Why The Banana Business Of Chiquita And Dole Is At Risk

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Why The Banana Business Of Chiquita And Dole Is At Risk

Americans love bananas We eat more of them than any other fruit We even bicker about the proper way to eat them It’s not brown Yes, what is that color? Oh, that crunch right there This banana did the same thing! No Basically, we’ve gone bananas for bananas Specifically, we like this banana: the Cavendish There are hundreds of varieties of bananas, but the Cavendish is the only one widely available in the U.S In 2018 alone, the U.S imported about 2.2 billion dollars worth of the Cavendish, or about 10.5 billion pounds But there’s a problem A deadly fungus that targets the Cavendish is spreading around the world The fungus and the disease it causes go by a few names, most often Tropical Race 4 or TR4 and Panama disease But whatever you call it, the result is the same. The fungus actually infects through the roots, gets into what’s known as the corm, which is the big bulb at the bottom, and then gets into the vascular tissue The first symptom is usually a very characteristic yellow leaf, just one leaf Very quickly after that, the plant dies Bang Bang indeed It hasn’t yet arrived in Latin America, the region that supplies the U.S with 97 percent of its bananas But experts agree that it’s only a matter of time It has spread across oceans, two continents And, if you look at them ap, it’s coming to Latin America. There’s no question about that All it takes is one person to transfer this on their shoes, and then we’ve got an epidemic and it’s going to sweep through the American production system like fire This is troubling news for banana fans and for the three American companies that dominate global banana sales. As of each company’s most recent public filing, bananas comprised significant portions of their sales But the worst part? We can’t stop it We know this because Panama disease has already destroyed the banana industry once before Bananas are, like, the most boring, mundane objects on Earth. Like, it’s just a banana This is Dan Koeppel, author of this book about bananas. Yet behind the banana is this amazing, fascinating history It’s like science, it’s culture, it’s it’s bloodshed, it’s murder, it’s music, it’s everything We’ll get to all that But let’s start here U.S. imports the second largest number of bananas, behind the European Union But banana agriculture barely exists in either place: a dwindling amount in Hawaii and a moderate amount in the Canary Islands To understand bananas improbable domination, we have to go back to the beginning Bananas were first cultivated here on this tiny island 3000 years ago They migrated with humans across Asia, the Middle East, and Africa, becoming a staple everywhere they went. Arabic and European scholars even bickered over whether the famous fruit that tempted Eve was not an apple, but a banana Bananas arrived in the Americas in 1516, when a Spanish priest brought them from the Canary Islands to the Dominican Republic From there, they spread throughout the rest of the Caribbean Bananas are fragile and rot within a week of being picked In the early half of the 19th century, the small amount that managed to make it to the U.S were sold as an expensive luxury food But after the Civil War, bananas became a huge craze Between 1871 and 1901, the value of the bananas imported to the U.S increased from $250,000 to $6.5 million And in the 10 years after that, U.S consumption of bananas nearly tripled from 15 million to 40 million bunches So many banana ships arrived at these docks on Manhattan’s Lower East Side that they became known as the ‘banana docks’ This shift is thanks to these three entrepreneurs By 1899, they had formed a banana importing business called United Fruit Company That might not sound familiar, but its modern name will: Chiquita But back then, it was United Fruit and it was huge So huge that it gained the nickname ‘El Pulpo,’ or ‘the octopus,’ for the stranglehold it developed on Central America So huge that the U.S government repeatedly brought antitrust action against it. So huge that understanding bananas in the first half of the 20th century means understanding United Fruit United Fruit’s business model relied on economies of scale I mean the banana really is an impossible export fruit I mean, it’s fragile, it ripens quickly, it gets rotten fast And the way to do it is to make it so cheap that your money is made on volume Keeping the retail price low meant keeping the costs to produce those bananas very low But transporting a delicate tropical fruit across thick jungles or hurricane-stricken oceans was not a

