a. How did the Common Market Organization for Bananas (“CMOB”) affect Chiquita?
Six firms dominated the banana industry in the early 1990’s, three from Europe and three from the United States. In 1994, the three United States producers, Chiquita, Dole, and Del Monte, accounted for approximately 72.4% of world banana sales. Chiquita accounted for 48% of worldwide banana sales and 66.4% of banana sales of the three U.S. producers.
Prior to 1994, Europe accounted for nearly 40% of world banana imports by volume, of which roughly 60% came from Latin America, the primary location of Chiquita Brand International’s banana production. However, in 1993, a common banana import policy, council Regulation (EEC) 404/93, became effective four
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Since those numbers were not available in the case, we chose to compare the prices and consumption of bananas in Germany versus France prior to CMOB taking effect. (move to an end note: Germans, residents of the only free market for bananas in Europe, consumed 16.6 kg of bananas per capita at an average price per ton of 438 of ECU in 1991 while the French, residents of Europe’s most protective market, consumed 8 kg of bananas per capita with average price per ton of 604 ECU. (case p 7). The percentage change in price from France to Germany is (604 ECU-438 ECU)/438 ECU, which equals .379. The percentage change in quantity from France to Germany is (8 kg-16.6 kg)/16.6 Kg, which equals -.518. The absolute value of the percentage change in quantity over the percentage change in price is 1.3.) That calculation showed European demand to be elastic at 1.3, so for every 1% change in price, the quantity demanded will change 1.3%.
c. What are the supply side constraints in the banana market? The slope of the supply curve demonstrates how quickly a supplier can react to a change in prices. The following issues can affect the slope of the banana supply curve:
Labor: Bananas grow all year but in 13 week cycles, and they are harvested daily by cutting the stems by hand. (http://money.cnn.com/magazines/fortune/fortune_archive/2001/11/26/314058/index.htm). In its controversial
20 years ago, Peruvian asparagus would not be found in the isles of American supermarkets, whilst now Peru is the largest exporter of fresh asparagus bringing in most of it’s exports to primarily American buyers. Unlike most of its competitors, Peru hardly consumes any of its own produce exporting 99% of its output both fresh and processed. Only Mexico shows similar characteristics where 95% of the Asparagus is exported. Since Asparagus is native to the land, Peru has the advantage of growing the freshest and safest product that needs no type of processing or chemical preservatives. Roughly fifty percent of the Asparagus produced in Peru is green and sold fresh whilst the other half is white and sold in cans or jars. (Carnoy) Peru was able to produce asparagus very cheaply due to very low labour costs, cheap water and high yields. These factors offset the cost of exporting the goods, which is roughly half the cost of Peruvian asparagus by the time it reaches our shelves. When Peru came into the U.S. market with a
John Soluri 's Banana Cultures: Agriculture, Consumption and Environmental Change in Honduras and the United States, (Which for spatial and repetitive purposes, I will refer to as Banana Cultures for the remainder of the paper), introduces the reader to a world of corporate greed, consumption, and environmental change using the history of the common, everyday fruit, the banana. He explores the various political occurrences, health problems, and changes in mass media through the rise of the consumption of the banana in the United States, and around the globe.
We eat bananas almost every day; however, most of us do not really know where these fruits come from. In Banana Cultures, John Soluri focuses on the relationship between banana production in Honduras, especially in the North Coast between roughly 1870 and 1975, and banana consumption in the U. S.. He focuses on growing, protecting, transporting, and mass marketing of bananas. John Soluri integrates Agroecology, anthropology, political economy, and history in order to trace the symbolic growth of the banana industry. The author admits that his work is highly interdisciplinary, as a desirable trait in the academic world. The study incorporates a wide range of sources, including manuscript census data from Honduras, fruit company records, published scientific records, Honduran and U.S government correspondence, oral testimonies, and ephemera from U.S mass culture. Throughout his work, he combines elements of geography, biology, social history, foreign affairs, and environmental history. Soluri also looks at labor practices and worker’s lives, changing gender roles on the banana plantations, and the effects of pesticides in the Honduran environment and people. His central argument is that United States consumption of bananas causes major social, political, and environmental change in Honduras. In addition, he looks at the banana pathogens, the ways the United States treated these fungal diseases, and the terribly detrimental effects these new treatments had on the farmers on
At the end of 2007, Panera Bread Company was in an unfamiliar position where taking out debt was a necessary action to gain funding. Raising prices would be an option to help with the deteriorating margins, but there is fear that this move will slow the growth of the company. Other options, such as lowering the quality of food, would go against Panera’s fundamental goal of serving high quality food. At this time, Panera is in a position where it needs to repurchase stock. The $75 million buy-back should help give confidence to their shareholders. However, to accomplish their growth goals and stock repurchase, Panera will require external funding for the first time.
