From plantation to retailer
The three big multinational banana companies and Noboa are integrated vertically up the chain. This means that they own or contract plantations, own sea transport and ripening facilities, and have their own distribution networks in consuming countries (above all in the United States). It gives them considerable economies of scale, and they can sell dollar bananas on the Northern markets at a very low price. They tend to repatriate profits to their countries of origin. According to figures from the French research institute CIRAD, only 12% of the final retail price stays in the producing countries. An even smaller proportion goes to small farmers (5-7 per cent) or to plantation workers (1-3 per cent).
The combined market share of the top three companies was at its highest in the 1980’s, when they controlled almost
two thirds (65.3%) of global banana exports2, and the share has gradually declined since. In 2013, the market share of the top three companies was slightly over one third (36.6%) and the share of the top five companies was 44.4%, down from 70% in 2002. As a consequence, other companies now account for over half of all exports.
In recent years, these big companies have tried, as a general rule, to free themselves of direct ownership of plantations, in favour of guaranteed supply contracts with medium- and large-scale producers in the countries where they operate. Amongst other benefits, it allows the Northern-based companies' headquarters to shift responsibility for labour and environmental conditions onto local producers.
Some national growers’ companies are also present on the international market: Reybanpac/Favorita in Ecuador, Caribana and Acon Group in Costa Rica, Uniban/Turbana and Banacol in Colombia. Most of these companies sell their fruit to the big multinational companies, but in some cases they sell directly to the retailer.
The practices of the big banana companies (both national and multinational) do not vary substantially from company to company, although some have shown a more serious approach to ethical, social and environmental issues in recent years. However, the economic reality of the current ‘race to the bottom’ means that the business of producing large amounts of cheap, unblemished bananas favours very intensive methods of production requiring large volumes of chemicals (second only in quantity used to the cotton industry).
In recent years the power along the supply chain has however shifted towards the retailers. The multinationals still have enormous responsibility for and influence over labour standards on the plantations that they directly own or source from. However, the retailers - who control the grocery sector in import countries - are increasingly dominating the supply chain. Read more about the increasing power of big retailers.