recipe for rock-bottom production costs United Fruit managed this by tightly controlling every aspect of the supply chain First, United Fruit acquired huge swaths of land in Latin America In exchange, they constructed railroads and telegraph lines — infrastructure that locals could use, but that remained under company control During the heyday of its operations, it was generally the largest landowner in any of these countries At one point, it controlled almost 20 percent of all arable land in Guatemala for example Second, United Fruit squashed competition with price wars or buyouts, becoming a virtual monopoly by the early 20th century The U.S government brought antitrust lawsuits against United Fruit multiple times In 1909, the government forced the company to sell the 50 percent of shares it owned of one of its last remaining competitors The company’s previous owners regained control and later renamed their business Standard Fruit Remember that name It later became Dole But the most controversial aspect of United Foods early history was its treatment of local plantation workers In order to produce bananas very profitably, you have to keep the wages extremely low And so the plantations historically have resorted to extremely repressive labor conditions in order to suppress wages Workers often protested these conditions, but United Fruit took drastic measures to squash rebellion Measures that often involved military action, either from local governments or from the U.S itself. In 1928, workers from United Fruit plantations in Colombia went on strike United Fruit encouraged the government of Colombia to suppress the strike That December, the workers were told they could meet with the regional governor in the town square to discuss their demands Instead, the Colombian army mounted machine gun nests in all the surrounding buildings and gunned down, it’s estimated, up to 3000 civilians in cold blood, including many women and children and elderly people And so the national governments were the ones who were mainly involved in the suppression of strikes, but they were acting very much at the behest of United Fruit And when local governments couldn’t or wouldn’t step in, the U.S itself did [Newscaster] Dateline Nicaragua, 1926 In a moment, the story The U.S Marines landed repeatedly in Central America The U.S government was determined to prevent any sort of communism from taking hold in the Americas When banana workers on United Fruit plantations protested for unions or rights, it raised fears of Communism. Fears that many historians argue were more of a convenient excuse than a legitimate threat The accusation always flung at union organizers or human rights activists was that they were acting under communist auspices It was a very convenient way of dismissing those movements and rationalizing extreme political and military measures against them They sort of lost sight of the fact that they were a banana company and not sort of the political communications arm of the anti-Communist campaign I mean, it sounds crazy but it’s really true Perhaps the most notorious example is that of Jacobo Árbenz. In 1950, Árbenz won the presidency in Guatemala on a promise to redistribute unused United Fruit land to poor Guatemalans The company sounded the alarm, which quickly reached the White House thanks to a few well-placed company executives Allen Dulles, who was a lawyer who worked for United Fruit and a board member of United Fruit, was the brother of John Foster Dulles, who was the secretary of state in the Eisenhower administration And so when United Fruit perceived its interests to be threatened in Guatemala, there was a direct communication of that threat from United Fruit’s managers on the ground in Guatemala to Allen Dulles, in turn to his brother, in turn to President Eisenhower, who then directed the CIA to lead a disinformation and destabilization campaign against Árbenz — one which resulted in his being overthrown and exiled and which ushered in literally two generations of military governments, extremely repressive governments in Guatemala United Fruit called this a ‘decidedly favorable development’ in its 1954 annual report Chiquita declined to comment on these allegations However, in 2001, the company released a corporate social responsibility report that acknowledged allegations of the company’s participation in the Árbenz coup and other events They noted that ‘this casts a shadow even today over the company,’ but that ‘times have changed and so has our company.’ If this seems like a lot of work for bananas, that’s because it was But back in the U.S., they

