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Chiquita's crooked business

The following research was carried out between December 2019 and January 2020 for the Swiss NGO Public Eye and was first published in March this year. In order to protect the interviewees from repression, all the names in the text were changed. Plantation worker Daniel, whose real name is Lenin Merino, died of Covid-19 on 11 July 2020. The background here.

A good dozen men are sitting at a traffic circle outside Machala that late afternoon – they chat, surf on Facebook, wait. They are here because they are hoping for the foreman of some banana plantation, who confirms to them a Jornada for the following day: work for one day. It is a lottery that thousands of men and women are exposed to every day across Ecuador.

Outside the banana sector, there are hardly any jobs, the men at the roundabout tell us. At most here and there a few days as an auxiliary worker on a construction site. When asked how he would otherwise get money, a 17-year-old says bluntly: “About selling drugs.” This is much more lucrative than sifting down on the banana plantations, his colleague says.

Chiquitas crooked business

Since the beginning of the 20th century bananas have been planted in this area, as in many places in the Ecuadorian lowlands. The Andean state has been the world’s largest banana exporter since the 1950s, with almost a third of all bananas traded internationally coming from Ecuador. There are around 5000 producers, from micro-enterprises to large plantations, the sector employs more than 200,000 people, and indirectly around two million people depend on banana cultivation.

Saving taxes on Lake Geneva

Most Ecuadorian plantation owners sell the bananas to middlemen, who sell them to international banana traders– chiquita, for example. The company primarily supplies Europe and North America and has two headquarters: The US business is handled in Fort Lauderdale ( Florida). The European business since 2009 in the canton of Vaud.

The group used to be headquartered in Antwerp, Belgium, where Chiquita had to pay income taxes of more than 20 percent. With the move to Switzerland, the tax burden fell to 2.5 percent, according to a 2010 report by Swiss television. The Group had registered in the canton of Vaud just in time for the so-called “Lex Bonny”: the law had allowed structurally weak areas in Switzerland to waive taxes entirely for new companies for ten years.

This privilege attracted a number of well-known corporations to the Lake Geneva Arch in the early 2000s. Meanwhile, the tax privilege for Chiquita has expired. Ten years after moving to Rolle, Chiquita moved its headquarters a few kilometers further, to Etoy. It is not known whether a new tax deal was negotiated there.

Chiquita has not published any figures since 2014. The banana trader was acquired by a joint venture between Brazilian orange juice exporter Cutrale and Safra Group, which also includes Swiss bank J. Safra Sarasin. The new owners took Chiquita off the stock exchange.

If you want up-to-date information about Chiquita and its suppliers, you have to talk to industry experts, producers and workers. The company responds to media enquiries with cumbersome generalities. Instead of hard facts, there are colorful PR brochures.

Military coup and protection money to paramilitaries

A lot can be found out about the company’s history. For Chiquita has a long, inglorious history of accusations of human rights violations. Even the term “banana republic” goes back to Chiquita, or its predecessor United Fruit Company (UFC). The term stood for the stark social inequalities in Central American states, whose dependent and sometimes corrupt governments were virtually controlled by the UFC.

In the 1950s, the UFC supported a military coup against Guatemala’s reform-minded president; In 1961, the company participated financially in the invasion of the Bay of Pigs, a U.S. military coup attempt against Cuba. In 1972, the UFC helped a dictator to power in Honduras. And after the name change in 1990, Chiquita paid protection money to Colombian paramilitaries.

Finally, at the beginning of this century, it was revealed that Chiquita had agreed with its competitors on the prices and sales volumes of bananas and pineapples. At the time, the company secured impunity with a self-instatement. To this day, NGOs report violations of labour rights on banana plantations – for example, due to pesticide poisoning and the suppression of trade unions.

Gross violations of labour law

Ecuador is an important banana supplier for Chiquita, especially between October and May. In 2014, Chiquita sourced 18 percent of all bananas from Ecuador. Accordingly, all the plantation workers we meet have already worked for Chiquita producers. At the beginning of 2020, we set out to take a look.

Based on our research, we assume that the group hardly owns its own plantations in Ecuador and that most of the bananas are bought by intermediaries. The relevant contracts are often drawn up at short notice, typically for one or two years. Already 13 years ago, Public Eye called on the transnational banana companies to enforce minimum ecological and social standards in subcontracting companies as well.

But little has changed since then, and the misery on the subcontractors is still complex. The low wages are one of the biggest problems for harvest workers, as one of the day laborers tells us. Depending on the plantation operator, they receive between 20 and 25 dollars per day, sometimes less. If you work full-time on this wage, you will barely reach the legal minimum wage of 400 dollars per month.

