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Globalized Fruit, Local Entrepreneurs: How One Banana Exporting Country Achieved Worldwide Reach

Author(s):Southgate, Douglas
Roberts, Lois
Reviewer(s):Wiley, James

Published by EH.Net (October 2016)

Douglas Southgate and Lois Roberts, Globalized Fruit, Local Entrepreneurs: How One Banana Exporting Country Achieved Worldwide Reach. Philadelphia: University of Pennsylvania Press, 2016. viii + 219 pp. $60 (hardcover), ISBN: 978-0-8122-4807-4.

Reviewed for EH.Net by James Wiley, Department of Global Studies and Geography, Hofstra University.

Douglas Southgate, an emeritus professor of agricultural, environmental, and developmental economics at Ohio State University, and Lois Roberts, a former instructor of Latin American history and culture at the Naval Postgraduate School in Monterrey, California, waste no time in defining the purpose of their volume. In its introduction, they criticize the many previous academic books on the western hemisphere’s banana industries for their failure to distinguish the Ecuadorean model from those practiced to its north, especially in Central America. Instead, they suggest, Ecuador’s experience with that very important fruit is usually casually lumped together with those of other countries whose industries were dominated by one or another of the major U.S.-based fruit multinationals. They argue that Ecuador does not fit that model — that its banana industry has focused primarily upon independent growers. In this, they immediately carve out a niche missing in the literature that they wish to fulfill.

Why so much concern over the banana, a question often asked of those who do research into this industry? The banana is the world’s most important traded fresh fruit and vegetable (FFV) commodity by volume and ranks fifth among all traded agricultural goods after wheat, corn, soybeans, and barley. In tropical zones around the globe, hundreds of thousands of people earn their living in the industry, with several million others indirectly employed in the various ancillary activities that serve the industry and its workers. It is an industry whose growth could not have occurred until the development of refrigeration technologies during the 1870s, making it possible to transport such a highly perishable fruit over great distances. The banana trade increased dramatically around the turn of the last century, particularly after the creation of the United Fruit Company (today’s Chiquita), referred to throughout the book as El Pulpo, the Octopus, the name commonly used in the region during the heyday of the Banana Empire.

With their goal clearly established, the authors begin by offering a very abbreviated history of the banana industry elsewhere in the western hemisphere. Perhaps most significant among the characteristics of the early years of the industry was the evolution of the system of vertical integration by El Pulpo and its competitors where they existed. This was necessary to coordinate the various stages of an industry in which the timing was of the utmost importance. Thus, the ability of one firm, through a variety of subsidiaries, to control production (usually in the form of monoculture plantations), the harvest, transport to local ports in the growing regions, shipping to consuming  countries (mostly in temperate regions), and internal transport there to reach widely dispersed retail outlets is absolutely essential to having the fruit arrive to its ultimate consumers in edible form. This array of activities lies beyond the capacity of small-to-medium banana growers to accomplish, creating openings for large multinational corporations.

After offering this basic understanding of the requirements of bananas, the authors proceed to develop an historical geographic profile of the industry in Ecuador from its origins, paying particular attention to those factors that distinguish it from those in neighboring countries. This effort covers multiple chapters and represents both the greatest strength of the book and its primary contribution to the body of literature on FFV commodities. Foremost among Ecuador’s distinctive characteristics is the prior existence of an important port city, Guayaquil (now the country’s largest city). Guayaquil has played a significant role from the colonial period on and, in the process, fostered the development of entrepreneurial skills of many of its residents. These were largely in place by the time bananas became a major export commodity for the country in the 1950s. The city spawned several entrepreneurs who would be instrumental in the development of the banana industry. The most notable among these was Luis Noboa. His story, recounted at length throughout the book, was a classic rags-to-riches tale of a driven man who became Ecuador’s wealthiest man and whose firm ultimately became its largest banana trading company (and the fourth largest in the world). The Central American exporting countries did not have anything or anyone to equal these advantages, rendering them much more dependent upon the major fruit transnationals than was necessary in Ecuador. The existence of such a city was also a critical factor behind the absence in Ecuador of the kind of banana monopolies that existed to its north. From its inception, the Ecuadorean banana industry was characterized by multiple firms and numerous growers, a situation that was advanced by proactive government policy, one of the few instances in the book when government activity was presented in a positive light. While foreign corporations including El Pulpo did operate there, they were never able to achieve the dominance than characterized their operations in Central America.

