1. 1. The Banana Chain:
The macro economics of the Banana Trade
Adelien van de Kasteele
on behalf of IUF
Amsterdam, February 1998
1. BANANAS: THE PRODUCTION CHAIN
In 1996 world production of the most important fruits was around 400 million tons. Bananas
compete with grapes for second place behind citrus, both accounting for 13-14% of total world fresh
fruit production. Banana production has been increasing by around 3% per year over the last decade.
Bananas are grown in all tropical regions and are one of the oldest known fruits. Because they are
used as a staple food, they are of importance for domestic consumption, growing quickly and being
harvested the whole year round. Since the introduction of the cultivated banana onto the US market
100 years ago, banana trade has increased rapidly. Currently, about 20% of total production is
entering world trade.
World trade is dominated by three companies, Dole Foods, Chiquita Brands and Fresh Del Monte
Produce, with over 100 years’ presence in banana plantation production in Central America and
Colombia, and together controlling 65% of world exports. They are followed by the Ecuatorian
company Noboa, which controls another 10%, and the European company Fyffes, which controls
some 6-7%.
With the integration towards a single European market, the traditionally different supply sources of
European and US companies led to a very complex European trade regime which has been attacked
ever since it became effective in July 1993. In the past 5 years, it has dramatically influenced
developments within the sector.

2. Table 1:
1996: 57m. tonnes, annual increase 3% PRODUCTION
4 major producers 45% world production:
India, Brazil, Ecuador, Indonesia
Cultivation: Plantations (export);
independent growers (domestic/export)
Main companies with plantations:
Chiquita Brands, Dole Food , Fresh Del Monte Produce
1996: 79% of total production: DOMESTIC
Asia (94%); Africa (95%); MARKET
Central America (45%); South America (70%)
In main export countries only 20-25%
1996: 11,5m. tonnes / export value $4bn. EXPORT
Major exporters:
Latin-America: Ecuador, Costa Rica, Colombia
Asia: Philippines
ACP: Windward Islands, Ivory Coast, Cameroon
Main traders:
Dole, Chiquita, Del Monte, Noboa, Fyffes
A strict system is needed to guarantee the quality of bananas on the PACKHOUSES
market, leading to vertical integration EXPORT HARBOUR
All major companies have their own reefer vessels TRANSPORT
Main ports USA: Gulport, Wilmington. Philadelphia IMPORT HARBOUR
Europe: Antwerp, Hamburg Livorno, Dover RIPENING
Company owned or national agents DISTRIBUTION
Distribution increasingly in direct partnerships with retail chains RETAILCHAINS
Major importers 1996: CONSUMPTION
EU15 (30%), USA (30%), Eastern Europe (12%), Japan (8%)

3. 2. BANANA PRODUCTION
FAO estimates for banana production for 1996/97 indicate a production increase to around 57m.
tonnes, up from 45m. in 1989 and around 38m. at the beginning of that decade.
Six main producer countries (India,
Brazil, Indonesia, Ecuador, BANANAS: Main Producers
(000' tonnes)
Philippines, and China) account for
57% of total world production.
Indonesian production has been
underestimated, but has been
increasing significantly over the last 10000
decade.
8000
As Figure 2 a) shows, China, Ecuador
6000 India
and Indonesia have known the Brazil
biggest increase in production, which 4000 Ecuador
Indonesia
has more than doubled in the last 2000 Philippines
decade. In Africa growth has been China
0
less, and production is almost totally 86
Colombia
88 90
directed at the domestic market 92 94 96
(96%).
Fig. 2 a). Banana production Source FAO
1997
At the start of the nineties,
expectations of rapid growth due to BANANA Production 1996
the opening up of world markets led
to the expansion of banana
production, especially in the export Colombia China
Philippines
4% 6%
countries Ecuador, Philippines, Others 6%
Colombia, and Costa Rica. 39% Indonesia
8%
The introduction of the EU banana
regime has obliged the companies to Ecuador
introduce major restructuring which 10%
has been especially felt in Central Brazil
India
10%
America. But production in the 17%
Caribbean also came under heavy
pressure to improve efficiency.
Fig. 2 b) Banana production 1996 Source FAO
1997
Bananas are cultivated in two different systems:
- Export directed plantations: Up to 1,000’s of hectares with advanced production and logistic
technique. A system of units in different stages of growing and ripening, traversed by irrigation
systems and banana rails to the packhouses guarantees a steady harvest throughout the year. The
companies, as well as bigger producers and co-operatives, use this system. The plantations are
most common in Central America, Colombia, and the Philippines. In other export countries,
like Ecuador, they normally have a smaller acreage. Plantation harvests of around 2,000-2,500
boxes (of 18,2 kilo/ha) are common, but differ from the more traditional ones with 1,300-1,500
boxes/ha up to 3,700 boxes/ha on the most modern plantations in Costa Rica.

4. With the arrival of US companies in Africa (Cameroon and Ivory Coast), plantations have been
set up for export into Europe. Indonesia , because of low labour costs, attracts investment in
plantations.
- Smallholdings directed at the domestic market: With lower inputs, and often less productive
soils, these farms produce smaller bananas of a lower quality. Production levels are also lower,
from 200-300 boxes/year up to 1,000 boxes/year, depending on soil, climate and combined
cultures (e.g. inter-cropped with cocoa bushes). Except for the Caribbean Islands, where
smallholders export 80% of their production.
2.1 Production costs
Because of the different systems, production costs differ widely and are calculated to be about 2-3
times higher in traditional production. But available data also vary and are difficult to compare
because of different calculation methods.
Table 2: Production costs per box, various estimations in $US
FAO (Ex-Finca) CIRAD (FOB) BANDECO Novotrade
1994 1995 1997 1997
*) FOB ex-finca FOB ex-finca
Ecuador 2.95 2.95 3.70 3.29 5.01-5.81 4.70-5.40
Costa Rica 3.25 3.25 5.56 4.78
Colombia 3.64 3.64
Honduras 5.22-6.22 4.45-5.25
Ivory Coast (1995) 3.40 8.53
Martinique 12.38
St. Vincente 8.39
Dominica 9.37
*) Based on CIRAD figures of production costs per MT.
Other figures (source unknown) from Costa Rica show the differences according to production
levels.
They show a range of $4.71 - $5.93 per box ex-finca, based on production levels from 2,500 -
1,600 boxes/ha on a 250ha plantation.
Some observations that can be made:
• Main differences are due to variations in labour costs, because of salary differences and labour
efficiencies due to type of holding. Salary costs in Costa Rica are higher, according to
BANDECO $14.87 per day against US$6.42 per day in Ecuador.
• Financial costs are not taken into account, with the exception of the Novotrade figures
(around $0.50 per box). CORBANA (Costa Rica) gives total costs for Costa Rica of $6.77,
including $1/box financial costs, while average FOB price for 1996 was $5.67 per box. This
resulted in a net loss per box of $1.10.
• Similar problems are indicated for Ecuador and Honduras, where contract prices are
systematically under production costs. The official minimum price in Ecuador in 1997 was
$3.30, which results in a. net loss of $1.50 per box minimum. (Novotrade). In January 1998
the minimum price was increased to $ 5,95 for the high season to June.

5. • In Honduras in 1996, Dole paid $2.89 per box with a premium of $0.17 for good quality, but
sigatoka costs were paid for by Dole. In 1997 this has changed. Dole now pays $3.17 per box
with a quality premium of $0.22 per box, but has passed the sigatoka costs on to the farmer.
Real sigatoka costs are about $0.45-0.80 per box. (Novotrade).
Therefore, real costs are definitely higher than formal cost calculations allow, especially as
financial costs and decent wage levels for labour are not normally taken into account.
Because of that, Indonesia has an attractive cost structure. A recent study of the pineapple sector
in the Philippines found that a worker in the Philippines gets $3.50 a day, while in Indonesia
$1.61 is paid. In India wages are equally low, and the liberalisation process is leading to increasing
foreign agricultural investment

6. 3. THE WORLD MARKET: BASIC FIGURES
Exports were around 7m. tonnes in 1980-85, and these were boosted from 1988 onwards as the
companies prepared themselves for a rapid market expansion. The opening up of Eastern Europe
and East Asia, the single market in Europe and the progress of the GATT talks lifted expectations
for this growth. The World Bank predicted that in a free-trade regime, the ACP countries would lose
nearly half of their market to the far more competitive Dollar banana. The Dollar companies
anticipated this increase and started to reinvest in plantations in Central America, and also in Asia
(Philippines, Indonesia). The three major companies already controlled 70% of world trade in
bananas, including half of the EU, and they looked forward to grabbing the rest. At the same time,
they increased exports to Europe to raise their market share in case any kind of quota was imposed.
However, it did not work out exactly like that and exports have been around 10-11m. tonnes for
the last three years. Eastern Europe did not develop as rapidly as the companies intended, and the
European market became restricted for Dollar bananas. Sooner or later, everybody had to adapt to
the developments within the European Union which, with nearly 35% of world imports at that
time, plays a major role in the world banana trade.
World Banana Exports
('000 tonnes)
12000
10000
8000 Others
Ecuador
6000
Costa Rica
Colombia
4000
Philippines
2000 Panama
Guatemala
0
1991 1992 1993 1994 1995 1996 1997
Fig. 3 a). World banana exports Source FAO 1997

