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What Role Has Politics Played in the History of Chiquita Brands and Its Predecessor?

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What role has politics played in the history of Chiquita Brands and its predecessor?

  1. Chiquita came into existence in 1899 through a merger between the Boston Fruit Company and railroad companies, which at that point of time was owned by Minor Keith in Costa Rica. In the 91 years that preceded the creation of Chiquita Brands, the United Fruit Company grew to dominate the international banana trade and to affect profoundly the economic and social conditions of the Caribbean and Latin American countries that grew and shipped its bananas.
  2. Chiquita’s export division had substantial role to play in bringing healthy revenues and margins for the company. The company provided benefits to its employees and investors through strong bottom-line performance. However, Chiquita did very little for the development and growth of other nations by way of ploughing back.
  3. The company established dominance over the market very early in its lifetime. It claimed that it was necessary to hold buffer acres of land because of the banana plant’s short-lived resistance to extreme weather conditions. What seemed like a business strategy in the eyes of the general public was actually a vicious game adopted to prevent the Govt. from distributing agricultural land to others.
  4. On several occasions, charges were held against the company for illegal and fraudulent activities such as:
  • Bribery
  • Abduction
  • Forgery
  • Theft and robbery
  • Attempt to murder
  • Poisoning of workers
  • Intentional damage to property
  1. Chiquita held great bargaining power in the banana industry. Through its well-established selling and distribution network, it was able to capitalize on the concept of economies of scale and made it increasingly difficult for smaller firms to survive & as a result of which many firms were forced out of business.
  2. The EU territory came back strongly by implementing trade barriers which were highly unfavourable to the business of Chiquita. This was done to primarily protect its home industries and other colonized regions. The company lost a staggering $1.3 billion in value, an amount which represented 66% of the firm’s net worth in 1991.
  3. Instead of modifying their supply chain and exploring newer markets across the globe, Chiquita pressurised political parties and international trade institutes to extend support in their fight against the EU territory.
  4. This move backfired when the EU nations adopted the policy of ‘DIVIDE AND RULE’. It set preferential trade practices for certain nations which gave a further blow to Chiquita’s cold-blooded acts.

What role has protectionism played in the global banana market?              

 

Fearful of the large-scale trade that Chiquita and other banana companies were involved in the late 80’s, the EU Union understood the need for regulatory activities to protect its home industries and other colonized nations.

On July 1, 1993, the European Union adopted new policies regarding the import of bananas in Europe. The new banana import regime divided banana imports into four categories, and had different policies depending on the category of imports. The four categories of imports were: imports from Latin American countries and other countries that were not in the ACP region (also referred to as “third country” imports).

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