Page 48 - 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
producers must step up to an internal regulatory system as a prerequisite to qualify for organic certification as a producer group. Only a percentage of certified producers (10-20 percent) are inspected. This form of quality control is very similar to the ones applied by exporters for conventional bananas. Moreover, producer organizations cannot select their certification agency; this is usually imposed on the exporter (buyer) of the organic banana. As a consequence,
it is not unusual for producers and their organizations to be regulated by
several certifiers if they supply different buyers, thus adding to producer costs (Roquigny et al., 2008).
Despite the Fairtrade certification and the premium price for fair trade and organic bananas, the retail sector approaches alternative banana value chain (fair trade or organic) with the same strategies and requirements as they do in relation to the conventional banana value chain. The retail chains decide the type, shape and quantity of conventional, organic and fair trade bananas they wish to sell. Although organic and Fairtrade certifications may encourage the establishment
of long-term contracts and relationships between importers and producers, importers usually adopt the same strategies and apply the price criterion as much as they do on the conventional banana value chain (Roquigny et al., 2008).
3.5 The impact of market power on the banana value chain
Given the market dominance of the global banana chain by the retail sector and the ability of the retail sector to establish the rules for the supply chain, it is not surprising that the value distribution becomes distorted and slants towards the retail end of the chain. Furthermore, since bananas are not transformed after harvest, it is easy to analyse the value distribution unencumbered by processing considerations and value addition. This uneven value distribution between the key chain players has been consistently demonstrated in various analyses and market surveys.
Chambron (2000) reported the return value along the banana value chain
for conventional bananas in the Dominican Republic and Ecuador, showing
that workers receive only 1-3 percent of final value in medium- to large-scale plantations (Figure 11) while producers receive 7-10 percent. On the other hand, the retail/supermarket chains capture the largest share of total value - between 34 and 40 percent - while the rest is split between exporters, shippers and importers which, together, capture from one third to two fifths of the total value that is generated. Under this distribution, the share of the final banana price
that is captured within the producing country varies from 12 percent (Ecuador) to 25 percent (Dominican Republic). The larger share relating to the Dominican Republic reflects the absence of large MNCs and the limited role of vertical integration (Vorley, 2003).
This uneven distribution of banana value shares is fairly consistent across many studies. Roquigny et al. (2008) report that less than one fourth of the final banana price has remained in the Dominican Republic, with farmers receiving approximately 13 percent of the final retail value, while exporters and shippers secured 5 percent and 9 percent, respectively. A 2006 study on conventional bananas in Costa Rica, sold in the United Kingdom (Figure 12), shows the same
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