7. Banana Exports 1997
Exports (prelim.figures)
In 1996 an average of 22% of world Others Guatemala Panama
production, 11.5m. tonnes, entered the 13% 5% 5% Philippines
world market. Exports are almost totally 10%
concentrated in Latin America. The
banana companies boosted banana export
Colombia
production in Central America, Colombia Ecuador 12%
and Ecuador during this century to supply 39%
the US and European markets. Costa Rica
Consequently, these countries have been 16%
responsible for around 65-70% of world
exports over recent decades. Indonesia is
still a small exporter. Given the Fig. 3 b). Banana exports 1997 Source: FAO 1998
extremely cheap labour costs, it surely
has potential to grow.
Due to rapid further concentration,
Ecuador, Costa Rica and Columbia
currently account for nearly 64% of total Latin American main exporters
world exports. Ecuador, especially, ('000 tonnes)
increased its exports world-wide. In 1991
exports to the US and the EU accounted Ecuador
for 64% of its total exports, and in 1996, Costa Rica
only for 39%. Noboa played an important 1997
Colombia 1995
role, in this change, boosting exports from
some 350,000 tonnes in 1991 to 1.5m. Panama 1993
1991
tonnes in 1996. New destinations were Guatemala
mainly China, Argentine, Chile and
Honduras
Eastern Europe. In 1993-94, Honduras
lost significant market share in Europe, 0 1000 2000 3000 4000 5000
and was not able to compensate by moving
into other areas as the big companies were
too busy restructuring their Central Fig. 3 c). Lat-American exports 1991-1997
American business. (1997 prelim.) Source FAO 1998

8. Imports
World imports 1996
Total net imports were around 11m.
tonnes in 1996, valued at over US$5bn. Other
Others
The EU and the US remain the major Europe North-
10%
FSU 8% America
importers, with substantially higher 35%
4%
imports than in 1991. Their share in total
imports, however, is declining because of Far East
6%
growing trade to all other regions.
Japan
Major changes are the increasing imports
8% EU15
of Former Soviet Union (FSU), and of 29%
Russia in particular. For 1999, total
imports of 2m. tonnes were expected, of
which 875t. tonnes were to Russia, up
Fig. 3 d). World imports 1996 Source: FAO
from 50,000 in 1991.
1998
However, imports to Russia dropped in 1996, and figures for 1997 are not known yet. China
imported over 500t. tonnes in the first half of 1996 from Ecuador, but shipping stopped as China
did not pay. In 1997 exports restarted.
Imports to the EU, including the three new countries, have declined since 1992. But 1992 imports
were well up from 1990-91, as companies bumped up imports in case a quota system was introduced.
Comparing 1996 with 1990, the imports of the current EU15 countries increased by over 9%.
Preliminar FAO figures for 1997 indicate an further increase of EU15 imports to 4,412t. tonnes.
Germany is far out Europe’s biggest market with over 1,2m. tonnes.
Table 3: World net banana imports 1990 - 1996 (‘000 tonnes)
1990 1991 1992 1993 1994 1995 1996
Japan 758 803 777 913 929 874 819
EU15 2,948 3,183 3,335 3,218 3,000 3,107 3,158
East-Eur/FSU 154 348 485 579 1,062 1,301 1,028
D'ing countries 603 943 911 1,256 1,302 1,350 1,719
of which 21 30 93 160 513
China
Nord-America 3,098 3,228 3,532 3,515 3,697 3,666 3,776
The EU15 figures before 1995 have been adjusted Source: FAO 1998 / Eurostat 1997
Imports per capita differ widely. The United Arab Emirates are the absolute winner with
31.5kg/capita, followed by New Zealand with 20kg/capita. North America, Chile, and most EU
countries have per capita imports of 10-14kg/capita compared with 2kg/capita in Eastern Europe
and 0.2kg/capita in the Far East and North Africa.. Within the EU Sweden has the highest per
capita consumption, around 17,5 kg, followed by Germany, Norway, Portugal and Iceland, all around
14 kg/capita.

9. Banana per capita import - 1995
35
30
25
20
15
10
5
0
Kuwait
Un.Arab
Zealand
USA
Czech.Rep
Canada
Norway
Slovakia
Singapore
EU
Switserland
New
Emir
Fig. 3 e). Banana per capita import 1995. Source: FAO 1997
3.1 The EU market
Total net supplies, or apparent consumption, in the current EU15 countries increased from 3,559t
tonnes in 1990 to 3,886t tonnes in 1996. EU domestic supplies have declined by some 10%, but
traditional ACP supplies have remained fairly stable. Dollar imports increased considerably between
1990-1992, as have non-traditional ACP supplies over the last few years.
European Union Supplies EU imports 1991 and 1996
(000' tonnes) ('000 tonnes)
4000 Somalia 1996
Dominica 1991
3500
St Vincent
3000 Jamaica
2500 Santa Lucia
Others ($)
Cameroon
2000 Ivory coast
1500 Guatemala
Honduras
1000 ACP Panama
500 Costa Rica
EU Colombia
0
Ecuador
1991 1992 1993 1994 1995 1996
0 200 400 600 800
Fig. 3 f). EU supplies Source: FRuiTrop 1997 Fig. 3 g). EU imports 1991-96 Source: Eurostat
1997
The ACP countries, Cameroon and Ivory Coast, where the US companies are investing, have seen
the biggest increases. Conditions in the new plantations are comparable with Central America, but
with less disease problems at this stage, which means they will be able to compete more easily with
the Dollar bananas. Honduras and Panama saw their exports diminish considerably, although
Honduras’ exports did go up again in 1996.

10. But although ACP countries saw
increases in their total imports to
Import, Wholesale, Retail prices the EU during this time, their
import prices have gone down
(in 1992 US$)
due to the competition with
25,00 Dollar bananas. Meanwhile,
retail
import prices for Dollar bananas
20,00 wholesale went up because of the quota
15,00 import system. In figure 3 h). a
comparison between the French,
10,00 German (Chiquita) and the US
market is made. In the US, not
5,00 only import prices, but also
wholesale and retail margins are
0,00
significantly lower, which
92
94
96
92
94
96
92
94
96
demonstrates the importance of
France Germany USA the EU market for the dollar
companies.
Fig. 3 h). Import, wholesale and retail prices Source: FAO 1997
In France, import prices and wholesale and retail margins decreased, but import prices decreased
most. In Germany, Chiquita wholesale margins improved, even when import prices went down again.
Even wholesale margins for other bananas were slightly up. In 1993-94 consumption fell in
Germany due to the higher prices. However, an average 5% fall in prices in 1995-96 has helped
sales to recover, up 11% in 1995 and 3.5% in 1996.
This seems to confirm the result of a market study of the Gesellschaft für Konsumforschung
(GfK) in Germany, which showed that price and quality rather than brand determine consumer
purchases. The study was immediately challenged by Chiquita with its own findings that about 50%
of consumers buy brands, of which 80% favoured Chiquita!
A comparable slow down in consumption was seen in Scandinavia, where per capita consumption
fell due to the price increase following their entry into the EU.

11. 4. EUROPEAN REGULATION
At the end of the eighties, existing differences between the different banana companies seemed to
be well established and, facing the prospect of opening up huge new markets in Eastern Europe and
Asia, it only seemed to be a question of boosting banana production to assure ‘fruitful’
development of the banana business. But life turned out not to be that easy. With the restricted
EU market, and no Eastern-European miracle, even big companies like Chiquita turned out not to
be untouchable. With the introduction of the EU banana regime in 1993, the world banana market
definitely changed.
First, the companies had to define their position with regard to the new regime in the EU, which
accounted for some 35% of world imports, and develop a new market strategy. And now, five
years later, the cards seem to have been reshuffled and companies will have to face modification
of the 404/93 regime, and possibly eventual deregulation. Meanwhile, the whole fresh-fruit sector
has become far more competitive. Again, the fruit companies have to define the key elements of
a successful strategy.
4.1 EU regulation
With integration of the European market, the EU tried to combine two main objectives:
- to create an integrated market for bananas harmonising different banana trade agreements,
- to guarantee that access to this market for their traditional ACP and European suppliers was not
hampered by the foreseen influx of cheap Latin American bananas.
The complicated 404/93 trade mechanism, introduced on 1 July 1993, was the result.
The EU established four categories of suppliers, each receiving different treatment:
1. EU producers (mainly Canary Islands, Martinique and Guadeloupe), covered by internal aspects of
the common market. For this category, income support up to 854,000 tonnes is guaranteed in
case prices fall below the costs of production. This mechanism has been used for several years.
2. Traditional ACP countries, i.e., the ACP banana suppliers in the years preceding the single
market, have duty-free access up to a maximum amount of 857,700 tonnes per year.
3. Non-traditional ACP countries (e.g. Dominican Republic) and quantities from traditional ACP
countries above the ceiling of 857,700 tonnes.
4. Third countries, the so-called 'Dollar' countries which, together with category 3 producers, share
a tariff quota of 2m. tonnes - duty free for non-traditional ACP countries and with a tariff of 75
ECU per tonne for the Dollar bananas. The quota to be increased to 2.5m. tonnes with the
accession to the EU of Sweden, Finland and Austria.
The Dollar allocation was granted to trading companies in the following way:
* ‘A’ licences: 66.5% reserved for traditional traders in Dollar bananas;
* ‘B’ licences: 30% reserved for established operators of Community and/or traditional ACP
bananas;
* ‘C’ licences: 3.5% for ‘newcomers’ with ambitions within the sector.
The allocation of Dollar quotas to the ACP companies was designed to cross-subsidise the expensive
ACP bananas with some Dollar banana quota rent and thus strengthen the position of the ACP
companies in relation to the Dollar companies. At the same time, it led the Dollar companies to
invest in ACP countries to build rights to future Dollar quota allocation within this category.
Within this tariff quota, each import category is again subdivided according to specific economic
activities, such as producing, purchasing, transport and ripening, making the future allocation of
100% of actual quotas only possible if a company operates in all economic activities. Therefore,

