Page 46 - Ecuador's Banana Sector under Climate Change

ecuador’s banana sector under climate change: an economic and biophysical assessment to promote a sustainable and climate-compatible strategy
(FAO, 2003). Controlled atmosphere in ships (reefer boats) began in the early 1990s, and computerized systems for monitoring atmospheric conditions were introduced in the late 1990s. These developments, plus the introduction of
a ripening process with ethylene, made it possible to transport green (latent) bananas and allow for the delivery of a fully ripe fruit at the point of sale (FAO, 2003).
A further technological innovation was the introduction of refrigerated containers, which allow farmers to harvest on a continuous basis - as opposed to ship’s days - and reduce handling costs at port. Pallets are increasingly being used in container shipping, as these can accelerate downloading and save on distribution costs by allowing loads to be divided into smaller units (FAO, 2003). In Ecuador, the use of containers has increased from 20 percent in 2007 to
80 percent in 2012 (LACENA).
3.4 Retailers
The increasing use of multimedia and the Internet has had a transformative effect on the food system, in general, vastly improving supply chain logistics, including facilitating the drawing up of contracts and speeding up access to market information. These innovations have contributed to lower communication and transaction costs. They have also facilitated the arbitrage of prices and loosened the vertical integration of MNCs, prompting a market power shift towards
the retail sector, which has gained in concentration through the rise of the supermarket. Supermarkets have taken on a more dominant role in leading global food value chains, including that of the banana.
The shift in market power from MNCs to the retail food sector during the 1990s has transformed global bananas into “buyer driven chains”. These new market leaders (supermarkets) began to set the rules, based on a horizontally coordinated market structure which is regulated by standards and norms. Contractual arrangements with suppliers define the conditions for production
and distribution of bananas without direct ownership (Roquigny et al., 2008). Under this new market structure, supermarkets now impose specific product requirements (origin, class, size and packaging) that suppliers must adhere to and bear the full cost for. MNCs also have changed their banana supply strategies
by initiating long-term supply contracts with independent medium- and large- scale producers. This has significantly undercut the role of MNCs, which have had to adjust accordingly by moving away from direct production control and by developing new strategies to reduce their risk exposure (e.g. weather conditions, political activism) and, at the same time, reduce their social obligations to plantation workers. By resorting to third-party suppliers through contracts, MNCs now manage to maintain a firm grip on production by setting the terms and conditions in their contracts with plantation owners and suppliers.5
The direct involvement of MNCs in the production process through company-owned plantations varies by country. They are still strongly present in Costa Rica, Honduras and Panama, but not in Ecuador
or Nicaragua, except for Dole Food Company, which maintains some production in Ecuador. MNCs have also diversified in other regions, notably in Africa and Asia, where they are present through joint
5
30