During the global trade between Europe and the Americas, the banana was first introduced to the New World and turned out to be one of the most
Banana is a commodity that is widely used worldwide. Bananas are neither too extravagant, nor too expensive meaning that anyone and any level of socio-economic status can purchase them, from the very poor to the very wealthy. Bananas can be found at any brand name store, farmers market, or flea market. Bananas are commodities that are highly valued, traded, and desired. The success of the banana can be attributed to the fact that it can be grown and harvested all year long in different parts of the world. The success lies in the mass production, distribution and consumption of these goods. However, there is an ugly reality people are exploited, countries and people are complete dependent economically on bananas, and countries and terrain are destroyed by those corporations that benefit the most from the distribution of bananas.
By 1993, the Banana Empire ceased to exist due to Panama Disease, ongoing labour issues, the rise of new competition and the increased assertiveness of host country governments all contributed to the growing intricacy of the industry. Nowadays, the modern banana farmer has been exposed to many pesticides, which have led to adverse health conditions for the majority of workers but working conditions and wages are on the rise currently. The introduction of fair trade bananas in 2004 was fundamental in bettering the working conditions for farmers and labourers.
The açaí palm (Euterpe oleracea) is native to Trinidad, Brazil, and throughout the Amazon rainforest region. It grows among the flooded soil along estuaries of the Amazon river and is traditionally consumed by peasants because of its filling nature and its abundance and availability in its natural habitat. The açaí palm provides both food and construction material, via the berries, palm hearts, and palm fronds that are used as thatch roofing. Açaí has become extremely popular among American and European markets in recent years and although it is not yet a mainstream product, it has caused a substantial shift in the means of production where the fruit originates. If exports continue on their current upward trajectory it is troubling to consider the effects that this would have on açaí-producing nations given the long histories that Central and South American countries have of imposed dependency on
Within each region it was also common to see different variations of the plant depending on how well it was cultivated in each area. It would be the expansion of Islam that would help with the “rediscovering” of the banana in Asia and once again in Europe. By the outbreak and presence of the Islamic culture Muslim merchants carried bananas amongst their goods in their trade routes to and from various regions such as South Asia, Middle East, North Africa, and West Africa`. Arabian conquerors and Islamic dispersion helped bring the banana plant to the west which would lead to the carriage and eventual movement to the New World by explorers traveling to the Caribbean for missionary purposes. The Japanese found other uses for the banana by using its fibers to be utilized for textile purposes and making other fabrics. In Europe however, the presence of the banana was most likely introduced to the Europeans by Moorish invasion in the 16th century. The Portuguese were establishing the cash crop in Brazil which also could be another source of how the crop spread to the New World and sugar plantations in the Caribbean. This area of the Caribbean extended out to Central and South America is where we now familiarize ourselves with the cultivation of the
In the book, Banana: The Fate of the Fruit That Changed the World (2008), Dan Koeppel talks about the historical background of banana. He also talks about its’ importance to African farmers and its’ importance to Latin America and Asia in economic terms. He describes that a disease called blight has caused serious threats to banana crops, as it is rapidly destroying the banana crops around the world (Koeppel, 2008). In this book, the author describes the role of two mega companies; Dole and Chiquita. They are committing massacres in the name of producing cheap banana. In Latin, America Chiquita is exploiting the labor. It also supports
Also, its supply chain is much more direct. By the time a peach makes it into the hands of a grocery store customer, it’s gone from the farm to a central distribution center, then to a local center. Once it’s in the grocery store, it sits in the back until they need to restock. That means weeks in between ripening on the tree and ending up in a buyer’s hand.
“Historically, the banana trade symbolized economic imperialism, injustices in the global trade market, and the exploitation of agriculture-dependent third-world countries”(2). However, they remain to be one of the most profitable items in grocery stores. Making bananas crucial to economic and global food stability for countries all over the world. They are the third largest staple crop, coming only after wheat and coffee. Since bananas are such a sought after fruit, many companies have gone to extensive lengths in the to fight for a share of the market. Chiquita Brands International was one of the pioneer companies to try and globalize bananas. They took a risk and made some very critical mistakes along the way.
While globalization is a relatively new phenomenon in theory, but not necessarily in history, as of 2009 it has created transnational corporations linked to government, international economic institutions, and non-government organizations. (Steger 67). With this definition bananas are a textbook example of the globalization of tropical fruit commodities. The transnational corporations of the United States, most notably Chiquita, Dole and Del Monte, have been linked to the governments of Latin and South America, the World Trade Organization, and the “organic” fruit movement. By tracing the path from banana plantations to supermarket it becomes clear how the “morals” of capitalism have permeated
As learned in class, the advantages of international business are great, but so are the risks. Some of the risks involve ethical issues as the ones Chiquita faced doing business in Columbia. Chiquita was the first to successfully internationalize banana trade; Chiquita did so by paying special attention to retail development and followed industry trends. Their competitive advantage was acquired when the company revolutionalized the banana trade by using refrigerated ships for the first time.
The industry in which Zespri functions in within New Zealand can be broken up into three broad value generating activities. The first activity is growing of kiwifruit which pertains to the orchards and includes pest and disease control and harvesting. The second includes the post harvesting activities including grading, packing and storing. The final stage and perhaps the most intrinsic stage includes the exporting.This includes the selling and distribution of the kiwifruit to overseas markets. Zespri International group is responsible for marketing almost all the export quality fruit from New Zeland. The only exclusion being the Austrailian Market.