12. this last subdivision directly resulted in the need for further ongoing vertical integration to guarantee
the future allocation of quotas.
Due to the insufficient level of quota allocation, the system has resulted in an active trade in
Dollar licences which, depending on demand, have been fluctuating enormously up to around $7-8
per box. The total cash value of the licences is calculated to be over $1bn. annually.
4.2 The WTO dispute
The system has been under attack from the moment it became effective. Five main Latin
American growers (Costa Rica, Venezuela, Colombia, Guatemala and Nicaragua) protested against
the system under the rules of GATT shortly after its coming into effect. GATT found that the EU
import regime contravened GATT rules. The EU did not accept the findings, but offered to settle
with the named countries in exchange for no further dispute. All but Guatemala signed a
compensatory 'Framework Agreement' , which was included in the last phase of the Uruguay Round
in April 1994. Ecuador and Honduras did not participate not being members of GATT at that time.
The Framework Agreement allocated quotas for the involved countries, which meant that national
governments were entitled to distribute export licences. The banana companies protested as they
saw an increase in the problems they already had with the system. Chiquita, especially, decided to
actively oppose the system, and has done so ever since with various complaints.
The official case was brought to the WTO by the US, and in 1996 a dispute panel was established. In
the final ruling, the WTO dispute panel found that the EU’s tariff quota regime for negotiating and
allocating quotas acted in a discriminatory way. The quota system as such was not condemned. The
EU immediately confirmed its intention to fully comply with the dispute ruling and its
recommendations. It has until the end of 1998 to modify the EU regime.
4.3 The future of the EU regime
In designing the modification of the current 404/93 regime, the EU has chosen to continue a
managed market for the import of bananas. The EU proposal is to keep the 2.2m. tonnes annual
quota that has been in place since mid-1994 on ‘dollar’ fruit. A tariff of Ecu75 per tonne is
payable up to this quantity. An additional 353,000 tonnes is proposed, reflecting the expansion of
the EU (Sweden, Finland, Austria) with a duty of Ecu300 per tonnes for third countries and
Ecu100 per tonne for ACP countries.
The total ACP preferential quota would also remain, although there would not be country specific
quotas any more. To compensate the ACP countries for the changes in the regime, the EU
proposes to award Ecu530m. in transitional aid over ten years to banana producers in the ACP
countries. However, this amount, spread over some twelve countries, will be less than the actual
amount received in cross-subsidies through the sale of quota allocations.
The main change is the redistribution of the controversial licensing system, where the so-called
‘B’-licences, granted to ACP producers, will disappear. However, it is not at all clear how this
redistribution will take place. In the new proposal, only countries with a substantial export interest
might remain with a country-specific quota. Regarding tariff-quota management, a system based
on historical reference (but what period?) seems to be the most likely to be installed. But other
options like an auction system are also being evaluated.
A system based on historical references will not only reinforce the position of the big banana
companies and again grant them a subsidy of about US$1 bn, the cash value of the licenses. It also
does not provide opportunities for market access to new operators, including ‘Fair Trade’
operators. The Dutch fair trade operators currently spend one third of total costs on the purchase
of licences, while at the same time, they are able to both pay the farmer a higher price and

13. compete on price in the market. On the other hand, an auction system could open up
opportunities for newcomers and provide incentives for market innovation.
Meanwhile, supporters of further liberalisation, like the German firms and Chiquita, have already
questioned whether the Brussels proposals will be acceptable to the WTO, which has until the end
of 1998 to approve the new scheme’s implementation.

14. 5. CHANGING COMPANY STRATEGIES
The ways that the banana companies have been adapting to the EU regime and the changing world
market have been various. Chiquita has taken a very formal position from the start. It seemed
neither to believe in the introduction of the mechanism nor, once it was installed, to trust in its
imminent abolition. Consequently, Chiquita adopted a far more formal position than the other
companies, which adapted themselves in a more pragmatic way to the new situation.
The EU regime accentuated the differences between the EU and US companies although, in the
end, all are involved in the same fight for a good mix between sourcing ACP and Dollar bananas to
obtain maximal access to Dollar licences. But not all survived and Geest, the former main UK
banana company, did not succeed and sold its banana division in 1995.
In Table 4 a short overview is given of the main companies, their sales and estimated market shares
in 1992 and 1994, together with their anticipated positions for 1997.
Table 4: Main companies, results and market shares 1992-97
SALES Profit/loss World Share EU USA
($m.) ($m.) (% of boxes) (% of boxes) (% of boxes)
1992 525m. 200m. 165m.
Chiquita Brands 2,723 (284) 34% > 30%
Dole Food Company 3,120 16 20% 12%
Fresh Del Monte Produce 900 (63) 15% 7-8%
Fyffes 890 47 2-3% 4-5%
Geest n.a. 5 3-4% 5-6%
1995 610m. 180m. 170m.
Chiquita Brands 2,566 9 >25 % 19 % 35%
Dole Food Company 3,804 89 22-23 % 15-16 % 35%
Fresh Del Monte Produce 1,068 (72) 15-16 % 8% 18%
Fyffes + Geest 1,700 65 7-8 % 17-18 % 1%
Noboa - - 12 %
1997 625m. 210m. 200m.
Dole Food Company 4,336 160 25-26 % 18-19 %
Chiquita Brands 2,434 0 24-25 % 15-16 %
Fresh Del Monte Produce > 1,200 > 100 16 % 10-11 %
Fyffes 1,460 54 6-7 % 16-17 %
Noboa 13 %
Sources: Eurofood, Fruchthandel, Reuters, Annual Reports, Solidaridad, Euro PA (1994), ADL (1995), author’s
estimations

15. The winners and losers are clearly shown in this overview. The main conclusion is that Chiquita is
being overtaken by Dole due to the loss of market share Chiquita has seen in the EU and elsewhere,
owing to the more aggressive strategies of Dole Food and Del Monte. Dole Food is the world’s
leading fresh fruit company and, although Chiquita is still mentioned as the banana leader, the
differential between them has grown very small. Dole is clearly the winner in market strategy.
This conclusion seemed to be confirmed by changes in the control of banana production which were
to the disadvantage of Chiquita. In Honduras, Guatemala and Ecuador, Dole has increased its control,
while in Costa Rica, Del Monte is expanding, and in Asian production, Del Monte and Dole are
dominant.
The impact of the EU regime on the market in the last few years has been considerable and has
emphasised already existent general tendencies. More details are given in annexed overviews for
each company.
5. 1 Diversifying banana supply sources.
Traditionally, US companies concentrate in Central and South America. To cover the Asian
market,. Dole and Chiquita worked from plantations in the Philippines. At the start of the nineties,
Chiquita and Dole also entered Indonesia, opening up banana plantations in joint ventures with the
Sinar Mas group. The production of these plantations is aimed at exports within the Asian region.
Indeed, last years Indonesian export to Japan was increasing. In 1997 Del Monte also entered that
country. The current position of Chiquita and Dole in Indonesian banana production is not known.
On the other hand, the European companies, mainly sourcing from ACP countries and overseas
territories, maintained control by making marketing contracts which were often exclusive with
producer associations and/or marketing boards, without direct involvement in primary production.
The establishment of supplier categories within the EU regulation forced both groups to become
active in each other’s regions:
- established operators of the Euro and/or ACP bananas: the 30% reserved Dollar licences gave
them the opportunity to spread imports from ACP bananas to the more valuable Dollar banana
outlets. Geest decided to invest $150m. in a new 3,000ha plantation (Costa Rica). Diseases and
labour problems made the investment a financial failure, and after the takeover by Fyffes/Wibdeco,
the land was sold to a consortium of Latin American businessmen.
Fyffes expanded its marketing contracts in Central America and Ecuador, and succeeded in spreading
its sources over ACP, Euro and Dollar bananas. But Fyffes’s entrance into Honduras (through
contracts with independent growers) and Guatemala (production contracts) did not succeed, and now
it works mainly through agreements with other traders (a.o. Dole).
- US companies: a foothold in the ACP and/or Euro banana countries assured them a future part of
the 30% Dollar licences reserved for this category.
Indeed, all US companies have invested in Cameroon and/or Ivory Coast, mainly through joint
ventures with French companies (e.g. Dole/Compagnie Fruitiere) and tried to get a foothold in the
market for Caribbean bananas. To obtain control over Euro bananas, they invested in Spain and
have deals with co-operatives on the Canary Islands (Fyffes/Coplaca, Chiquita/Coslo).
The involvement of the US companies in production in the ACP/Euro region increased from
80,000 tonnes in 1992 to 400,000 tonnes in 1994. Recently, Dole considerably expanded its
control in the Ivory Coast via its participation in Compagnie Fruitiere, which acquired 67% of SCB,
Ivory Coast’s leading banana supplier.
The question is what the consequences of abolishing B licences, as proposed by EC Commission, will
be. For the Dollar companies, especially Dole and Del Monte, which have meanwhile established
themselves in the ACP countries, there is not much of a problem, as their new plantations are
modern enough to compete. But for Fyffes, which swapped at least part of its shipping agreement

