Opinion: "Latin Americanizing" the banana industry
By Banana Link international coordinator Alistair Smith
Taking the world's most famous banana brand into private Brazilian ownership is an historical step in a genuinely globalized industry that has never stood still. For better or for worse, the news that Chiquita's three divisions are now controlled by orange juice giant Cutrale and financial conglomerate Grupo Safra will lead to changes for the world's most traded fruit. From Garcia Marquéz' imaginary Macondo to the very real Cutrale heartland at Araraquara, the United Fruit Company's history has marked Latin America more than any other economic operator.
The news has implications for hundreds of thousands of people involved in producing Chiquita brand bananas. A quick look at history gives us a glimpse of the potential contradiction that this latest big step towards the "Latin Americanization" of the banana industry represents.
Exactly 50 years ago Gabriel Garcia Marquéz started penning "A Hundred Years of Solitude" with the bloody events of 1928 in his native northern Colombia resounding clearly in the novelist's imagination. Just three years later, in March 1968 José Cutrale Jr., the current owner's father, formed what was to become one of Brazil's most controversial agribusiness companies.
Today, Cutrale has a third of the world's orange juice trade and has just acquired (with Safra), apart from the large banana heritage, Chiquita Brands International's existing interests in pineapple and other juices. Cutrale also grows or trades apples, lemons, peaches and soya, and owns six juicing factories in Brazil, one in the U.S., eight port terminals and a one-sixth share in Coca Cola Brazil.
It is reported that the US$1.3 billion price tag for Cutrale and Safra - more than double the original bid last August - includes a compensation payment to Fyffes for losing the race to acquire Chiquita stock. What is less sure however, is where the new company will go in the near and longer-term future. A question which transcends the significance of any big numbers, though, is: what will the new owners and management do with the last much more positive 15 years of Chiquita's history?
Chiquita sources affirm that this corporate social responsibility (CSR) record and improving history of worker and trade union relations has been discussed with Cutrale and that the new company is likely to want to build on work done since its turbulent 100th birthday year in 1999. However, analysts including Banana Link and Latin American banana workers' union coordinating body COLSIBA are less reassured. We have concerns over the other part of the new venture's history which were expressed in this media back at the time of the first bid to trump Fyffes; a long series of cases against the company in the Brazilian justice system at local and state level concern orange workers' rights violations.
As recently as 2013, very substantial fines were handed out for 'collective moral damage' in a case brought by the Federal Public Prosecutor's Office for failure to provide migrant workers from other states of Brazil with transport back to their homes after the orange harvest in Sao Paolo state. Wages continue to be low and piece work is universal across the industry. Although the Brazilian national minimum has risen faster than inflation in recent years, it is still not a living wage. Attempts at unionization are regularly frustrated.
So, will the recent banana history of greater corporate responsibility prevail in the new venture? Or will the practices of Brazilian orange industry history turn out to be too financially attractive to abandon? The tide is turning in the global banana industry as the World Banana Forum's first five years start to show exciting results on a number of fronts. But will Cutrale and their financier colleagues see the advantage of turning some good CSR work into real game-changing moves across an important swathe of South and Central American agribusinesses?
Workers, consumers, governments and retailers, as well as industry competitors, will necessarily have a responsibility in how the next months and years of the Chiquita brand's history pan out, but the main responsibility falls to Chiquita's own employees - at the top, in the middle and at the bottom of the hierarchy - and to the political will of the new owners.
The signal from Cutrale in particular will also be watched and analysed very closely by many whose livelihoods depend on the scenarios now unfolding, but the orange juice king has a real golden opportunity to make good history. Many will be there to support such a process and build on Chiquita's leadership in setting up the ground-breaking World Banana Forum.