CSR News

Spiraling Banana Production Costs Underline Need for Fairer Prices and Living Wages

Banana Production Costs

Banana Production Costs – Fairtrade America, the United States affiliate of Fairtrade International, stated today that it is supporting requests from banana growers and farm workers for fair prices and good wages, otherwise banana producers may go out of business.

Fairtrade recently conducted its annual public consultation and detailed cost of production study, engaging more than 165 farmers, traders, and retailers, in order to deliver on its goal of securing fairer prices for farmers and workers. As a result, the organization revised the Fairtrade Minimum Price in 16 banana-growing nations and launched a new Fairtrade Living Wage Differential.

“Price plays a critical role in creating fairer terms of trade for farmers and workers,” said Silvia Campos, Fairtrade International’s senior advisor for bananas. “The price we pay at the supermarket checkout has repercussions all the way up the supply chain to the workers and farmers who grow them.” As the phrase goes, price is important, especially when these manufacturers are dealing with rising prices that are beyond their control.”

Fairtrade is the only worldwide standard that guarantees living wages, living incomes, and durable banana supply chains. Only Fairtrade provides three essential factors in banana trading: a newly updated Fairtrade Minimum Price, a Living Wage Reference Price, and a brand-new Fairtrade Living Wage Differential.

Banana Production Costs

“This mechanism [Fairtrade] represents a significant step forward in ensuring sustainability and fairness in the banana industry, encompassing key elements such as fair labor standards, environmental sustainability, and social responsibility,” said José Antonio Hidalgo, executive director of the Ecuadorian Banana Exporters Association AEBE and coordinator of the Ecuadorian Banana Cluster. “The new Fairtrade mechanism establishes a Fairtrade Minimum Price that includes not only the Fairtrade Base Wage (seventy percent of the Minimum Living Wage) and labor costs, but also environmental and social costs, as well as those required to address all of the industry’s phytosanitary challenges, including sigatoka, moko, and TR4 prevention.” This comprehensive method acknowledges the complexities of banana production and ensures that growers can meet their financial responsibilities.

Fairtrade also provides its business partners with a suite of reporting and monitoring tools, as well as continually updated technical data. They will be able to monitor and understand how their resolve to pay a higher price is assisting workers to earn a livable wage while also assisting farmers and large-scale farming business owners to pay for sustainable agricultural practices on their farms.

The complete new offer reaffirms the critical role of price in establishing sustainable supply chains and achieving global sustainability goals. It also enables firms to invest more directly in their supply chains and meet consumers’ growing desire for products that respect people and the environment.

“From the beginning, Equifruit has made a 100% Fairtrade brand commitment. To ensure fairness in our banana supply chains, we must operate within a framework in which we do not set the rules or track our own progress. “Fairtrade Standards are clear, and minimum pricing is reviewed annually to reflect the cost of sustainable production,” Equifruit’s head of sales and marketing, Kim Chackal, explained. “The prices that retailers have come to expect are unsustainable for banana farmers.” The Fairtrade framework offers us trust in our business model’s transparency and traceability.

Fairtrade America learned from the 2023 Fairtrade America Consumer Insights report conducted by independent insights consultancy, Globescan, that despite increases in the cost of living in the United States, nearly 80 percent of consumers who know Fairtrade are willing to pay more for a product to ensure producers are paid a fairer price, and 86 percent trust Fairtrade.

The research also discovered a shift in customer opinions of the value of certified bananas. Fairtrade bananas currently command a $0.60 USD premium per pound in the United States. In the last two years, tolerance for rising banana prices has increased from 43% to 66%. Today, 61% of consumers are aware of the Fairtrade Mark, and 2/3 are interested in it.