16. from the Dollar countries for licences, the future is less clear. And the other ACP traders will lose
their income from the sale of B licences. Moreover, the additional support proposed in the
modification of the EU regime will not cover this loss, and will be channelled through other (aid)
channels.
5. 2 Vertical integration
US banana companies have been functioning along the whole production chain from production to
import/ripening. However, the EU rule, according to which licences are allocated on the basis of
market share in the different categories of economic activity (purchasing/producing,
distribution/transport, ripening/wholesale), lead to the further integration of operations. Moreover,
this vertical integration was stimulated as a result of the Marrakesh Agreement, which rules that
companies need not only import licenses but also export licenses from the countries involved. This
lead to further investments in production.
The US companies have been looking to expand their European network in Southern Europe.
Again, Dole especially has been expanding, combining all stages of industry and aiming at volume
growth. It successfully bought Pascual Hermanos, the troubled company abandoned by Chiquita, and
made it profitable again in a short time.
The position of independent importers has become difficult. As long as they do not operate in the
whole chain, their licence volume will decrease. For example, Cobana Fruchtring, when it lost its
contacts with Chiquita, had to survive through agreements with companies like Geest, Fyffes and
Pomona. Fyffes made optimal use of this situation and realised joint ventures with over ten
companies within three years.
The complicated license system has generated a lively trade in licences, which makes companies less
dependent on the official licence distribution. But at a high cost, the estimated value is nearly $1bn.
The amount to be paid for the licences varies widely from $0.50-$7.00 per box, which means that
at bad times it comprises more than 50% of the total import price.
5. 3 Diversifying markets
The expansion into new markets is a general trend within the food industry that is mirrored in other
industries. The increasingly saturated markets in the USA and Europe make continuing growth more
difficult, and efforts are directed to strengthen positions in selected core activities. Volume growth
through market expansion is sought elsewhere in developing regions. All main companies are
expanding in Eastern Europe and Asia for that reason. In the banana sector, investments in 1989-
91 were directed at global expansion. The restrictions in the European markets led to increased
efforts to develop other markets (Near East, South America, Far East), where per capita
consumption is still much lower.
The EU regulation has had a double effect. Firstly, the companies are obliged to invest in trade with
the EU12 to maintain their import licences and, therewith, their future market share. The EU15
not only accounts for around 30-35% of world imports, but the increased price level for Dollar
bananas also makes the loss of market share a double loss. And secondly, the Dollar companies had
to invest in export to other countries in order to divert the banana surplus generated by the
decreased trade with the EU during 1992-94.
Imports into the EU from Dollar countries diminished by 250t between 1992-1994, the biggest
losers being Honduras and Panama. Ecuador was not granted country allocation, but maintained its
share of the European market, functioning as a buffer for the banana companies.
The Near East had the biggest increase in banana imports in 1992-93 and is increasingly supplied
from Latin America. The three southern countries of America (MERCOSUR) nearly doubled
imports since 1992, almost totally supplied by Ecuador. The Former Soviet Union (FSU) market

17. has grown rapidly since 1994, but showed a decline last year. More recent are the increased imports
in China. Although the potential is significant, limitations in infrastructure (adequate ripening and
storage), may be a constraint in the near term.
In a the fight over the Japanese market, Del Monte won access to distribution channels, lowering its
prices and giving the other two a hard time. Losses for Chiquita have been such that, for a time, it
reduced its banana trade to Japan while maintaining its ripening and distribution facilities. Given the
recent decision of the Japanese government to relax limitations on agricultural imports and the
rapid increase in Chinese imports, Chiquita, like the other fruit companies, has stepped up activities
in the Far East. Sumitomo too plays a role in the Far East, with sourcing reported from both the
Philippines and Ecuador
5. 4 Reduced dependency on the banana trade
All companies have been diversifying to other fruits, but again the EU regulation has accelerated the
process. See the annexes for more detail.
- Within Dole food operations, their banana trade accounts for an estimated 35% of turnover. Other
fresh fruits and vegetables, and packaged fruits and juices make up for the other 65%. Falling
profits have obliged Dole to reconsider its business lines. It decided to sell off its more problematic
activities (parts of its juice and dried fruits business), while it invested in the development of its
fresh fruit business: melons, pineapples, grapes, kiwis, apples, etc. In 1994, Dole became Chile’s
leading fruit exporter, accounting for over 12% of Chilean exports.
- Chiquita’s operations are more concentrated on bananas (±60%) and expansion in 1990-91
increased long-term debt. The recent crisis obliged it to invest in the restructuring of banana
operations, and restructuring charges and interest expenses hugely affected results. Chiquita has
been investing in other fresh fruits, but to a lesser extent, and has a packaged-food division of
canned vegetables, juices, etc.
- Del Monte Fresh Produce is the world's leading pineapple producer and a leading melon exporter.
Since being acquired by the IAT Group, it runs the fresh fruit exporter United Trading Company
(UTC) in Chile, through which it plans to expand its fresh fruit business to Europe and Asia.
- Fyffes is also a mixed fruit company, with their banana trade accounting for 25-30% of total
business. Through its rapid banana expansion, Fyffes became more dependent on them, but
corrected this to some extent when, in 1994, it also invested in Chile with the take-over of
NAFSA, a fresh fruit exporter.
On the European fresh fruit market the fruit companies compete especially with South Africa
(Capespan). Capespan plans to boost exports over 100m. boxes of fruit internationally in 1998.
However, the recent deregulation of deciduous exports leads to the opening up of more
distribution channels, and to new and different distribution joint ventures. Dole Food is also
involved in one of these, securing marketing rights to Sunpride branded fruit in Continental
Europe.
Another big player is Albert Fischer (1997: £1,19bn.sales) , which was said to be approached by
one of the large outfits in 1997. Albert Fischer has positioned itself as a global fruit supplier in
recent years, with an impressive network of distribution companies in Europe, and has become an
attractive investment for the world’s fruit giants.
5. 5 Market orientation
Given the increased concentration in the market and the retail sector, all food companies are obliged
to strengthen their market orientation. The increased competition with other brands and private
labels has led to a process whereby supply contracts and conditions are increasingly determined by

18. the retail chains, the so called reversion of the production chain. Efficiencies are no longer sought
only within the companies, but along the whole production chain. Consequently, requirements in the
area of dependable supply, (information) technology, marketing and logistics are constantly
increasing. Due to the high investments involved in these developments companies are looking for
partnerships through ‘preferred suppliers’ relations. In this situation it becomes difficult for smaller
companies to remain competitive.
Dole is developing an aggressive strategy in this field, leading to partnerships with retailers,
wholesalers, and distributors, to set up integrated import, ripening and distribution systems. It states
clearly in its Annual Report that is has shifted its focus from the supply side to the market side.
Another example of these development is the recent take-over of the fresh produce division of the
British Perkins Food and the Dutch fresh fruit trader Van Dijk Delft by the Dutch The Greenery
International, which handles over 50% of the Dutch fruit and vegetable production. Through the
take-over The Greenery has strengthened its positions towards the retail chains and has widened the
product range they can offer with tropical fruits like avocados, citrus and bananas. This gives them a
key position within the fruit chain where new distribution systems are being developed in joint
efforts between producers, traders and retail.
The increased market orientation makes the banana companies much more sensitive and
vulnerable in respect of consumer opinions, with the effect that actions on the consumers’ side,
like the Fair Trade initiative and the UK banana campaign, can have a far-reaching impact. The
recent EU study of the attitudes of EU consumers to Fair Trade Bananas found an overwhelming
interest (400,000 tonnes based on conservative estimates). Equally, the attention the big fruit
companies are paying to the combined banana campaign from the Costa Rican trade union
SITRAP, UK Bananalink/World Development Movement and the IUF shows the growing concern
of the companies for their image. The discussions in the UK between the Banana Group of the
major fruit companies (excepting Wibdeco) and the retail sector, through the British Retail
Consortium (BRC), concerning a Code of Conduct, and the recent negotiations with Del Monte in
Costa Rica (Bandeco) about union rights and social and economic conditions which resulted in a
SITRAP-Bandeco agreement, are clear examples of what combined consumer/trade union action
can achieve.
Chiquita still seems to follow a more conservative strategy which concentrates on advertising to
strengthen its presence in the wholesale/retail sector and to improve brand awareness. In 1995, it
started the ECO-OK programme with the US NGO ‘Rainforest Alliance’, through which Chiquita
wants to establish itself as the environmental leader of the banana companies. In Europe, where the
ECO-OK certification is not recognised as an ECO-label, the campaign is primarily directed at the
retail sector.
5. 6 Restructuring business
All the above mentioned trends have resulted in a global restructuring of the banana business. The
introduction of the EU regulation in 1993 not only made the over-capacity in banana production
that was created at the beginning of the nineties evident, but it also made other producer and
supplier patterns obligatory. All companies involved have been both reconsidering core activities
and reorganising within them to become more cost effective and to guarantee their leading position
in the market. Two aspects should be considered:
* Company restructuring, concentration on core activities
Chiquita has sold off its meat operations over the last two years, while Dole has separated its real
estate activities. Del Monte Fresh Produce, concentrating on fresh fruits, is the result of the Del
Monte split up in 1989 and no longer belongs to Del Monte Foods, which stayed in the canned food
business. Geest sold the wholesale division in a management buy out in April 1995, and the splitting