Even the minimum wage is hardly enough to live on. But the plantations do not hire the same number of workers every day. And those who are unlucky are paid per box, which greatly increases the pressure to perform. Some producers also hire migrant workers from Colombia or Venezuela, some of whom worked for a daily wage of 12 to 15 dollars. That would be equivalent to an hourly wage of 1.50 to 1.90 dollars for eight hours. “But often the Jornada takes longer,” says one worker. “Sometimes it’s ten or twelve hours a day.” The workers in Ecuador’s banana plantations are vulnerable to this arbitrariness.

Many people we talk to tell us that contracts are rarely concluded and hardly any social security contributions are paid in. If a picker becomes ill, a washing machine worker becomes pregnant, a packer has an accident or an auxiliary worker is scheduled to visit the school, then that is their problem.

Chiquitas crooked business

“Nobody cares about us,” says one of the men on the side of the road in Machala. Those who want to get up or organize themselves in a trade union run the risk of being fired, or of finding their name on a blacklist and no longer being employed anywhere, the workers said.

Children also worked in plantations

We meet Daniel at work on a banana plantation. Even as a child, he packed banana tufts into huge plastic bags – one of the hardest jobs on the plantations. His work not only requires constant climbing up and down the ladder, the Enfundadores, as they are called, are continuously exposed to synthetic pesticides. Impregnated with fungicides or insecticides, the plastic shells protect the fruit from weather, vermin and fungi.

When he was instructed by his older brother, Daniel was twelve years old. The boys needed the money to get their mother and siblings through. And even if the producers deny it or deliberately overlook it, abusive child labour is still a reality in Ecuador’s banana industry. It is not only human rights organisations that keep pointing this out. The U.S. Department of Labor has also listed bananas from Ecuador on a list of products that are at high risk of being produced with the involvement of abusive child labor.

It is well known that the agricultural sector is a high-risk sector for human and labour rights violations of all kinds, and Public Eye has also recently published a detailed report on this subject. One of the worst forms of these infringements is abusive child labour. Entire generations are discouraged from attending school, allowing themselves and their families to break out of the spiral of poverty. Chiquita must have understood this after all these decades, but the company writes in its richly illustrated sustainability report of 2019 only that it has “identified children as a potentially vulnerable group” and now needs to better understand what the impact is on them.

Chiquitas crooked business

Daniel, who has worked on various banana plantations since childhood, could certainly tell the company a lot about how this work has affected his life. Today, he is 30 years old and still packs bananas, albeit on an organic farm, without synthetic pesticides. He is very happy about this, because the use of poison made him seriously ill ten years ago. A doctor warned him at the time that a simple flu could be fatal for him. That’s why Daniel collected seafood on the coast for a while, but a few years later he came back to the bananas. Daniel now earns between 25 and 30 dollars a day and is one of the privileged with his de facto permanent employment, albeit without a contract of employment.

The propellers of several small aircraft can be heard from a distance. Every day they make their rounds outside Machala, the self-proclaimed banana world capital near the Peruvian border. They spray their pesticides from three to five meters high on the endless green monocultures. Directly next to the plantations are schools, residential buildings and streets.

One who was exposed to the aggressive chemicals is Francisco. The young doctor completed an internship in the countryside last year, not far from where the propeller planes make their rounds. Soon he noticed the frequent cases of hives fever; He had treated one or two patients a month with itching, quads or swollen lips.

When the 26-year-old visited his patients in the countryside, he found that the plantations had almost taken over their homes over the years and with the spread of monocultures. In some cases, the banana plants stand up to the canopy of the neighbours. According to Francisco, plantation residents are exposed to the highest health risk – apart from the workers themselves.

In numerous conversations, they confirm to us that they often stand in the middle of the plantation during the spray flights and have to cover themselves with a piece of fabric. They would have to be warned and would not be allowed to enter the plantation for 12 to forty-eight hours after flights. But in practice, they only wash their eyes afterwards and try to dry their skin as much as possible from the oily mixture.

Chiquitas crooked business

Characteristic of this is the story of a young woman who accidentally emptied water with chlorine granules over her chest, abdomen and legs while washing bananas. Because she was dependent on work and did not dare to leave her post for moving, the disinfectant burned into her body for hours. It wasn’t until seven days later that she joined Francisco, with second-degree burns. “For fear of losing their job,” says the doctor, “these people try to hide such accidents at work and wait until there is no other way.”

Bribe oils the banana trade

For Andrea, it was clear from the beginning that she wanted to dispense with synthetic fertilizers and pesticides in her plantation and produce organically. In 2017, she began selling her fruit to Chiquita through a cooperative. However, she is reluctant to remember that time. “We had problems with Chiquita from the beginning,” she says. “Whole pallets were rejected on flimsy grounds, and that is at least about fifty boxes of bananas.”

