The Panama Banana Wars of 2003,4,5,6,7...
Monday, October 29 2007 @ 05:46 PM UTC
Contributed by: Don Winner
Editor's Comment: Nobody covers the entire scene of banana production in Panama better than the guys at Freshplaza.com By way of background, the Chiquita company is in the process of slowly "backing out" of the Panamanian banana business, and they signed a contract that gives them leverage over how things are done for several more years. Panamanian babana growers want to get on with it, but it is in Chiquita's best interests to do otherwise.
A first delivery is in the photo report attached to this article. It contains comments and perceptions (in Spanish) of some actors at this conflict. To see the report please click here.
Mr. Alvaro Muñoz, legal advisor of the workers, declares that contracts in 2003 and revalidated in 2006 were against the interests of workers, who are supposedly the owners of the production. According to Salustiano De Gracia, General Secretary at the Union Sintrachilco, the Cooperative needs not only a better price per box but also that Chiquita eliminates the monopolistic behavior of the contract. This contract does not allow selling bananas to other companies without their permission. Mr. De Gracia assures that many firms want to buy Coosemupar bananas directly. In fact, they want to buy the bananas that Chiquita rejects, but “Chiquita does not allow it”, he declares.
“Chiquita only buys bananas of outstanding quality; the problem is that they reject the rest: the so-called “first-quality modified” is rejected, second quality is bought with a price under the production costs and the rest lower than these standards is also rejected”, declares Mr. De Gracia. The land has potential, diseases can be controlled with a good support, infrastructure exists and workers push to work harder, but according to the contract of 2006, if the cooperative does not have economic viability it would be closed. According to the legal adviser, Mr Alvaro Muñoz, “there are some clauses impossible to fulfill. If the sales to other companies (different to Chiquita) are not liberalized, simply we close and that was known by Chiquita when they imposed this contract”.
According to Mr. Muñoz, there are two alternatives to break this contract: first, to ask the national agency for protection of consumers and anti-trust in Panama to open a process to finish the contract or second, to ask for an arbitration process (in the US). The latter would take longer and would result in the fastest solution for the workers. “An external alternative would be to ask the WTO, but this is only possible between governments and that could take even longer”, concludes Mr. Muñoz.
The Auditor Manager of Coosemupar, Mr. Hirisnel Sucre, confirms in a letter to the Executive Director of the Instituto Panameño Autónomo Cooperativo, Víctor López, the problems above and concludes: “the cooperative under our management, cannot continue with the contractual relationship with Chiquita International Limited because of its unsustainability from the economical point of view, therefore we ask (…) to finish the obligations of Coosemupar with this company”.
Coosemupar has 3,000 hectares of production for 2,800 direct workers (2,400 of them are part of the union). Logistics until port are complete responsibility of Coosemupar but it should be paid to Chiquita. According to the Union's figures the normal costs of logistics until the harbor could be 12 cents and Chiquita charges 30 cents.
During the last four years, losses in social aspects sum up approximately 21,5 mln. dollars. According to the workers, there is a hope for them: since 2003, the government has given a technical support of about 4 mln. dollars and nowadays it can be noticed an approach between workers and the Minister of Agriculture.
Reaction by Chiquita
In an official statement, Chiquita reacts as follows: "Chiquita wants Coosemupar to succeed and we have worked with government to find a sustainable solution to coop's financial condition, which is due primarily to poor farm productivity. Chiquita, the government and the coop agreed to a financial assistance package in December of 2006 to allow the coop to rehabilitate cultivations, improve productivity and become viable. We have fulfilled our portion of the agreement completely, providing more than $4 million in financial assistance, and we expect our contract to be honored.
"However, the challenge remains that productivity and efficiency must improve to generate the income and cash flow required for Coosemupar to be a sustainable business. How these challenges are resolved is an important decision for the government and the cooperative."
Click here to view the photo report
Publication date: 10/29/2007 Author: Jahir Lombana Copyright: www.freshplaza.com