19. up of the company in July 1995 reflected the growing importance of its convenience food
businesses. The banana activities were then sold off in December 1995.
* Restructuring in the banana business
The spread of supply sources and the ongoing vertical integration led to an expansion through
Europe, Africa and the Caribbean, as has already been mentioned. Dole and Fyffes especially have
been very active in take-overs, which form the bases for the strengthening of their EU market
position. The need for international restructuring in a climate of increased competition, not only in
the EU but also as a result of the diverted trade on the other markets, has intensified the pressure on
production costs in the Dollar zones as well as in the other countries.
The developments in Central America reflect the effects of the financial reconstruction measures
the companies have been taking. Investments are increasing the yields of the higher producing
plantations, while less productive lands have been abandoned. As an example, in Costa Rica, which
has an average production of around 2,000-2,500 boxes/ha, Dole's most modern plantation produces
up to 3,700 boxes/ha. Meanwhile, Chiquita has been disposing of 1,200ha of less productive lands in
Honduras, using the severe strike of 1994 as an argument. Moreover, new forms of labour
organisation are being introduced in the plantations, with Total Quality Programmes itemising the
work and responsibility. The constant pressure for low-cost production is worsening primary and
secondary labour conditions.
But the ACP countries are also feeling the results of the intensified competition. Prices for their
bananas have dropped on the European market, and tropical storms have caused considerable
damage to vast areas on the Caribbean Islands. They face difficulties in maintaining production
levels and reaching sufficient quality at reasonable cost. But investments are risky, given the
uncertainty of price and level of exports, and given that the EU might agree to alter its regime in
line with USA/WTO demands. For example, in St Vincent, an irrigation project to install
equipment on 160ha of bananas in the North Eastern Eco-zone is to be set up with money from
the EU Stabex (stabilisation of export earnings) programme). It must increase production from
450 to 1,000 boxes per hectare. It is supposed to be the first part of a 1,600 hectare project. But
even with this increase in production, production levels are still far below those of Central
American plantations.
The need for diversification in the Windward Islands is repeatedly mentioned, but given the
conditions on the Islands [this] it is far from an easy task to find alternatives which guarantee
reasonable income and employment levels.

20. 6. CONCLUSIONS ON THE MARKET,
CHANGING COMPANY STRATEGIES
* Five major companies control the world market: Chiquita Brands (USA), Dole Food (USA), Del
Monte Fresh Produce (Mexico), Noboa (Ecuador) and Fyffes (Ireland). The first three are the
Dollar companies that have control over 65-70% of world banana trade. Noboa, the dominant
Ecuadorian exporter, is roughly estimated to have a trade volume of around 13% of the world
market. Fyffes, which took advantage of the EU trade regime most strongly, has emerged as the
dominant European company and is expected to handle around 6% of the world market.
* These companies cover the whole chain, controlling production, transport vessels, storage and
ripening facilities and distribution. The EU regulation has intensified the vertical integration in
Europe, leading to several take-overs of importers, ripeners and distributors in the last five years,
especially by Dole Food and Fyffes. Fyffes’s intention to expand its control over production in
the Dollar countries has been less successful.
* The situation of oversupply following the implementation of the EU regime has forced
companies to expand to other markets. Trade to Eastern Europe, the Middle East, South
America, and lately to China has been growing significantly. But competition in the Far East has
also been fierce, and will surely continue if China stabilises as a major importer.
The import to the EU, after the decline in 1993-94, is increasing again since 1995.
* All companies have not only been diversifying their banana supply sources, but have also been
expanding into other fresh fruit and vegetable and packaged foods business, thus becoming less
dependent on bananas.
* The overall banana crisis has led to a global restructuring of the banana companies. The
companies are concentrating on their core business of fresh fruits and selling off other divisions,
but it has also intensified the pressure on production costs. The consequences are dramatic. In
recent years, the abandonment of plantations, and the consequent massive dismissals, have been
followed by rationalisation of the higher producing plantations. Total quality management has
been, and continues to be, introduced widely, leading to higher production per worker and less
fixed labour contracts, thus resulting in further unemployment. Governments are being pressed to
lower taxes and levies. And on top of that, recent labour reforms facilitate the companies in
achieving a much more flexible use of labour. Because of this, primary and secondary labour
conditions are worsening.
* Not all companies have reacted in the same way, and the crisis has left winners and losers:
- Chiquita has posted severe losses since 1992 and only made a small profit in 1995 and 1997.
It is judged to have made the wrong decisions in Europe in that it did not expand further after
1993 and expected the rapid break up of the EU regulations, but it also lost in the Pacific area. It
plans to strengthen its market position through emphasis on building up brand awareness,
whereby it wants to position itself as the industry’s environmental leader. However, suffering
severe losses of market share in Europe and Asia, it founds its position as the premier banana
company seriously challenged by Dole.
- Dole and Fyffes have a far more aggressive market strategy and are the winners in this
situation. They are both investing strongly both in Europe and in the different supplier areas, and
have gained European market share. Dole is the most advanced in market strategy, setting up
new integrated partnerships with distributors and retailers. However, one of Fyffes main
strengths lies in its access to the B licences, which enabled it to spread its sourcing further to
Latin America. But at the same time, inexperience with Latin American sourcing practices,
and counter attacks from the existing companies, caused it to fail in setting up a strongly based
network of its own. Deals with, among others, Dole were inevitable. The question is, once it is

21. without the B licenses, what will its future in Dollar bananas be, and how vulnerable will it
become to new advances from fruit companies that want to use its distribution network?
- Since it was acquired by the Abu-Ghazaleh family, Fresh Del Monte Produce has the capital
for a far more aggressive market strategy and, indeed, has been strengthening its position. It is
estimated to have gained market share in not only Europe, but also in the US.
Of the national companies, Noboa (Ecuador) has been expanding rapidly, trading all over the
world.
* To again modify the EU regime will not be without consequences, which also depend on the way
the licences will be distributed among existing companies. If it is to be based on historical sales,
the actual subsidy to the established companies will remain, and the entrance of newcomers will
remain quite impossible. But in any case, the ACP traders that lose their B licences, and the
producers they source from, will have to confront a far more difficult situation. The additional
EU support will only partially compensate this loss and will be channelled through yet other
channels. Prolonged support will be necessary to make the banana sector in these countries more
competitive or to enable them to move to alternative economic activities.

22. References:
Chapter 1-3:.
• FAO, Banana statistics, April/May 1997
• FAO, Banana information note, February 1998
• Fruchthandel, different issues
• Rabobank, The world fresh fruit market. Utrecht, the Netherlands, 1993
• Rabobank, The world of fresh fruit trade, Utrecht, the Netherlands, 1997
• David Hallam a.o., The Political economy of Europe’s Banana Trade, University of Reading,
1997
• Eurostat, intra and extra European Union statistics, 1995-96.
Chapter 4:
• Solidaridad, Yellow fever, Proposal for Quota allocation for Fair Trade Bananas. Utrecht, the
Netherlands, 1995
• Farmers' Link, Banana trade news bulletin, 1994-1997
Chapter 5 / Annexes:
• Annual Reports 1993-1997 Chiquita Brands International, Dole Food Company.
• www.hoovers.com / internet sides banana companies
• Farmers' Link, Just green bananas! Norwich, UK, 1995
• The world of bananas, WINFA seminar on fair trade, 1997.
• Different issues of:
Agra Europe, Eurofood; Eurofruit Magazine; Fruchthandel
Financial Times, Reuter Textline, Business Week, The Guardian,
Tropifruit, Marchés Tropicaux.

23. Appendix A:
CHIQUITA BRANDS INTERNATIONAL Inc.
Cincinnati, Ohio, USA
Chairman and CEO: Carl H. Lindner
A.1. Financial Results 1991-1997 (in US$m.)
1997 1996 1995 1994 1993 1992 1991
Net sales 2,434 2,435 2,566 2,506 2,533 2,723 2,604
Operating income 84 176 71 103 (97) 198
Net income (loss) 0.3 (51) 9 (72) (51) (284) 128
Chiquita Brands International (known in Central America and Columbia since the end of the last
century as the United Fruit Company) was, for decades, the world's largest banana producer and
distributor, and still claims to be premier in bananas. It has about 35,000 employees, of which
30,000 (from 35,000 in 1994) are in Central and South America (1996).
The company also markets other fruits and vegetables. Less well known are its processed foods.
These activities accounted for 64% of its revenues before it sold its main meat business (North
America) in 1995 after severe losses. Bananas are still said to account for 60% of its sales.
Chiquita is controlled by the American Financial Corporation (AFG-USA), which has a 43% stake
(1997). AFG is the holding company for many of the business interests of Carl Lindner and his
family. Its main business is insurance, these include: non-standard auto; speciality lines, such as
workers’ compensation, professional liability, non-profit liability and multi-peril crop insurance;
and general commercial and personal lines, including home-owners coverage. AFG’s primary
insurance subsidiaries include Great American Insurance Company and its subsidiaries, as well as a
non-standard auto subsidiary in the UK. AFG also sells retirement annuities through its American
Annuity Group.
The net sales of Chiquita Brands have diminished since 1991, mainly due to lower banana volumes.
Chiquita’s losses were aggravated by high net annual-interest expenses of around $165m. in 1993-
95, as the company is deeply in debt. In 1995, sales were up again and, for the first time in years,
the company made a profit. However, in 1996, due to considerable farm damages in Latin America
after record floods caused damages of around $70m., it showed losses again.
Continuous losses
One of the main problems for Chiquita has been the European nightmare. Focusing on a formal
stance from which to attack the EU banana regime through the GATT/WTO, has caused it to
make severe political and economical miscalculations:
Firstly, the regime seems to have turned out to be much more long lasting than Chiquita had ever
imagined, holding it back from the necessary counter-attack. Unlike the other big fruit companies,
it did not invest effectively in ACP countries and was less active on the European market.
Secondly, it chose a quite passive market position and trusted to its brand strength. But, although
it has repeatedly been trying to prove in several market studies that consumer loyalty to Chiquita
is very high, and that consumers are prepared to pay a premium and even go to other shops if
they cannot find Chiquita, the contrary has been proven. It has faced ongoing lower European
banana volumes, and, in particular, it has lost market share in Germany. In addition, it reduced the