It was a matter of a lack of weight of the goods or of mini scars on individual fruits. “But if you put enough money on the table for The Controller of Chiquita, it suddenly didn’t matter anymore.” She had to pay several hundred dollars so regularly, Andrea says. Today, the middlemen are a little more cautious because of the newly installed cameras in the warehouses rented by third-party companies. “Now the business is simply done in the front room.”

We meet Enver, an agricultural engineer who has been following the banana sector for years and knows the business practices. Somewhat tensely, he sits in the chair in his office outside the economic metropolis of Guayaquil, with both arms resting on his back, and says what many in Ecuador think: “The banana industry works like a mafia. Fifty percent is legal, fifty under the table.”

Enver didn’t want to talk to us at first. Certainly not about the banana trader Chiquita, with whom he was employed for several years. He was responsible for inspecting the plantations, irrigation systems and weed control at Chiquita’s suppliers and for checking the condition of the fruit between harvesting and shipping.

When we explain the purpose of our research to the mid-forties, he agrees. “It’s important to know that this is not about a single company,” enver says, “it’s about a whole system.” His manager at Chiquita was one of many who regularly took bribes – both from the middlemen themselves and from the producers' cooperatives closely associated with them, the Asociaciones Bananeras.

Organic bananas are used in traditional fruits

In fact, the banana trade in Ecuador would be strictly regulated. The State defines a minimum price for conventionally produced bananas year after year and obliges intermediaries to pay the producers this price per box. It currently stands at 6.40 dollars per box. The free-on-board price for conventional bananas is currently 8.23 dollars. That is the price that international banana companies should pay to put the boxes on their freighters. Theoretically.

As everywhere in the agricultural industry, seasons and weather play a decisive role in supply and demand. Because when summer is in the northern hemisphere, there is a lot of competition in the fruit shelf in North America as well as in Europe and Asia. And when the rainy season in Ecuador’s lowlands, around January and April, the supply increases. This volatility means that producers and intermediaries have to decide again and again: either lose the business or get rid of the goods below the prescribed minimum price.

Chiquitas crooked business

One strategy, Enver tells us in his office, is to sell conventionally produced fruit as organic bananas, much less of which is produced. This is a widespread practice. Demand for organic bananas is high, but conventional fruits are cheaper to produce. “My boss,” he recalls, “has both eyes closed in these cases.” He had bought the conventionally produced bananas from an intermediary for seven dollars per box, but had indicated in his own books a purchase price of nine. “The remaining two dollars,” he says, “he shared with the middleman: one dollar went to him as silence, the other dollar was pocketed by my boss. With several hundred boxes a week, a decent amount came together.”

Corporations evade responsibility

Working with middlemen is practical for the group, because that’s how others have to struggle with the paperwork. Customs controls must also be organised and financed by intermediaries. If a container cannot be loaded due to delays in handling, it will lose 10,000 dollars in one fell swoop, complains Santiago, the managing director of an inter-trading company. A container transports around 1000 boxes of bananas, i.e. between 20 and 22 tons.

In such a case, Chiquita suffers hardly any damage. If whole pallets are rejected due to a small blemish, the bananas end up in the feed troughs of pigs or cows. According to Santiago, this loss is also borne by the middlemen.

The responsibility for the health and livelihood of the workers who worked on the plantations remains on the plantation owners. Chiquita seems to have no interest in contact with the workers, as was made clear in our discussions.

In the latest Sustainability Report, Chiquita writes: “We require our employees and all employees working on our behalf – including business partners, suppliers, service providers, independent contractors and each of their subcontractors – to comply with all laws and regulations in the countries in which they and Chiquita operate.”

Compliance with local laws is a matter of course and does not deserve any special mention. With regard to banana production, this statement is also cynical: for more than a century, international corporations have dominated this industry. They are so powerful that they can set the rules of the game in the market. In many cases, they have intervened in politics in the past in order to secure a favourable starting position.

Sustainability brochures are not enough to improve the working situation in the producing countries. And volunteering alone obviously does not change anything. Market leaders such as Chiquita must be obliged to carry out human rights due diligence, as required by the Group Responsibility Initiative, for example.

Only when multinationals regularly analyse the negative effects of their activities along the entire production chain can they take the right measures to prevent labour and human rights violations.

The Group Responsibility Initiative also requires companies to report publicly on identified risks and measures taken. In the case of bananas, one is expected to report on the most pressing problems, such as abusive child labour, corruption practices, frequent pesticide poisoning, lack of contract or the lack of social security at suppliers.

The whole banana sector is permeated by these grievances, we are told in the south of Ecuador on every street corner. We have found no evidence in our research that the situation on Chiquita-supplied plantations is fundamentally different, so we assume that Chiquita also faces such problems in its Ecuadorian supply chain. It remains unclear to what extent the Group is aware of these risks, analyses them and takes measures to prevent violations of work and human rights. Chiquita declined to comment on our detailed questions.