were becoming an extremely popular snack The American public was largely unaware of United Fruit’s tactics abroad But at home, they fell in love with bananas thanks to the company’s extensive advertising efforts To name just a few: in 1924, the company added coupons for bananas to boxes of cornflakes to encourage consumers to eat the fruit with cereal In 1939, the company distributed free textbooks to grade schools filled, of course, with information on bananas. In 1944, they unveiled their most iconic marketing success Miss Chiquita The big question is why Like, Andrew Preston, the founder of United Fruit, what made him think this like easily rotten, expensive to ship, weird-looking fruit could be sold for almost nothing to people who didn’t know what it was, how to eat it? That weird-looking fruit was gold for United Fruit In 1920, the company had net profits of 33 million dollars, or about 419 million in 2019 dollars I mean, it was just just a miracle A miracle that was bought obviously in blood and horror. But it was absolute marketing genius, there’s no question about it In short, bananas kicked off lawsuits, advertising innovations, protests, coups, and violent suppression But these bananas were not today’s Cavendish These are Gros Michel bananas, a related species that is bigger and tougher than the Cavendish and with a slightly different taste They’re also the first banana rendered commercially extinct by Panama disease Before we get into that, some science Gros Michel bananas were all genetically identical The same is true of today’s Cavendish, which is why bananas look the same no matter where you buy them Business-wise, identical products are good Companies can standardize transport systems and cultivate loyalty and trust among consumers But biologically, they’re bad Monoculture is is always an issue in agriculture The problem is that if you’re growing all the same material, all of these are going to be susceptible to the same disease So when the deadly fungus first appeared in Panama in 1903, it made short work of United and Standard Fruit’s products Over the next 57 years, Panama disease wiped out virtually every Gros Michel plantation in Latin America. Both Standard and United Fruit knew of the disease since the early 1900s, but they dealt with it differently. United Fruit clung to the Gros Michel, hoping it could outrun the disease by starting new plantations on fresh land Demand for bananas was skyrocketing, but the ability to grow bananas in South and Central America was declining. The disease was actually creating this avaricious need for land That method only worked for so long By the early 1920s, banana shortages were such a noticeable problem that musicians Frank Silver and Irving Cohn wrote this hit song, in which a fruit stand vendor repeatedly informs his customers that he’s out of bananas By the 1950s, the Gros Michel’s future looked grim Even the strategy of stealing land as the disease was chasing was, was running out of gas because there was not enough land to meet the demand for bananas United Fruit went into freefall From 1950 to 1960, annual revenue fell from 66 million to 2.1 million. Meanwhile, Standard Fruit couldn’t afford to constantly buy new land So in the late 1920s, it began searching for a banana with the taste, look, and resistance to Panama disease to replace the dying Gros Michel It eventually landed on, you guessed it, the Cavendish Standard Fruit grew the first commercial Cavendish in 1953 on a plantation in Honduras It spent the rest of the decade figuring out how to transport them Cavendish is very fragile Gros Michel was never shipped in boxes, it was just thrown in bunches into ships But by boxing them and using gas to preserve it, to keep their ripening in check, they were able to ship this and grow them at low prices This put Standard Fruit leagues ahead of United Fruit when the latter finally adopted the Cavendish in the early 1960s In that time, just that 10-year span, Standard Fruit, which became Dole, had managed to get a 50 percent market share So Chiquita never really recovered, to this day Other than Chiquita’s decline, the switch to the Cavendish went smoothly enough Nearly 60 years later, most Americans happily consume the Cavendish, unaware of its lost predecessor For the next few decades, the industry hummed along much as it had before, just with a different banana Standard Fruit became Dole and United Fruit became Chiquita. Together with Del Monte and the Irish-based company Fyffes, they dominated global banana exports, controlling two-thirds in the 1980s

But the many problems faced by banana workers continued, more than can be detailed here Notably, in 2007 Chiquita admitted to paying a violent Colombian terrorist group to protect its banana workers from 1997 to 2004 And in the mid-1990s, Chiquita kicked off a trade war with the European Union over its legislation that favored bananas from former EU colonies Chiquita lobbied the U.S government to file a complaint with the newly-formed World Trade Organization The ensuing trade war, called ‘the worst trans-Atlantic economic dispute since World War Two’ by a 2005 Harvard Business Review article, dragged on until 2012 Even with all this, nothing changed for American consumers. Bananas reliably appeared on supermarket shelves around the nation for dirt-cheap prices — an average of about 55 cents per pound since 2000 But this brings us back to the beginning of this video: Panama disease In the 1980s, the banana industry’s old foe reappeared Banana biologist Randy Ploetz first identified it in the early 1990s Basically, what started