24. number of ripening and distribution companies it worked with in Germany, importing exclusively
through Atlanta-Scipio, based in Hamburg since 1993. According to the marketing institute,
Nielsen, Chiquita had an estimated 18% market share in Germany in 1996, down from nearly 40%
in 1993. Even if it has been able to maintain its share in the other European markets, losing more
than half of the German market means that its total market share in Europe has fallen below
15%.
And thirdly, Chiquita seems late in strengthening its non-banana fruit and vegetable business. Like
the other fruit companies, it has been diversifying into other products, but to a lesser extent.
With its expansion in 1990-91, it became highly indebted. And, once confronted with the
consequences of the EU banana regime, Chiquita had first of all to attend to the restructuring of
its banana business. It divested itself of its meat operation during 1992-1995 after severe losses. In
1995 it sold its Numar edible oils group in Costa Rica, its stake in the troubled Pascual Hermanos
in Spain, and shut down part of its juice business.
But despite all its complaints about the EU Regime, Europe is the only market where it really
makes a profit because of the higher margin. Europe and other international markets accounted
for 85% of Chiquita’s operating income in 1996.
Only recently, after reducing overall borrowings and apparently under pressure from the problems
it faces in its banana business, does it seem to be shifting its attention towards non-banana
operations, especially to vegetables and vegetable related products. The new acquisitions are part
of a realignment of marketing operations which, together with agressive general cost-cutting
measures and a multi-year reorganisation of management structure, are aimed at finally boosting
Chiquita’s lagging profits.
In 1996, Keith Lindner became vice chairman of the board and was succeeded as President of the
Chiquita Banana Group by the group’s vice president Robert F. Kistinger.
A.2. Main acquisitions and divestments since 1993:
1993 Compagnie des Bananes (CDB), 49% owned by Chiquita Brands, takes 33% of Societe
Bananiere Caraibe (Sobaca), with option for the remainder, from Fabre-Domergue group
(Martinique). Also a distribution agreeement is signed.
1994 Joint venture with Eurobrands, Italy to market fruit juice on the European market.
1995 Sale of last part of its meat division to Smithfield, the other parts being sold in 1992-1994.
1995 Sale of its share in Pascual Hermanos (Spain), now part of Dole Foods.
1995 Sale of Numar edible oils in Costa Rica.
1997 Acquired Friday Canning Corporation (Wisconsin), American Fine Foods (Idaho), Owatonna
canning (Minnesota) in a combined $77m. deal.
1997 Acquired 83% in Blueberries Farms of Australia.
1998 Acquired Stokely, USA, a vegetable canning company.
1998 Direct Fruit Marketing GmbH, joint venture Chiquita’s European Frupac operations and
Atlanta.
A.3. Bananas
Chiquita expanded banana production in 1990-1991, expecting world-wide growth in the banana
trade. It was one of the first banana companies to invest in Eastern Europe in representation and
storage houses. Chiquita directly blames the EU regime for its losses and is the driving force behind
the US inquiry, under US trade Law 301, and the WTO dispute demand.

25. But it not only lost market share in Europe. It withdraw from the Philippines after the land reform
process, and had to reduce its Japanese green-banana trading. Over the last two years, it has tried to
recover its position in the Far East, in Japan and in new trade with China.
Given its position, brand promotion is essential to Chiquita. It claims to deliver the highest quality
and prices its bananas far higher than others. The difference was often over 50% per box. Its policy
has made it lose supermarket contracts to Dole and other companies, and not only in Germany. In
recent years, Chiquita has developed retailer- and consumer-oriented advertising campaigns
(especially in Germany and France) to restore the market share of its high-priced Chiquita label,
attempting to convince the public that quality is more important than price.
But its main goal it to establish itself as the environmental leader of the banana companies. In 1995,
Chiquita started the ECO-OK programme with the Rainforest Alliance, an international NGO
dedicated to the conservation of tropical forest. The programme is directed at achieving ‘sound,
safe, and environmentally improved agricultural practices’ (Annual Report 1996) in all its
plantations, and at the start of 1997, 25,600 acres had been certified in Costa Rica and Panama.
One of the main criticisms of the programme has been the lack of effective restriction of the use of
agro-chemicals as an ECO-label should demand. Especially as Chiquita, together with Dole and the
main Chemical companies, are involved in lawsuits with some 11,000 workers in different countries
over the harmful effects of the highly toxic DBCP. Meanwhile, the certification is intended to
reinforce Chiquita's market strategy.
Chiquita sold Fyffes to Fruit Importers of Ireland in 1986, considering it no longer part of its core
business. In 1995, Chiquita approached Geest to buy its banana operations. However being deeply in
debt, it was unable to find the cash for the deal. The losses in the European market have also made
Chiquita lose market share on a world level. Currently, the company is estimated to have revenues
of over $1,3bn. dollars coming from its banana activities, and to control around 24-25% of world
trade.
A.4. Other activities
Actually Chiquita is active in other tropical fruits like mangoes, kiwis and citrus, as well as other
fresh fruits and vegetables, including avocados, asparagus and potatoes, under a variety of brands
such as Consul, Amigo and Premium. It entered into the Chilean fruit export business in 1992 with
the acquisition of Frupac, one of the leading Chilean export firms. In 1997, it bought an 83%
stake in the fruit company Blueberry Farms of Australia for around $13m. In order to float its
Chilean exports on the European market, it announced a joint venture between Chiquita’s
European Frupac and Atlanta, called Direct Fruit Marketing in early 1998. And in the US,
Chiquita has citrus production for the US and European market.
Chiquita’s packaged foods division consists of a range of products, including:
- Ready-to-eat salads
- Edible oil products (margarine, cooking oil and shortening). Although Chiquita sold the Costa
Rican Numar group activities, it still sells edible oil-based consumer products in Honduras under
the Numar and Clover brands.
- Fruit juices and drinks, under the Chiquita Naked Juice, Ferraro brand. In Italy it produces fruit
juices for Europe.
- Processed bananas, among others, for use in baby food.
- Canned vegetables and other products. Chiquita's Friday Canning Corporation is a major
processor of private-label canned vegetables.
With several acquisitions last year in the USA (American Fine Foods, Owatanna Canning, Friday
Canning Corp, Stokely Inc) it has bumped up its vegetable-related revenues from around 5% to
15% of total sales. Lately, it has announced the closure of three vegetable plants at the Friday
Canning Corporation in Wisconsin.

26. Appendix B:
DOLE FOOD COMPANY INC.
Westlake Village, California, USA
Chairman and CEO: David H. Murdock
B.1. Financial Results 1991-1997 (in US$m.)
1997 1996 1995 1994 1993 1992 1991
Net sales 4,336 3,840 3,804 3,499 3,108 3,120 2,964
Operating income 164 193 138 123 133 223
Net income (loss) 160 89 23 68 78 16 134
Source: Annual Reports, Hoover estimate (1997)
Dole Food Company, formerly known as Standard Fruit in Latin America, is the world’s leading
producer and marketer of fresh fruits and vegetables. It seems to be successfully challenging
Chiquita’s leading position even in bananas. It also deals in canned fruits and juices. Dole Food is
active in more than ninety countries, and has around 47,000 employees world-wide (1996).
Dole was founded in 1851 in Hawai, its subsidiary, the Standard Fruit Company was created in 1909
by the D'Antoni family, and sold to Dole in the mid sixties. In 1995, Dole decided to separate its
real estate and resort business, Castle & Cooke, from the food business, as the two businesses are
too distinct in operation. David Murdock continues to lead both companies as CEO, but they are
separately listed on the New York Stock Exchange.
Dole revenues have been increasing steadily from $2.9bn. in 1991 to $3.8bn. in 1996. But their
operating income has gone down in the food business from $223m. to $123m. in 1993, clawing
back to $164m. in 1996. In 1992, the company blamed the world recession and lower prices for
their fall in operating income and spent $89m. in a two-year cost-reduction program. The low
results in the Pacific Rim and Europe, and a further 1994 loss in the USA reduced income, but they
are compensated for this by increasing results in Latin America however. Net income was down in
1995 due to losses in the discontinued operations.

