Spiraling banana production costs underline need for fairer prices and living wages

Fairtrade demonstrates partnership with farmers and workers with the announcement of a Fairtrade Minimum Price UPDATE and a brand-new Fairtrade Living Wage Differential

WASHINGTON, Oct. 17, 2023 – Fairtrade America, the U.S. branch of Fairtrade International, today announced it is backing calls from banana producers and farm workers for fair prices and decent incomes – or banana producers risk going out of business.

In order to deliver on its promise to secure fairer prices for farmers and workers, Fairtrade recently undertook its annual public consultation and extensive cost of production study involving more than 165 farmers, traders and retailers. As an outcome, the organization updated the Fairtrade Minimum Price across 16 banana growing countries and introduced a brand-new Fairtrade Living Wage Differential.

“Price plays a critical role in creating fairer terms of trade for farmers and workers,” said Fairtrade International’s senior advisor for bananas Silvia Campos. “The price we pay for bananas at the supermarket checkout has a ripple effect all the way back up the supply chain to the workers and farmers who grow them. As the saying goes, price is everything, especially as these producers face inflated costs outside their control.”

Fairtrade is the only global standard that offers a sustainable path to living wages, living incomes and resilient banana supply chains. Only Fairtrade offers the three elements that play a crucial role in the trading of bananas: a newly-updated Fairtrade Minimum Price, a Living Wage Reference Price, and a brand-new Fairtrade Living Wage Differential. Together, these cost-focused elements are designed to make both living wages and resilient banana supply chains a reality.

“We found that banana production costs have shifted significantly in key areas,” continued Campos. “For example, wages – which account for around half of all production costs – have risen by nearly 15 percent. Fairtrade continuously monitors these changes and adjusts prices to reflect the realities of banana producers on the ground.”

Fairtrade’s unique model of minimum pricing and premium has acted as a vital safety net for banana producers since its introduction in 1996. The Fairtrade Premium alone has brought more than $259M USD in Fairtrade Premium to banana growers since 2015. Fairtrade International is the only certification in the world to have 50 percent producer governance and is proud of its farmer-centered approach to decision-making.

“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 Association of Banana Exporters of Ecuador AEBE and coordinator of the Banana Cluster of Ecuador. “The new Fairtrade mechanism establishes a Fairtrade Minimum Price that not only covers the Fairtrade Base Wage (seventy percent of the Minimum Living Wage) and labor costs, but also includes environmental and social costs, as well as those necessary to address all of the industry’s phytosanitary challenges such as sigatoka, moko and TR4 prevention. This comprehensive approach recognizes the complex nature of banana production, ensuring that producers can meet their financial obligations while achieving social and environmental sustainability.”

“This mechanism represents a significant step forward in ensuring sustainability and fairness in the banana industry.”

• José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador

Fairtrade is also offering its commercial partners a package of reporting and monitoring tools and continuously updated technical data. They’ll be able to measure and visualize how their commitment to pay a fairer price is helping workers earn a living wage as well as supporting farmers and large-scale farming operation owners to pay for sustainable practices on their farms.

The comprehensive new offer reasserts the indispensable role price plays in building sustainable supply chains and reaching global sustainability goals. It also allows businesses to more directly invest in their supply chains and meet the increased demands of consumers for products that respect people and the planet.

“At Equifruit, we’ve had a 100 percent Fairtrade brand promise since day one.  In order to assure fairness within our banana supply chains, it is crucial that we operate within a framework where we are not setting the rules nor marking our own progress. Fairtrade Standards are clear and minimum pricing is reviewed annually to reflect the cost of sustainable production,” shared Kim Chackal, director of sales and marketing at Equifruit. “The pricing that retailers are accustomed to is unsustainably low for banana farmers. The Fairtrade framework gives us confidence in the transparency and traceability of our business model.”

A ripe market for bananas

Through the 2023 Fairtrade America Consumer Insights report conducted by independent insights consultancy, Globescan, Fairtrade America learned that – despite increases in the cost of living in the U.S. – 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 of them trust Fairtrade.

The study also found a shift in consumer perceptions around the value of certified bananas. On average, U.S. shoppers today are willing to pay $0.60 USD more per pound for Fairtrade bananas.​ The tolerance for higher banana prices also increased from 43 percent to 66 percent in the past two years. Today, 61 percent of consumers are aware of the Fairtrade Mark, and 2 in 3 shoppers familiar with Fairtrade prefer to shop at retailers that carry certified products.

“Climate change, workers rights and living wages are more top of mind than ever for U.S. shoppers. The time is right to create meaningful change throughout the supply chain,” urged Amanda Archila, executive director of Fairtrade America. “ We are optimistic that with a continued focus on fairer prices that address the urgent needs of banana producers, we can create a banana industry that will last for years to come.”