The Growth of the Banana Industry in Costa Rica and
Its Effect on Biodiversityananas and Development

Kendra Worobetz
Department of Biological Sciences
University of Alberta
ENCS 465, Dr. Wein
April 14, 2000

THE ISSUE OF BANANA PLANTATIONS

Throughout the world, habitats are being lost, degraded, destroyed, and natural biodiversity is in danger of being overexploited by the ever increasing demands placed upon them by our expanding and resource hungry population (Goss- Custard and Sutherland, 1993). Deforestation in the tropics, which has converted vast tracks of forest to agricultural lands, has caused a marked reduction in biodiversity (Rivera and Aide, 1998). Costa Rica, like many other developing countries, utilizes a heavy government interventionist approach to the management of its forest resources. The recipient of much international attention, due in part, to the richness of its biological resources and the relatively large emphasis given environmental concerns by the government, Costa Rica never the less possess the highest deforestation area in Central America (Gottfried et al., 1994). Originally Costa Rica was 99.8% covered by forests, these forests now cover less than one third of Costa Rica (Gottfried et al., 1994). It can therefore, be expected that forests which bear the marks of human influence will play an increasingly important role in species conservation (Jong, 1997).

Particularity in tropical communities like Costa Rica, where biodiversity must be preserved, but also where economic needs put considerable pressure on natural resources. In Costa Rica, forests are managed for economic interests therefore, maintaining a diverse forest with a large number of species is often considered contradictory to the principal goal of increasing returns (Jong, 1997). This is the case with most of the plantation development within Costa Rica.

Much of the deforestation in Costa Rica is largely, a result of banana plantation expansion, to make matters worse many of the sites for expansion are close to national parks, nature reserves, or conservation areas (Lead, 1996). This crop needs vast areas in which, plantations can be created this means that hectares of virgin forest must be cleared on a regular basis to support Costa Rica’s ever growing need for agricultural land. Primary and secondary forestland, in Palacios and Sarapiqui has been converted for exactly this reason (Lead, 1996). Therefore, this loss of forest in Costa Rica has caused an undeniable loss of biodiversity within and surrounding Costa Rica’s rain forest due to a conversion to a banana monoculture (Astorga, 1996).

THE HISTORY OF BANANAS IN COSTA RICA

Historically banana plantations have played an integral part in Costa Rica's economy. It all began in the 1880's when Minor C. Keith was commissioned to build a transnational railroad and in the process built a sprawling banana empire (Hernadez and Witter, 1996, Lead, 1996). The first banana plantation was created in 1872 and commercial export began in 1879. By1899, Minor Keith had merged with the Boston Fruit company to form The United Fruit Company. This company was to become well established throughout Central America within several countries, which were known, as the "banana republics". However, by 1956 the Costa Rican government had become concerned about the number of plantations, which had been developed and abandoned due to "Panama Disease" (a root fungus), not to mention the careless use of the countries natural resources by the United Fruit Company (Hernadez and Witter, 1996). It was with this government concern that the second era of banana production in Costa Rica began. At this point the government recruited the Standard Fruit Company (now Dole, a subsidiary of Castle and Cooke) who began purchasing small amounts of fruit from local growers. Unfortunately it was also at this point in time that the use of agro-chemicals was put into practice, with this came the use of large amounts of pesticides, fungicides, nematocides, (Astorga, 1996) and other chemicals, as well as other intensive field and processing management.

As of 1967 the United Fruit Company became known as the United Brands Company and the Chiquita label was introduced into Costa Rica. In 1968 another company, Del Monte, through it’s subsidiary, BANDECO, started producing and exporting from the Atlantic Zone. These three companies, Dole, Chiquita, and Del Monte are known as the "Big Three" in Costa Rica (McCracken, 1998). In 1985, Luis Alberto Monge’s administration issued the Banana Expansion Decree, which transformed the production and commercialization of bananas in Costa Rica (Emaus Forum, 1998). This decree brought in new transitional and national companies and began what was known as the ‘uncontrolled banana expansion". The magnitude of this process is evidenced by the fact that Costa Rica doubled its banana production in less than seven years to 103 million boxes in 1994 (Emaus Forum, 1998). As well by 1985 banana plantations had taken over 20, 000 hectares, which jumped to 32, 000 hectares in 1991, and by 1996 over 52, 000 (approximately 1% of the total land mass of the country) hectares were been cultivated as banana plantations (McCracken, 1998, Mortensen et al., 1998). However, it should be of great concern that of the recently expanded 32, 000 hectares thirty five percent of this was under forest cover at the time of purchase by the banana companies (Vargas, 1998)

THE ECONOMICS BEHIND BANANA PLANTATIONS

INTERNATIONAL BANANA TRADE

World banana trade is an important component of the world market for fruit second only to grapes, and has many unique characteristics due to the nature of the producers (mostly tropical developing countries) and the consumers (predominantly in the industrialized world). Many of the main banana exporting countries are highly dependent on a small number of basic agricultural commodities to generate a significant portion of their foreign exchange earnings (Lead, 1996). For example in 1986, four of the major Latin American exporting countries: Costa Rica, Ecuador, Honduras and Panama, earned more than 20% of their foreign exchange by exporting bananas. Therefore, the behavior of the international market has contributed as well as hindered the development of a group of countries that have been given the stereotyped name of "banana republics". Production and marketing of bananas are highly integrated and concentrated activities. Ten countries account for over 60% of the world production, while the top five produce over half of the world’s banana production. These are Brazil, India, Philippines, Ecuador and Colombia (Lead, 1996). However, only 15% of the world's total production is traded internationally. Seven countries (Ecuador, Costa Rica, Philippines, Colombia, Honduras, Panama and Guatemala) produce about 80% of the world’s banana exports. However, the two top producers of bananas (Brazil and India) do not figure among the top seven exporters (Lead, 1996).