27. B.2. Main acquisitions and divestments since 1993:
- Joint venture Compagnie Fruitiere for distribution in France and Spain. Common investment
in Cameroon and Ivory Coast.
1993 Acquired Saman-Micasar, a leading dried fruit company in France.
1994 Acquired 35% in Jamaica Producers Fruit Distributors Ltd., Dartford, Kent, UK. 1993 sales
$225m. Combination has 20% of the UK market.
1994 Acquired D&C, Agrofruta, Chile’s ninth fresh fruit exporter.
1995 Disposed of part of juice business and dried-fruit business, USA.
1995 Acquired the New Zealand operations of Chiquita Brands. Until then Dole had no financial
interests in New Zealand excepting the markets through Market Gardeners. In late 1994,
Chiquita had 39% of the market and Dole 18%.
1996 Acquired 90.8 % in Pascual Hermanos, the largest fruit and vegetable firm in Spain.
1996 Acquired a majority stake in Paul Kempowski & Co, Germany, a large banana ripener and
distributor. (25,000 boxes/week)
1996 A marketing joint venture with Langeberg Food Ltd., one of South Africa’s leading canned
fruit companies.
1996 Joint venture with BAMA Group, Norway, forming Dole-BAMA Fresh Salads.
1997 Acquired SCB Plantations, Ivory Coast through Comp. Fruitiere.
To improve their results, the company resolved to further identify their most profitable business
units and to concentrate on those activities. For that reason, Dole decided to sell the major part of
its juice business and dried-fruit business in the USA. To conform with general developments in the
food sector, Dole shifted its management attention from the supply to the market side of the
business, paying much more attention to strengthening its distribution network and supply
partnerships with the retail sector. Moreover, unlike Chiquita, Dole has followed a pragmatic market
approach since the introduction of the EU banana regime. It invested in production and distribution
in the ACP countries and Europe to obtain maximum access to banana import licences.
This approach has not been without success. In Germany where Chiquita lost half of its market
share, Dole is estimated to have doubled its share from around 13% in 1992. Also, in Asia Dole left
Chiquita behind. In the growing Middle and East-European market, both are present. However, no
data about market shares are available. The conclusion is that Dole has clearly won the market
battle with Chiquita, and even if Dole has not yet taken the lead in the world banana business, the
day does not seem far off when they will.
B.3. Bananas
As stated above, Dole’s world-wide banana volumes have steadily been increasing. Together with
Chiquita, Dole controls the North American market with an estimated market share of around 35%
(1994). Chiquita reduced its presence in Japan in 1994, but Dole had severe problems with Del
Monte, which was seeking a distribution system into the Japanese market through price-cutting.
Using investments in fresh and packaged food, the company has tried to guarantee itself a share in
the vast and growing Asian market. In December 1996, it opened the largest distribution facility in
Japan.

28. Dole has had a very pragmatic approach to the European market. Specialising in Dollar bananas, it
had to provide itself with access to ACP countries’ bananas to maximise its access to import
licences. It began by marketing ventures with European producers in the Canary Islands and former
European colonies in Africa and the Caribbean. In 1993, it tried to get hold of Fyffes, but failed in
the attempt. The 35% acquisition in 1994 of Jamaica Producers Fruit Distributors Ltd., a leading
distributor of bananas and other fruits in the United Kingdom, allowed Dole access to around 20% of
the UK banana market.
The joint venture with Compagnie Fruitiere resulted in access to production in Cameroon and the
Ivory Coast, but it also permits Dole to use the Compagnie Fruitiere’s distribution networks in
France and Spain for its bananas and other fruits and vegetables. In 1997, the takeover of 67% of
the SCB plantations in the Ivory Coast provided Compagnie Fruitiere with modern plantations, and
packing houses capable of serving the traditional Dollar markets. SCB control some 100,000 tonnes
of bananas. Once again, this is bad news for Chiquita which had a sourcing deal with SCB.
Previously mentioned arrangements have substantially increased Dole's banana sales in Europe.
Total sales of Dole Food Europe were over $1b. in 1996, up from around $570m. in 1993.
Meanwhile, Dole has developed a modern fruit terminal in Italy (Livorno). In 1996, it had a
network of twelve facilities in France, seven in Spain, four in Italy and one in Germany. It also has a
large distribution centre near Istanbul, and is expanding into St. Petersburg.
B.4. Other activities
Dole Food includes fresh fruit, fresh vegetables and packaged foods.
Fresh fruit and vegetables
The company has increasingly diversified in fresh fruit; oranges, kiwi fruit, mangoes and
pineapples. Following major acquisitions, it has become Chile's major fruit exporter (grapes, apples
and other fruits). In New Zealand it is involved in the export of kiwi fruit and other fruits.
Dole appeared in Chile in 1981 as the Standard Trading Company. In 1994, it managed its first
take-over in production with the acquisition of Agrofruta, a sister company of C&D International
and the ninth largest export firm. With the purchase of C&D, Dole Chile became the undisputed
leader of Chile's fruit export sector, outstripping the traditional industry leader David Del Curto
SA. The company deals in apples, pears and grapes, and more recently has been expanding into
stone-fruit. In 1996, Dole Chile marketed some 19m, cartons of fresh fruit world-wide, up from
around 12m. cartons in 1993, and representing about 12% of total Chilean fruit exports. Dole has
invested some US$40m. in the last five years to upgrade and expand its packing, cold storage and
CA capacity, and now operates eleven packing houses throughout the fruit producing regions of
Chile.
In the US, Dole sources fruits from different states, and through a ‘jet-fresh’ programme in Chile.
In the US, it runs the largest fully-integrated citrus organisation and is also the leading supplier of
grapes. The Philippines is Dole’s major pineapple production area, but it also produces vegetables
(and of course bananas). In Japan, it contracted over 1,000 Japanese farmers to grow fruit and
vegetables for the Japanese and other markets. In Europe, Dole sources pineapples from the Ivory
Coast through its joint venture with Compagnie Fruitiere. Dole Honduras continues to be the main
source of Dole branded grapefruits, however, currently it is expanding into US sourcing.
The North American market is its main market for vegetables where it deals in more than twenty
different types (including artichokes, broccoli, carrots and assorted lettuces). Given the
concentration in the US retail sector, Dole focuses on long-term partnerships built on a year-
round supply and increasingly requiring logistical support. It also has a growing line of value-added
products in one of the USA’s fastest-growing grocery segments -- single-serving salads, fresh-cut
vegetables and salad kits that include dressings. In 1995, it opened a new plant in California to
process vegetables. To reduce the agricultural risks in the USA, Dole is downsizing its investment in

29. agricultural properties, and sources increasingly from premier growers. Since 1996, it has been
disposing of many of its North American agricultural (vegetable) lands.
The expansion of the Dole distribution network in Europe after the introduction of the EU
banana regime also helped the company to broaden its fresh fruit, processed fruits and vegetables
business, so that it was not based only on the sourcing of fresh fruits in Chile. In Spain, it gained a
major acquisition with Pascual Hermanos (fresh fruits and vegetables). Pascual was facing severe
financial problems, and because of this Chiquita had decided to dispose of its stake.
In Norway, Dole entered into a joint-venture with the BAMA Group, active in fresh fruit and
vegetables, to form Dole-Bama Fresh Salads. It stood as a model for the roll-out of Dole’s value-
added salads throughout Europe. Dole expanded in Europe from fresh-cut pineapple and tropical
fruit salads to other fresh salads, which were also later introduced in the US.
Packaged foods
Dole is particularly strong world-wide in canned pineapple products and tropical fruit salads. With
over 6,000 workers in the Philippines, it farms around 10,000ha and operates a pineapple
cannery that is one of the largest fruit canneries in the world, exporting world-wide. For the
selection of fresh products and the distribution of packaged foods, it works together with Quantum
Corporation in the Philippines.
In an alliance with Langeberg Food (South Africa) in 1996, Dole planned to extend its product
line of deciduous canned fruit in the European market. However, at the end of 1997, poor
European results led Langeberg to shift its focus elsewhere and retire from the UK market. The
partnership with Dole will apply to Germany, Benelux and Scandinavia but has to be redefined.
In 1995, Dole disposed of the main part of its juice business to the Seagram Company, world-wide
leader in fruit drinks. Dole maintained its canned pineapple juice business. In Honduras, Dole has a
majority-owned beverage operation which supplies beverages, edible oils and soap products. It also
bottles for Coca-Cola and has a total share of around 75% of the Honduran soft-drinks market.