this whole thing going was that there was a mindset in Southeast Asia, In Indonesia in particular, in Malaysia, that they can make money growing these huge monocultures of Cavendish for the first time When they first started doing this, they started succumbing to Fusarium Wilt It was like, whoa, what’s going on there? The strain of the fungus that wiped out the Gros Michel was called Tropical Race 1, or TR1 Cavendish is immune to that But it isn’t immune to a different strain of the same fungus: Tropical Race 4, or TR4 Think of them like different strains of the flu It was very much a surprise People thought Panama disease would not be a problem on Cavendish anymore, and lo and behold it is Quarantine efforts contained the fungus in Southeast Asia for a while, but it soon spread Historically, this has never been a really great strategy I mean if you’ve ever been to a banana plantation, there’s thousands of vehicles going in and out all day long. There’s there’s no effective quarantine method that we’ve ever seen that really works For now, Latin America is safe It’s oceans away from the fungus But experts agree that the fungus’ arrival is a matter of when, not if Hopefully it’ll take many, many years but it could happen tomorrow There’s no way to really put a timeline on this Part of the danger is due to how the industry has changed. The giant, corporate-owned banana plantations of the Gros Michel era have been replaced by many more exporters operating on much smaller plots of land In Ecuador, for instance, the number of registered banana exporters jumped from 181 in 2011 to 333 in 2012 Experts worry that the logistics of implementing protective measures across so many plantations will allow Panama disease to spread rapidly It’s very difficult to make a thousand different family farms do clean farming compared to one big factory farm I think what’s possible is that someone’s going to get it in their field and they’re going to keep it a secret and not let people know And that would be a disaster. Because once it gets in the waterways, in the soil, that sort of thing, it spreads in kind of an insidious manner And this time, there’s no readily available replacement. No known banana has the correct taste or durability They dodged the bullet in the 1950s by identifying a variety, Cavendish I think if there was something out there, they would’ve found it by now I know they’ve put a lot of effort into screening material and looking at material and so far they don’t have a replacement Even if they did, the entire infrastructure network for transporting bananas would have to be replaced once again The entire banana supply chain, from the moment the plantlet is planted in the ground to the moment you start to peel it, is designed just for the Cavendish banana. It’s almost as though a Cavendish-shaped pipe from Central America comes to your house and it doesn’t really fit another banana This could explain why, until recently the big three banana companies seemed unwilling to recognize the problem I think they’re still not quite cognizant of the fact that they’ve got the same problem happening again CNBC reached out to Dole, Fresh Del Monte, and Chiquita for comment A Fresh Del Montespokesperson wrote that: A Dole spokesperson wrote: Chiquita declinedto comment Breeding a Panama resistant Cavendish, traditionally or by genetic modification, is likely the best hope for the banana’s future But each has their drawbacks Traditional cross-breeding of Cavendish bananas is difficult because of their tiny seeds

People have been selecting bananas for thousands and thousands of years based on seedlessness No one particularly wants seeds in their bananas And now we have some residual fertility in it, but it’s very difficult to produce seeds in bananas Genetically modifying bananas has proven more successful. In 2015, Australian researcher James Dale engineered a Panama-resistant Cavendish banana We’ve taken a resistance gene from a wild banana that occurs in Southeast Asia and is naturally resistant to Tropical Race 4 We’ve moved that gene into Cavendish That’s how we’ve generated resistance But any genetically-modified banana will face strong resistance from anti-GMO groups in both the U.S. and the EU But the Cavendish is more important, both for global economies and food security, than the Gros Michel ever was In 2013, the World Banana Forum under the United Nations created a task force specifically to combat Panama disease And demand continues to rise From 2017 to 2018, global imports of bananas increased by 2 percent to over 40.3 billion pounds, a record level Over a quarter of that went to the U.S But if Panama disease takes hold in Latin America, it will decimate the industry Cavendish could no longer grow in the quantities needed to satisfy the world’s, and especially the U.S.’s, love of bananas It may already be there and we’re just not aware of it But once it’s there, it’s kind of a ‘horse is out of the barn’ type thing