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Introduction

A tropical commodity bought and sold by the boatload throughout the world. Agribusinesses with worldwide reach, including a firm that has been a lightning rod for anti-corporate criticism since the Great Depression. Minor Latin American states on the receiving end of globalization. An uncomplicated, and oft-told, story of banana republics and the misfortunes visited on them by multinational companies. What more need be said?

Bananas are the ultimate nonlocal food. More tons of wheat are exported. Cross-border shipments of corn and soybeans are more sizable as well. Barley holds fourth place in a ranking of agricultural exports by weight because harvests in Europe are routinely sold to feedlots and breweries in neighboring countries. But bananas come next, in fifth place and far ahead of every other fruit and vegetable. International shipments of bananas are a full order of magnitude greater than the cross-border trade in rice, which is produced in enormous quantities in China, India, and other Asian nations though almost entirely for domestic consumption. Economists characterize the international rice market as thin, which is another way of saying that the staple grain of the world’s most populous continent is primarily a local food. In contrast, countless bunches of fruit are purchased in the United States, Germany, and other places where few bananas grow. These places’ imports come from countries where negligible shares of production are consumed domestically, thereby allowing practically all output to be dispatched overseas. Safe to say, no farm product is more globalized than bananas.

Likewise, no agricultural commodity is associated more closely with large corporations based in the United States. The banana business was largely the creation of the United Fruit Company, called The Octopus because of its near monopoly in the U.S. market and its control of supplies in Central America and other parts of the Caribbean Basin for many years after the firm’s founding right before the turn of the twentieth century. The banana republic narrative derives from this period, when The Octopus overwhelmed its commercial rivals and controlled the fortunes of entire nations.

Chiquita Brands International (the current incarnation of United Fruit) has not had a lock on the production and marketing of bananas for decades. Nevertheless, corporate power and wrongdoing in Latin America are a recurring theme of books and articles about the tropical fruit industry—so much so that events and trends that do not fit with this theme are downplayed, if not ignored completely. Relatively little has been written, for instance, about the impact Colombians competing against United Fruit have had on banana development in their country. An even more striking example of neglect is Ecuador, which has been the world’s leading exporter of bananas for sixty years and counting. In various ways, the country contradicts the two-dimensional tale so many authors relate of The Octopus and the tropical lands it plunders. The truth is that Ecuador’s banana industry, which is the subject of this book, is independent, has been forged in competition, and ably serves customers wherever they are found.

Multinational enterprises have had a presence in Ecuador—an important presence, dating back to the 1930s and continuing today. However, the country has not achieved and sustained export leadership at the expense of turning itself into a corporate satrapy; to the contrary, its commercial accomplishments have gone hand in hand with its insistence on steering its own course. Still, the South American nation is treated as just another banana republic by authors bent on chronicling the power and abuses of The Octopus. Take Peter Chapman, who mentions Ecuador barely five times in a book titled Bananas that was published in 2007. Only once does Chapman distinguish the country from places that arguably have been under United Fruit’s thumb, by acknowledging in passing that an unnamed Ecuadorian firm competes in the global marketplace against Chiquita and a couple of other multinational fruit businesses.¹ In a volume with a nearly identical title released a year after Chapman’s book, Dan Koeppel goes so far as to mention the Ecuadorian brand (though never the name of the company, itself) on two separate pages.² No matter. One can read both books, which are supposed to be about the tropical fruit sector in its entirety, and still be unaware that the world’s largest fruit exporter has never been a banana republic.

Many authors whose writings have a narrower geographic scope hew to the prevailing narrative every bit as much as Chapman and Koeppel do. Historian Marcelo Bucheli does not do so. His book underscores United Fruit’s monopolization of Colombia’s banana industry before World War II, yet details the achievements of national planters and exporters since the middle of the twentieth century.³ In contrast, The Octopus looms very large in a book about Ecuador published in 2002. The author, Steve Striffler, is also dismissive of “local capitalists,” whom he lumps together with “small-time con men.”⁴ Aside from describing their conflicts with peasants and workers, Striffler devotes little more attention than Chapman and Koeppel to Ecuadorian growers and exporters. As a result, opportunities are cast aside to examine the significant contributions these economic actors have made to agricultural trade and development.

Geography and history have mattered a lot in Ecuador’s banana industry, including in terms of local entrepreneurship. The western part of the country, between the Andes Mountains and the Pacific Ocean, abounds in the natural resources needed for tropical fruit production: fertile soils, generous precipitation in some places and easy irrigation elsewhere, and a Caribbean climate though without hurricanes. The area also boasts a port city of long standing: something the Caribbean coast of Central America lacked at the turn of the twentieth century, when United Fruit and other U.S. companies started carving banana plantations out of the region’s tropical forests. Remote from governmental authority for hundreds of years after its founding by Spanish conquistadors, Guayaquil was a hub for business long before opportunities arose to export tropical fruit.