30. Appendix C:
FRESH DEL MONTE PRODUCE
Coral Gables, Florida, USA
Chairman and CEO: Mohammad Abu-Ghazaleh
C.1. Financial Results 1992-1997 (in US$m.)
1997 (3Q) 1996 1995 1994 1993 1992
Revenue 937 1,189 1,068 992 880 ± 900
Income (loss) 121 (134) (72) (64) (58) (63)
Fresh Del Monte Produce grows, transports and markets fresh fruit world-wide. It is the third
largest banana company, and the biggest in pineapples. In 1996, the company had 14,600
employees world--wide. The Abu-Ghazaleh family, of the United Arab Emirates, owns about two-
thirds of the firm through a holding company, the IAT Group. Since late 1997, Fresh Del Monte
Produce shares have been traded on the New York Stock Exchange. In 1996, bananas accounted
for 61% of Del Monte’s gross profit and pineapples for 36%.
No longer part of Del Monte Foods
The 1995 ownership structure is basically a product of the break up of RJR Nabisco in 1989. Del
Monte was split into three units: processed foods, fresh fruit, and international food and beverages.
The processed-food arm, Del Monte Foods USA (San Francisco), was bought by Myrell Lynch
Investment Funds (1994 sales: $1.6bn.). It owns the Del Monte brand and has stuck to the
company’s core business of canned fruit and vegetables. Del Monte International was taken over by
a management buy-out and sold to Royal Foods of South Africa. It has had problems ever since its
start.
Del Monte Fresh Produce was sold to Polly Peck which went bankrupt in 1992, after which the
division was sold to the Mexican investor group, GEAM, headed by Mr. Cabal, for $525m. In July
1994, it was announced that Del Monte Foods of San Francisco had agreed to a $1bn. take-over by
GEAM. Mr. Cabal’s intention was to re-merge Del Monte Foods with Del Monte Fresh Produce,
thus obtaining full rights over the Del Monte brand.
However, in September 1995 Cabal was discovered to have made illegal loans to himself, and his
associates, worth US $1bn. The government moved against Cabal, in part to prevent the purchase
of Del Monte USA as it would be financed illegally. Cabal disappeared. The company came under
state administration and the government put pressure on GEAM (Grupo Empresarial Agricola
Mexicano) to sell-off Del Monte Fresh Produce. The big companies, as well as Ecuador’s premier
exporter Noboa (Bonita label), were all mentioned as interested parties although, after all the
financial problems were taken into account, the real worth of Del Monte Fresh Produce was unclear.
In 1996, 80% of the shares were sold for US$534m. to Grupo IAT, owned by the Abu-Ghazaleh
family, with administrative headquarters in the United Arab Emirates. Grupo IAT owns Chile's
fourth-largest fruit exporter, United Trade Company UTC. The other 20% stayed in the hands of
GEAM.
Notwithstanding the financial and ownership problems, Del Monte Fresh Produce had been growing
as well in bananas as in other fruits, and sales passed $1bn. in 1995. Del Monte has been active in
the Pacific Market, where it lowered prices considerably to get access to the distributor network in
Japan. Since Del Monte was acquired by the Abu-Ghazaleh family, the company’s financial profile

31. has improved significantly. New capital and cost-cutting measures have enabled the company to
invest and expand aggressively in production and marketing world-wide. Late in 1997, Del Monte
made a public equity offering, of which it received net proceeds of around $177m.
The company is making a profit again, its share in total banana trade has grown as have its market
shares in Europe and North America. Besides bananas and pineapples, Fresh Del Monte also intends
to expand the exports of fresh fruit from its Chilean operation UTC.
C.2. Main acquisitions after 1993:
1994 Joint venture with four Brazilian companies from Pernambuco, Interfruit, to produce 200,000
tonnes of Del Monte bananas per year.
1994 Investment in Mexican agricultural lands to expand non-banana fruit production.
1996 Control over UTC, Chilean fruit exporter, due to the acquisition of FDMP by the IAT group.
1997 Nusantara Tropical Fruit, Indonesia. Joint venture with Umas Jaya Agro Industri for the
development of a plantation on Sumatra.
C.3. Bananas
In 1996, Del Monte claimed to have passed sales of 100m. boxes of bananas world-wide, which
reflect 15% of total banana exports. Like Dole, Del Monte has been investing in ACP countries, it
has invested in Cameroon, to spread its sourcing between Dollar and ACP banana countries. Its joint
venture in 1997 in Indonesia with Umas Java Agro Industri was to set up Cavendish Banana
production for export to East Asia.
Recently it has been far more aggressive on the European market. Its intensified market orientation
makes it, like the other fruit companies, more alert to consumer response. The combined banana
campaign from the Costa Rican trade union SITRAP, UK Bananalink/WDM and the IUF, led to
faster results than had been expected, and Del Monte (Bandeco) was the first company to sign an
agreement with the SITRAP in December 1997.
C.4. Other activities
Apart from bananas, Fresh Del Monte is active in pineapples and other tropical fruits. The
company is the world's biggest producer of pineapples through its subsidiary Pindeca, Costa Rica, and
has extensive plantations in the Philippines. Besides its own production, it buys from independent
growers.
Following the 1997 flotation, Fresh Del Monte is expected to substantially expand its UTC
operation. It has been buying significant farming capacity in Chile, and plans to increase exports
from 3.5m. in 1997 to some 4.2m. in 1999-2000, aimed at the European as well as the Japanese
market, where it recently opened a wholly-owned subsidiary.

32. Appendix D:
FYFFES
Dublin, Ireland
CEO: David McCann
D.1. Financial Results 1991-1995 (in I£m.)
1997 1996 1995 1994 1993 1992 1991
Revenu 1,460 1,430 1,118 897 623 524 608
Income 54 48 42 36 32 28 27
(I£1,460ml,n = US$2,040m.)
Fyffes is the main European banana company, and it also deals in other fruits and vegetables. It has
been expanding enormously since the introduction of the EU Regime through take-overs and joint
ventures all over Europe. It has nearly tripled sales since 1992, and has become the fifth most
important banana company on a world level.
The foundation for Fyffes was laid in 1882 by Edward Wathen Fyffe. In 1913 United Fruit took
over, but after more than a hundred years of family involvement, Neil McCann, who retired as
chairman in December 1995 and whose great-grandfather was the first Fyffes agent in Dublin,
bought the business in 1986 from Chiquita, which did not consider it part of its core business,
through the Fruit Importers of Ireland (then renamed Fyffes). The McCanns had 9% of Fyffes, but
have been expanding their share. Late in 1997, a US Chicago-based fund manager, David Herrero,
acquired 3%, considering the company undervalued.

33. D.2. Main acquisitions:
1993 50% Eurobananan Canarias, Spain. Joint venture with the Canary Islands’ largest banana
growing co-operative Coplaca (25% of the Spanish market). Sales around $100m.
1993 50% Lembcke A/S, Danish fresh fruit distributor, with sales of over $130m. (40% of the
Danish market).
1994 70% JA Kahl, German fresh produce company, with sales over $90m.
1994 50% Velleman en Tas, Rotterdam's (Netherlands) largest fruit-terminal operator with
sales over $250m.. In 1997 ,Fyffes expanded its stake to 100%.
1994 33% Sofiprim, a French distributor of fruit and vegetables, with sales over $100m.
1994 50% Tropic International, a French fresh produce group and banana ripener, with sales
over $45m.
1994 40% Jamaica Banana Holdings, JV with Jamaica Producers Group (55%) to cultivate two
estates (1250ha). Government has 5%.
1995 Majority stake in Grupo Angel Rey, through Eurobanan Canarias, creating the largest
trading group within the Spanish fruit and vegetable sector.
1995 50% Swithenbanks, UK distributor of fresh fruit. Sales ± $28m.
1995 Geest Bananas in a 50% joint venture with WIBDECO, the Windward Islands Banana
Development and Export company.
1995 50% Peviani, a major Italian fresh fruit and vegetable import-export group, with 1995
sales of $120m.
1996 50% Anaco International, Netherlands, fresh produce, one of the largest Canary Islands’
importers with 1995 sales of $65m.
1996 13% Ahorner GmbH, an Austrian fruit trader.
1997 NAFSA, Chilean Fruit exporter.
The agreement under which Chiquita sold Fyffes gave Chiquita the rights to the Fyffes trademark
for three years and a 'non-use' clause prevented Fyffes from using the trademark outside the UK and
Ireland until 2006. In 1989, Chiquita stopped using the trademark but invoked the clause to prevent
Fyffes from using it to sell into the European market. However, in 1992 after a complaint with the
European Commission, Fyffes won the world-wide rights to the Fyffes trademark.
Fyffes has been working hard on its expansion through marketing contracts and take-overs in ACP,
as well as in Dollar countries. It sees no problem in challenging the bigger companies and entered
into different countries with contracts with independent growers. In 1992, Fyffes bid for Del Monte
but lost. And in 1993 Dole offered £420m. for Fyffes, but was turned down at the last moment.
After getting the trademark rights in 1992, Fyffes started its expansion onto the European market,
which - in its own words - has not yet come to an end. It mainly invests in joint ventures wherein it
obtains controlling stakes. In 1993, it abandoned its plans to purchase Saba, the largest Swedish fruit
distributor, but is has a supply contract with them. Following more then ten acquisitions in two
years, Fyffes has obtained a foothold in all of Europe's main markets.
In December 1995, the take-over of Geest Bananas became a fact after months of rumours. In a 50-
50 joint venture (Wibco) between Fyffes and WIBDECO, Geest Bananas was bought for £147m.

34. Fyffes beat the Ecuadorian Noboa, because its attack on the EU trade regime made it an unreliable
partner for WIBDECO.
Late in 1996, Fyffes announced its intention to upgrade and expand seven Geest Bananas ripening
centres, and to retain the Geest Banana name because of its brand value.
D.3. Banana production
Fyffes has tried to move into Central America since 1990 to establish itself in Dollar banana
production. Until then it was only present in Belize, one of its original ACP sources. In 1990, Fyffes
played a role in breaking the market power of Chiquita and Dole in Honduras, but not without
violent problems which further destroyed the already poor relation between Fyffes and Chiquita. In
1992, it also became involved in COBSA, Guatemala, bringing an area of over 3,500ha under
production.
However, the lack of experience in production and banana sourcing within these countries broke
Fyffes up. It retired from Honduras, and in Guatemala sold its operations off to Dole. In addition,
Fyffes has set up a long-term shipping agreement with Dole to transport bananas from Latin
America.
D.4. Other activities
Through its extensive European network, Fyffes is active in other fruits and vegetables. To
expand other fresh fruit sales, it acquired the Chilean fruit exporter NAFSA, which exported 4m.
cartons of fruit last season.