The total share of production has shifted between different regions during the last three decades, with an increase for the Latin American and Asian producers vis-à-vis African and Caribbean producers, many of which are former European colonies and therefore, protected by the Lome Convention (World Development Movement, 1997). This is a critically important fact to understand some of the recent trends in market development, such as the decision by the European Economic Community (EEC) to impose quotas on Latin American banana exports starting in 1993 (Lead, 1996). At the beginning of the sixties, Central and South America accounted for 66% of exports and this figure rose recently to above 71%. Exports from the Philippines, which were insignificant in 1950, reached almost 12% three decades later. At the same time, African and Caribbean countries, as well as the rest of Asia, decreased from 34% at the beginning of the sixties to less than 20% today (Lead, 1996).

Imports are also highly concentrated, the United States, Canada and the European countries account for over 75% of world imports. The United States is also the major importer from Costa Rica. See table 1. This concentration partially explains the tight control over markets and distribution exercised by the three largest US multinationals: United Brands (now known as Chiquita Brands), Castle and Cooke (Dole), and Del Monte Corporation. These multinationals were used to commercialize the entire Central American production (excluding Nicaragua), as well as most that of Philippines, and some of Colombia and Ecuador (Lead, 1996). Five large corporations commercialize over three-quarters of banana imports, and the three largest account for over 60%. Chiquita, Del Monte, and Dole control maritime transport of their fruit as well as the distribution processes in the key markets. This vertical market integration gives these multinationals very high leverage with the producing and exporting countries, which are highly dependent on banana exports to generate badly needed foreign exchange (Lead, 1996).

Table 1.
Imports of Costa Rica bananas by major countries (1992)
(Source: CORBANA, 1993)

Table 2.
Costa Rica banana exports by company (in 1992)
(Source: CORBANA, 1993)

BANANAS IN COSTA RICA

Unfortunately in Costa Rica, both human wants and needs have prevailed, and the natural resources have proven to be exhaustible. This is due to the fact that the allocation of the of the benefits from the exploitation of the natural-resource base equitable among Costa Ricans or between the Costa Rican and transnational companies that exploit these resources (Hernandez and Witter, 1996). As of 1997 Costa Rica’s gross domestic product (GDP) stood at approximately $9.76 billion U.S. with agriculture contributing 22.4% of that total. Agricultural exports now average close to 59% of the countries total exports, with over 1044.4 million tones per year being exported to the U.S. (Committee on Commodity Problems, 1999). In total Costa Rica exports over 2099.4 tones of bananas per year, to over eight major countries making it the largest source of foreign exchange earnings among agricultural commodities for Costa Rica every year since 1990. Bananas are currently the second most important export from Costa Rica and account for between 16-28% of all exports.

Summary of banana statistics from CORBANA, 1997 (National Banana Corporation):

Number of Boxes Exported: 101, 173, 266
Destination (%): United States- 53% /Europe- 47%
Total Value of Receipts: $551, 496, 424 U.S.
Government Receipts (in taxes): $22, 258, 118 U.S.
CORBANA Receipts: $33, 843, 479 U.S.

Percent Marketed:

Standard Fruit- 33%
Bandeco- 27%
Chiquita- 23%
Others- 16%

Net Receipts (U.S.$):

Standard Fruit- $186, 351, 440
Bandeco- $148, 036, 396
Chiquita- $121, 242, 845
Others- $95, 865, 741

Total Hectares: 49, 191
- hectares in the Atlantic zone: 46, 557
Workers (estimated number): 40, 000
Productivity (boxes/hec./year): 2, 057

It is obvious from statistics how much the national banana growing sector in Costa Rica depends on the three large transnational companies whose marketing possibilities reach as far as United States and Europe. The government of Costa Rica is not actively seeking an additional quota for selling "fair Bananas" to the European Union; this is unfortunate as this added quota could open up more possibilities of exporting more bananas, produced in a more humane and environmentally sound manner (Emaus Forum, 1998). Neither is there an initiative to reinforce the national banana growers sector to lessen the dependency on the transnationals’ power of commercialization. There has also been a decrease in both the levels of banana exports and productivity in the past few years. Companies like CORBANA see this primarily as a problem related to the costs and quantities of agro-chemicals, instead of looking at the aptitude in general of the soils and in particularly at their quality as an ecosystem with its needs of biodiversity (Emaus Forum, 1998).

The banana industry also employs more workers than any other single agricultural commodity sub-sector or industry in Costa Rica (Committee on Commodity Problems, 1999). Banana plantations employ between 5 and 10 percent of the entire population of Costa Rica (Astorga, 1998). Each of these workers produces approximately $20, 000 per year for the transnational but is compensated the minimum wage of only $2, 000 per year and are exposed to horrific working conditions and several highly toxic substances on a regular basis (Mora, 1998). In recent years there have been regulations for banana imports into certain countries unfortunately, no clauses were included to regulate the protection of workers or the environment in the face of over-expanding and unlimited banana production in countries like Costa Rica (Emaus Forum, 1998).