A Success Story from the South? The Global Banana Industry

Bananas are a classic Latin American commodity with a long history of insertion into global markets: they have been traded throughout the globe since the early twentieth century, thereby becoming the “ultimate non-local food” (Southgate and Roberts, 1). Globalized Fruit, Local Entrepreneurs aims at retelling the history of the global banana industry, paying special attention to the initiative and economic success of Ecuadorian businessmen. In doing so, the authors also wish to qualify the role of the US United Fruit Company, the corporation more closely associated with the banana trade.

Two US businessmen founded the United Fruit Company in 1899. The company became quickly known as “the octopus” for its alleged almost endless power over the Latin American countries where it operated. The story goes that Latin American so-called banana republics responded to whatever the company wanted: control over land, tax exemptions, lax labor laws, or the prohibition of unions. The authors contend that while this was partly true for Colombia and the Central American countries where United Fruit ran plantations, it cannot be verified for Ecuador. Hence, the notion of the “almighty octopus” is a myth and the notion of Ecuador as a “subsidiary” of exploitative US corporations comes as “inaccurate and misleading” (158). To the contrary, the Ecuadorian banana industry, based in the city of Guayaquil, represents a unique economic success that broke the former monopoly of United Fruit and established itself as a highly competitive global force. Southgate and Roberts identify several causes for this success: First, the region was very fertile and not prone to plant diseases. Second, Guayaquil provided an efficient infrastructure for business; and third, local and national authorities helped to keep the business in the hands of domestic planters and limited foreign landholdings, which were common in Central America.

In particular, Southgate and Roberts highlight the impetus of local entrepreneurs for the development of the sector. Ecuadorian banana businessmen did not just manage to enter existing markets and venture into new ones, for example in China, Russia, and (particularly Eastern) Europe. They also engaged in mutually rewarding partnerships, even with United Fruit, which allowed them to access improved technologies and to obtain new varieties of bananas, among other benefits.

While the book is full of new and occasionally entertaining information, it lacks a comprehensive theoretical foundation (notwithstanding the few references to Joseph Schumpeter’s typology of entrepreneurial innovation, 21–22). In consequence, it remains somewhat anecdotal and leaves the reader wondering if the case could contribute to broader analysis beyond mere description. For instance, while the authors stress entrepreneurial agency and the virtues of free markets, it seems that the Ecuadorian case rather makes a point for political regulation of transnational business to help domestic initiatives to flourish. Moreover, Globalized Fruit, Local Entrepreneurs presents a far too optimistic account of the global banana industry. It is a rather one-sided book centered on entrepreneurial verve, economic growth by (mass) production, and trade challenges. Certainly, success stories from the South are refreshing, and the book makes an important contribution to a better understanding of Latin American business dynamics.

However, this story has important blind spots. Indeed, in the last chapters the authors do pick up on some of the problems and current challenges of the tropical fruit industry, among them the environmental and health damages caused by the extensive use of pesticides. The other big challenge to the existence of the sector as a whole is the emergence of a new fungus in the 1990s (called T4) that is so far resistant to all pesticides. Yet, while the first point is somewhat downplayed because of an alleged lack of verification and quantification, the proposed solution for the latter is even more worrisome: the authors call for more biotechnology, which they complain is still not very accepted as a “tool for agricultural progress” (5). They justify their position by echoing the arguments articulated by the biotech lobby since the early days of its existence. It is necessary to save the sector not only for business-related reasons but also because the decline of banana production would cause hunger. Biotechnology is argued to be able to prevent this looming hunger crisis. However, several studies and also some of the books under review in the following have clearly demonstrated that this discourse is simply not persuasive: biotechnology so far has not helped to end hunger and, to the contrary, causes additional problems (see the next sections). To be sure, these grievances are not borne by successful Ecuadorian entrepreneurs but rather by poor local field workers and nearby populations. A serious examination of this industry in light of critical food scholarship (such as the books by Galt, Motta, and Lapegna) or guided by a perspective on social inequalities would clearly contribute to a more critical history of the banana industry in Ecuador and Latin America as a whole.