Ecuador’s many assets for having a successful industry are also identified. It has optimal soils for growing the fruit, an appropriate and relatively storm-free climate (bananas are easily damaged by strong winds), and an ample labor force already living in the lowland regions that would become the country’s banana zones. In addition, it had just experienced the failure of its prior primary export crop, cacao, adding some urgency to the interest in switching to bananas on the part of many farmers.

Another unique dimension of the Ecuadorean industry is its relatively late beginning. The country’s location on the west coast of South America had been the biggest deterrent to the successful export of the fruit prior to 1914 when the Panama Canal opened. While Colombia and Central American exporters all had Caribbean coasts through which their exports could pass, Ecuador’s trading links to Europe and most of North America involved an arduous voyage around the southern tip of the continent. The canal alleviated that necessity and, while adding on the expense of the canal toll, it allowed Ecuadorean bananas to be competitive in foreign markets. The country first attempted to develop a banana export industry in the 1930s but the Great Depression and the ensuing world war caused major reductions in global demand for the fruit. Instead, the industry got its real start in the late 1940s and took off during the first half of the following decade when Ecuador became the world’s leading exporter of the fruit, a position it continues to occupy. The late start actually worked to its benefit as it was able to learn from the problems confronted by its competitors in the region to its north. That helped both its entrepreneurs and its government make better choices, while also taking advantage of the U.S. Consent Decree of 1958, an anti-monopoly measure that required United Fruit to divest many of its landholdings in Latin America.

The volume has two, related, areas of weakness. Its analyses of government policies both in Ecuador and elsewhere were not balanced. A very clear bias exists, particularly in the latter chapters, in favor of neoliberal policies (a term that the authors unabashedly criticized as favored by “Latin American leftists” though its use extends beyond that) and against the efforts of any left-of-center governments. Related to this, the other weakness involve the unbalanced analyses of Latin America’s stages of economic nationalism (a term that does not even appear in the book) and the contemporary stage of globalization and neoliberalism. The former is criticized for its principal development strategy, Import Substitution Industrialization (ISI). While that strategy did certainly create several problems, it was also responsible for more positive results, including the first real industrialization of the region, the enhanced abilities of governments (especially in Central America) to confront the large multinational fruit companies, the sizeable expansion of what had been just a fledgling middle class, and the urbanization and modernization of many regions within each country. The treatment of the current stage is quite positive by comparison, with no mention of how Ecuador’s banana industry is often criticized abroad, including by many foreign governments, for having “won” the “race to the bottom” through achieving its competitive advantage by paying the lowest wages in the industry. A more balanced approach to these subjects would have enhanced the book significantly.

Overall, the volume represents a worthwhile contribution to the literature. It addresses the need for a comprehensive treatment of the world’s largest banana producer. As writers of books about individual commodities know, it is often impossible for authors to investigate all of the national industries, but it is surprising that Ecuador has not received greater attention. With this work, Southgate and Roberts have helped to fill this gap.

James Wiley has authored several articles and one book on the banana industry, focusing upon the so-called banana war of the 1990s and the early 2000s involving Latin America, the Caribbean, the European Union, and the United States. His book The Banana: Empires, Trade Wars, and Globalization was published by the University of Nebraska Press in 2008.

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Subject(s):Business History
International and Domestic Trade and Relations
Geographic Area(s):Latin America, incl. Mexico and the Caribbean
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII