ARTICLES: ISSUES IN THE WINDWARD-JAMAICA BANANA WAR

I

In the first place, it will be established that these recent developments in the banana trade have resulted mainly from a conflict between two private firms and that no real conflict of interests existed between banana growers in Jamaica and the Windwards. West Indian growers were caught as pawns in a game between the agents they selected to market their fruit.

The banana industry in the West Indies as a whole consists of numerous small independent growers and a few relatively large producers. Administratively, the industry in the Windward Islands is serviced by grower co-operative type associations which contract with Geest Industries Ltd., for marketing all export fruit. Decision making is simple, straightforward and relatively well representative of grower interests. And the associations have been able to secure good marketing arrangements from the agent.

The Jamaican industry, on the other hand, is serviced by an inefficient administrative superstructure consisting of the AIBGA, a growers’ association, a statutory insurance scheme and the Banana Board, a statutory body which is the sole exporting agent. Recently, the inefficiencies were exposed by a team of foreign marketing consultants though they have been recognised by local observers for several years. The consultants, in fact, merely extended points made by the local Sharp Commission of 1958-59, as they themselves admitted in their report. For exporting fruit, the Banana Board contracts with Elders and Fyffes, a subsidiary of United Fruit Company, and Jamaica Banana Producers Association, a Jamaican grower enterprise; but the latter is allotted only a minor share of total exports. Consequently, it is not considered in the rest of the discussion in this section.

All West Indian growers have the same basic interest: to obtain the best possible prices for all the fruit they supply to the market. This no one will deny. A struggle between growers for market shares is out of line with this basic interest since it is clear that higher prices could be obtained through co-operation, not only in regulating market supplies but also in realizing shipping economies if co-operation were extended to joint shipment by West Indian growers themselves. The marketing agents, on the other hand, are each primarily concerned with earning the highest possible rate of profit. Each agent would be better. able to achieve this is it had a monopoly on the market. Elders and Fyffes were, indeed, in such a position before the emergence of Geest Industries; and have therefore, been seriously concerned with the rapid erosion of their controlling and dominant position. There is no question that they would be in a happier position with Van Geest entirely out of the market, but, at worst, they would be prepared to make an accommodation if only they could control the larger share of the market. The rapid growth of Van Geest, on the other hand, must surely have demonstrated to that firm the possibility that one day it might

capture the whole market or at worst acquire control of the major share. There has as yet been no evidence that the two are prepared for a compromise market sharing agreement. In the normal course of events, some form of market agreement would tend to emerge when competitive tactics (price-cutting, etc.), have resulted in sustained losses by either or both firms.

The point at issue here, however, is that the basic interests of the two groups of West Indian growers are more in line with each other than they are with the private interests of the respective marketing agents. Yet it appears that each agent was able to manipulate the representatives of each group of growers to align with the individual agent and, thus, create an artificial conflict between Windwards and Jamaican grower representatives.

Even before the first big price decline of mid-October, grower representatives from Jamaica and the Windwards had decided to meet and discuss “the orderly marketing of fruit in the U.K.” The meeting had been scheduled for late October 1964. The Daily Gleaner of October 17, 1964, made the following statement in reporting on the forthcoming parley.

“The Windwards have always accepted it (agreement on the regulation of supplies) in principle. But they make it clear that they wanted their share of supplies to the market to be on percentage. This the Banana Board (Jamaica) was never willing to concede.”

The talks began in Kingston on October 22, and from the outset it was clear that the issue of market-sharing would be the focus of attention. The Daily Gleaner of October 23, reporting on the opening of the conference stated that:

“One of the principal bases for arriving at agreement on not over flooding the market in the future will be the percentage of British demand which each territory is supplying at the time of agreement, informed sources at the Banana Building reports”

The grower representatives met by themselves for the first two days. Prior to the conference, they had invited their respective marketing agents to join the talks in the closing stages, ostensibly to inform them of whatever decisions the representatives themselves made earlier. But after two days, the representatives could reach no agreement. Time posed no immediate problem. They had a week-end ahead during which time they could have a chance to consult with their government, with others and with themselves informally in order to pave the way for a mutually satisfactory compromise. Instead, they took the traditional, easy, but disastrous, alternative of asking “outside” interests to solve the problem for them. According to a Gleaner report of October 24:

“No formula was agreed    Instead it was agreed that the 14 Windward Islands representatives will consult with Mr. N. Van Geest on Monday morning next for evolution of a satisfactory formula. At the same time, the Jamaican representatives will consult with Elders and Fyffes and the Jamaica Banana Producers Association …[After that) the two sides will meet again to see if a mutually satisfactory arrangement can be made.”

This time the “outside” arbitrators were the two private firms with vested interests in the final outcome – interests which, as indicated above, are somewhat out of line with those of the growers themselves and which remained irreconcilable in the particular situation. The nature of the case is undoubtedly clearer in retrospect but even at the time it should have been obvious to any serious observer that the difference could not be resolved by reference to the two agents involved in a private struggle for market control. Indeed, this was the surest way to consolidate the impasse. Since there is no evidence that the representatives deliberately wanted the talks to fail, their course of action must be interpreted as reflecting complete ignorance of the real issues involved in the situation.

