Banana crisis speaks about the appeal of cocoa business

By Jonathan Power

WASHINGTON, D.C. (JP): Rarely has the United States -- when out in the countryside -- so lost sight of the wood for the trees. Its decision to go into battle at the World Trade Organization to deprive the small Caribbean banana producers of their protected European market is one which will come to rue.

In the exaggerated name of free trade, but choosing the easiest and most vulnerable of targets, it is setting itself up for social and economic decline and thus chaos in its own back yard. Or, if that is to be averted, the development of cocoa as a substitute crop rather nearer home than Peru's Rio Huallica valley.

Officials in the European Union, conceding defeat recently in the so-called banana war, have been scratching their heads as to why Washington has decided to use a blunderbuss to kill a fly.

Surely it cannot be so crude as has been suggested--that it was because the staunchly republican chairman of the Chiquita banana company, Carl Lindner, that grows its cheaper bananas in the rival areas of Honduras, Guatemala, Ecuador and Mexico, recently contributed US$500,000 to the Democratic party?

The facts of the case are straightforward. The U.S. fruit multinationals, Chiquita and Del Monte, already dominate the world banana trade, even in Europe. Grown on their highly mechanized Latin American estates bananas can be harvested for $150 a ton, compared with $500 a ton in the Caribbean.

In a perfectly competitive world there would be no case to answer -- the Caribbean islands should be left to go under. But in the world we inhabit right now where agricultural protectionism is rife, particularly in Europe and Japan, why pick on the small fry (who supply only 7 percent of the European market) as an important target?

The U.S., which did much to put its own house in order with last year's Freedom to Farm Act, should be saving its big guns for the EU's internal market.

Over the years Europe's domestic subsidy policy has created enormous beef and butter mountains, has led to the destruction of millions of tons of fruit and vegetables and undermined agriculture in Third World countries, not just with its protectionism but with blatant dumping.

There looms the real prospect of new surpluses as member countries resist the changes now canvassed by European agricultural commissioner, Franz Fischler. Set against such issues the Caribbean banana growers are peanuts.

The European farmers' lobby, whether it springs from the Loire or Bavaria, has to be told very firmly that a liberalization of support prices would reduce world price stability, not the reverse, as the myth would have it.

The instability that remains should be countered with insurance, futures contracts and the farmers' own savings, as is now becoming widespread in the U.S.

Further, the richer bigger farmers who take the lion's share of government handouts, should be told they're on their own. They can live quite well in a free and open market.

Small farmers should be separated politically from the big boys. The richer farmers have cleverly made the poorer ones feel that their destinies are intertwined, creating a formidably large lobby.

But, in practice, the richer farmers have done disproportionately well, exploiting the political power of the small farmers while taking most of the cash for themselves. Both in Europe and the U.S., over many years, agricultural support has actually increased disparities between farmers, not reduced them.

The effect of all this expensive larding in the industrialized countries is as nothing compared with the damage it inflicts on Third World farmers, struggling to escape their inheritance of chronic poverty. Their potential markets are being savagely destroyed and the balance between rural and urban dwellers skewed.

This northern irresponsibility helps fuel the Third World's pathological rush to the city, creating massive slums and undermining the economic strength of the countryside.

And, let's face it, it provides the incentive for Third World farmers who stay on the land to switch to those crops that are not subsidized in the north.

Crops that produce the poison that is pushing crime rates through the ceiling, that is destroying the safety and well being of the towns and cities of America and is corroding more slowly, but nevertheless surely, the towns and cities of the rest of the industrialized world.

Clinton's giant-like swipe at the banana growers of the little islands of the Caribbean sends the wrong message to Europe. He should save his energy for the big picture and push for the Europeans not to cut loose the little man on the periphery but to tackle, as he bravely did last year, their own big farmers' self- serving interests.