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Production Overview

AGRIBUSINESS AND CORPORATE STRATEGIES
IN THE BANANA EXPORT INDUSTRY

From the nineteenth century, the banana trade has basically connected tropical producing countries with northern hemisphere markets. Hence, sea transport has always been very important to the organisation of a banana exporting.

The earliest connections were from West Indian islands to Britain and France, and from the Caribbean coasts of Central and South America to the United States. The Caribbean region gave birth to organisations which have dominated the industry in the twentieth century.

By 1900, American shipping firms transporting bananas from Central America had merged into two large companies, United Fruit (of Boston) and Standard Fruit and Steamship Company (of New Orleans). These companies subsequently expanded into land ownership, banana production, development of transport links, ripening and wholesaling operations and were very early examples of agribusiness enterprises.

The term `banana republic' began to take on an additional meaning as the companies became involved in Central American politics to secure favourable conditions from governments under which to expand their control of banana production.

By 1948, United Fruit (now Chiquita Brands International) controlled three-quarters of world trade in bananas. This eventually caused the United States Government to force the company to sell its operations in some production regions, reducing its power to control the American market for bananas.

Dole, founded in Hawaii by American interests in the 1850s as a pineapple grower, later merged with Castle and Cooke Inc. This group took over Standard Fruit in 1968 to become second only to Chiquita as a producer and trader of bananas. In 1991, Castle and Cooke changed its name to Dole Food Company.

In the 1960s, Del Monte Company of California, a large fruit and vegetable processing firm, entered the banana industry by purchasing some of Chiquita's Central American operations. Since then, Chiquita, Dole and Del Monte have controlled between 60 and 70 per cent of world banana trade. The companies operate plantations in the major producing countries but also buy fruit from contract growers who may be locally-owned plantation companies or small-scale family farmers. Vertical integration extends along the production chain as TNCs operate refrigerated ships and control ripening and distributing companies in the major markets of Europe, North America and Japan.

Since the early 1990s, all three banana TNCs have diversified into fresh vegetables, fruits and cut flower production. In 1999, Dole passed Chiquita as the world's largest banana trader (25%–25% of world trade). Del Monte controlled 17% of the banana trade. Other large traders in 1999 were Irish-based fruit importer Fyffes Ltd, (the largest single banana importer into Europe, especially from former colonial territories in Africa and the Caribbean Islands) and Noboa a fast-growing Ecuadorian banana producer.