. So yes, if I have no alternative, I will go without bananas. I also know that one store raising the price of bananas to support the efforts of independent suppliers, like Equal Exchange, and small farmer co-ops, like CEPIBO and APOQ, will also not change the system. In the absence of an organized movement for change, these single actions won’t accomplish much.

I’ve asked the representatives of CEPIBO and APOQ and the banana team at Oke USA/Equal Exchange what will it take?  These are powerful companies and no one has an answer, but we have a few ideas:

• Keep informed about the practices of Dole and Chiquita. Let others know about this issue.
• Ask your store to carry Equal Exchange bananas. Let them know you are willing to pay more for a pound of organic, Fair Trade bananas.
• Support stores that do offer small farmer bananas.

I hope that one day, Fair Trade bananas from small-scale farmers becomes a mainstream idea, and a household staple.  Like Cepibo and Apoq, we can learn to say “no, we won’t accept business-as-usual”.  The other alternative looming in front of us feels too sad to contemplate.