With a commercial city in its midst, western Ecuador has a banana market worthy of the name, with dozens of exporters and other merchants purchasing and selling the harvests of hundreds of farms. Few of these farms are large enough to qualify as plantations. By the same token, no fruit buyer, either foreign or domestic, monopolizes the market. Under the pressure of competition, entrepreneurial innovation, such as sales of bananas in places where U.S. firms rarely if ever venture, is rewarded. Additionally, business skills are honed. Not least among these skills is a knack for mutually advantageous partnerships, of the sort Ecuadorian exporters have harnessed in their ascent to the very heights of the global banana business.

Some of the most rewarding partnerships have been with agribusinesses headquartered in the United States, thereby demonstrating that the relationship between Ecuador and companies such as United Fruit has always been a mix of the cooperative and the adversarial. The country’s growers rely on the multinationals for technology, which those firms have been willing to share since they deal regularly in bananas grown in Ecuador. Similarly, many Ecuadorian exporters got their start by associating with foreign businesses that were already established in the banana trade. Even now that those exporters have gained experience and have cracked a number of overseas markets on their own, partnerships continue—whenever the benefits are mutual, that is.

By no means has the Ecuadorian government been a passive observer of banana development. Hoping for an infusion of technology and capital, national leaders courted United Fruit as long ago as the early 1920s. Investment by the company did not actually begin until a decade or so later, by which time the political temper of Ecuador was much more populist and nationalistic. Along with other restrictions, limits were placed on the foreign ownership of agricultural land. Aimed squarely at The Octopus, these limits and restrictions allayed fears of political and economic subservience without being so burdensome that the firm would give up on Ecuador. Accordingly, the government was free to facilitate a boom in banana exports, in which United Fruit played a major role and which began once normal transoceanic commerce resumed after World War II. For example, macroeconomic stability was maintained, which encouraged private investment. Ecuador’s government also saw to the construction of roads and bridges, which accelerated the tropical fruit sector’s geographic expansion.

But while foreign firms and the national government have furnished critical support, Ecuador’s banana industry has been led by competitive, homegrown entrepreneurs and, thanks primarily to them, challenges consistently have been met and overcome. Some of these challenges have been microbial, as when pathogenic depredations required a wholesale switch after the mid-1960s from the traditional variety of bananas to a new, disease-resistant variety. Others have had to do with disadvantageous public policies on the far side of the world, such as trade barriers the European Union adopted during the 1990s to limit fruit imports from Latin America. Ecuadorian entrepreneurs have found ways to deal with these difficulties, sometimes with the government’s involvement or the assistance of multinationals and at other times on their own.

There are no guarantees of similar success in the future. Importing nations regularly succumb to the protectionist temptation. The banana industry is harmed as well by policies with national, not foreign, origins. Thirty to forty years ago, for example, Ecuadorian authorities followed the lead of their counterparts elsewhere in Latin America by pursuing a strategy for economic development that stressed enlargement of the state, favoritism for the manufacturing sector, and weakening of agricultural incentives. The banana industry was not spared the consequences and fruit exports stagnated for many years. Even though the development strategy of the 1970s led to a severe economic crisis in the early 1980s, it has been resurrected in recent years and the tropical fruit sector is paying the price.

Plant pathogens also take a heavy toll. Already representing a large share of overall costs of production, pesticide expenditures are heading upward, mainly because chemical inputs grow less effective as harmful organisms evolve. Worse yet, there are no chemical countermeasures for some plant diseases, which can be overcome only through biotechnology—a tool for agricultural progress that is still not accepted in some quarters.

Notwithstanding pathogenic and other challenges, Ecuador’s banana industry and its independent entrepreneurs continue to survive and prosper. The Octopus, in contrast, no longer does so, at least as a separate business entity headquartered in the United States. In October 2014, Brazilian investors announced they would be buying Chiquita, lock, stock, and bananas.⁵ So The Octopus—an enduring symbol for many of multinational dominance south of the U.S. border—will henceforth be a Latin American possession.

A note on currency conversions. Ecuador’s long-time currency, the sucre, disappeared in January 2000, when hyperinflation threatened and the U.S. dollar was adopted as the legal national tender. Throughout this book, historical values in sucres are converted into modern dollar equivalents by, first, applying the rate of exchange between Ecuadorian and U.S. currency that prevailed at the indicated date and, second, converting historical dollars into equivalent values in 2014 using the deflator for U.S. gross domestic product (GDP).