The same Gleaner report of October 24 stated that the reasons why no agreement had yet been reached were (i) that the Windward Islands would not bind themselves without prior Geest approval and (ii) the problem of supply quota (i.e. the quantities of fruit to be marketed in future by Jamaica and the Windwards, respectively). Jamaica wanted these to be based on 1963 shipments or on an average of the past three years while the Windwards wanted the quotas to be based on shipments in the last quarter prior to the talks, July-September 1964. Jamaica’s proposal was basically preposterous. It would ensure that Jamaica, and Eider’s and Fyffes, would be continually assured of the major market share. And it made no concession to the fact that the Windwards’ production was still expanding while that of Jamaica had been stable for some time.

The Windwards’ proposal, on the other hand, involved concession on their part since in any realistic projection of supplies their share or the market in the July-September quarter would be smaller than would normally obtain in subsequent years. In fact, by December 1964 weekly arrivals in the U.K. from the Windwards exceeded Jamaica’s supplies by 25 per cent. In refusing the Windwards’ proposal the Jamaica representatives revealed a characteristic short sightedness and poor judgement. Past experience should have guided them to accept the proposal. For they had once before had the chance to secure a more favourable share if only they had conceded the principle or market-sharing on the occasion when the Windwards had first suggested this as the basis for regulating supplies to the U.K. They should, by now, have realised that postponement would always favour the Windwards.      ·

Jamaica’s proposal would no doubt have been satisfactory for Elders and Fyffes since it assured them of a major market share which they would otherwise fail to achieve. And they would never accept the Windwards’ proposal so long as the one put forward by Jamaica remained a possibility. On the other hand, neither proposal could reasonably have been expected to satisfy Van Geest whose position would improve over time without any agreement. It should have surprised no one when the talks broke down after each delegation consulted with its marketing agent on the question of appropriate market shares.

After the breakdown of the talks, the banana bureaucracy in Jamaica launched a hostile campaign against the Windward Islands. The policy or the Board in fact, seemed to have been dictated more by the private interests of Elders and Fyffes than by the true interests or Jamaican growers, as the following considerations suggest. The Daily Gleaner of November 4, carried the headlines: “Parley fails; Jamaica moves to counter Winwards’ drive for 200,000 tons next year.” The news item reported on a decision of the Banana Board to launch a “crash programme for bananas” aiming at “250,000 tons (from present 175,000) in 1965”. In announcing this, a spokesman for the Board was reported to have said:

“it would be just plainly stupid for· us, in such circumstances to stand by and allow the market in which we have always held sway to be dominated by those whom we must now regard, regretfully, as our direct competitors.”

The Gleaner of November 21 further stated that the industry leaders in Jamaica were convinced that “the only way to avoid being pushed around was to have superior production to the Windwards.”

As already suggested above, the primary interest of Jamaican and all West Indian growers must be to secure the best possible prices for the fruit they produce for export. It is clear, therefore, that a forced expansion programme would be detrimental to their interest since this would result in oversupply and lower prices for all growers. To the growers themselves, dominance in the market must be a minor consideration, especially if this can only be achieved through a loss in revenue.

More direct evidence that the Banana Board was being used by Elders and Fyffes to help solve the latter’s market control problem – at the expense of West Indian growers – is provided by the following news item in The Gleaner of November 28, after prices had fallen to £49.15 a ton with an oversupply of fruit:

“Two top executives of Elders and Fyffes flew into Kingston … to advise the Banana Board of the marketing position and to arrive at a policy line It is understood that decision was taken to exercise none of the curbs on shipment of bananas which are usually done when colder conditions set in and only best quality fruit is sent forward. The reasoning behind this decision was that any such measure would only cause the Windward Islands to expand their position in the market. It is now official banana industry policy to surrender no ground in the U.K. banana market.”

It is clear from this that the Banana Board had passed the initiative for decision making and policy formulation over to Elders and Fyffes. A Statutory Authority is supposed to be responsible for policy formulation within the framework of overall Government policy. II it cannot perform this function it should be dissolved. ln this case, the Board, it seems, was merely acting as an agent for implementing the policy decisions of its marketing agent, instead of the reverse! Ironically, these policy decisions were to the detriment of all West Indian growers. For as I indicated in Caribbean Quarterly June 1964:

“it is clear that if the proposed expansion (in Jamaica) were to materialise, the only losers will be the growers themselves. The market will absorb the proposed increase in supply only at lower prices than would otherwise obtain; thus the British consumer will pay less for bananas, the marketing companies will earn more from the increased volume handled, and only the West Indian grower stands to lose.”

By and large, the way in which industry leaders in the West Indies were exploited by private foreign interests (to the detriment of the growers they represent) is perhaps a reflection of the general bankruptcy of the whole leadership class in the West Indies. But of equal significance is the fact that the West Indies make themselves more vulnerable to this kind of self-destructive manipulation by outsiders when operating as separate units. For it is clear that if we were together as one unit, the scope for artificial conflicts of this type would be reduced.

More interesting days still lie ahead because Fyffes and United Fruit are aware of the limitations to expansion of production in Jamaica and are currently seeking another Commonwealth source of supplies to solve their market control problem. It now seems that British Guiana will be the choice for dupe since negotiations with British Honduras were terminated following Dr. Jagan’s defeat in Guyana. Earlier plans for production in Guyana had been suspended because the company was uncertain of Jagan’s political posture. In a few years then, Jamaica and Guyana will be at each others throats and the present honeymoon between the Banana Board and Fyffes will be over. The handwriting is on the wall for those who care to see.