Global Food Regimes and Pesticide Use: Evidence from Costa Rica

Food Systems in an Unequal World by Ryan Galt provides a more critical perspective on food regimes. Galt focuses on a boom only rarely taken into account by scholarship: the Latin American horticulture boom that started in the late 1980s. Costa Rica is one of the mayor exporters of vegetables in the region. It is also a world champion in pesticide use (for instance, potatoes grown in Costa Rica are the worlds’ most heavily sprayed crop), contradicting the country’s “green reputation” as a natural paradise. As in other parts of the region, the extensive use of pesticides in agroindustrial production has caused manifold problems, such as soil degradation, water pollution, and health problems in field workers and populations living near the plantations.

Pesticide use in Costa Rica is unevenly distributed, with some regions and even some farms registering a significantly higher use. Galt’s objective is to explain this variation for his cases, the Northern Cartago and Ujarrás Valleys. He argues that pesticide use in general increased with the introduction of agrarian capitalism and the integration of small-scale farmers into national markets. Farmers started to use pesticides because it allowed them to increase yields and sales. Pesticides’ uneven distribution depends on two additional factors. First, environmental conditions (the ecological underpinnings of agriculture, as Galt puts it) such as humid areas, which are prone to plant diseases, incentivize farmers to apply more pesticides. Second, pesticide use varies depending upon the specific market regulations farmers are subject to. In Costa Rica, vegetables produced for export use significantly fewer pesticides (146). Galt explains this difference by pointing to “unequal food regimes” and the stricter regulations that vegetables for export (in his case to North American markets) must comply with. The increased demand for healthier fresh food in the industrial world, as well as fear of terrorist attacks with contaminated food in the US (which culminated in the Bioterrorism Act in 2002), motivated far stricter import regulations. As a result, export farmers in Costa Rica use fewer pesticides or adopt less-toxic chemicals in their productive activities. Moreover, this “regulatory risk” (153) is controlled by export managers that function as intermediaries between local production and foreign markets. By contrast, regulation for the domestic market is weak and barely enforced. Producers for the national market lack incentives to reduce their pesticide use and continue to produce vegetables that end up killing “Ticos” (i.e., Costa Ricans, chapter 10).

The finding that pesticide governance works in unequal ways through the food system makes an innovative contribution to food regime scholarship. It counters a mainstream assumption according to which increased export-oriented global market integration led by transnational corporations will inevitably increase pesticide use to comply with cosmetic and phytosanitary requirements. The argument also implies that local production and political control of resources result in more sustainable arrangements. This is not necessarily true: production for local and national markets may be even unhealthier and less sustainable than produce for global markets. Unfortunately, Food Systems in an Unequal World does not move beyond this general assertion. The book would have benefited from a closer look at the political and social conditions that perpetuate the lack of regulation of pesticide use in Costa Rica: Which factors prevent the adoption and implementation of domestic regulation? One might assume that social inequalities constitute an important factor here, as Galt himself has found but only mentions casually. In his cases, production in pesticide-intensive areas was related to poverty. Wealthy farmers could move their plantations into other, less humid areas that required fewer pesticides. This allowed them to produce healthier products under healthier working conditions. Hence, there is no incentive for wealthier people to demand more regulation (or the implementation thereof), while those that suffer probably have no say in Costa Rican politics.

Genetically Modified Organisms and Social Demobilization: Argentina and Brazil Compared

Due to an increased demand for feed and vegetable oil in China, India, and Southeast Asia, soy production in South America has grown significantly since 2003. It can be viewed as another expression of the latest boom cycle in the region. Furthermore, the soy boom indicates a more general process of structural change in Latin American agriculture, which has integrated rapidly into global patterns of production and consumption, as well as the increased use of biotechnology, that is, genetically modified organisms (GMOs).

The use of biotechnology is contested not only in Latin America but also globally. The opposition to GMOs stresses their harmful consequences, which include the whole range of problems associated with the heavy use of pesticides in genetically modified crops. Moreover, GMOs generate a series of sui generis complications such as the contamination of unmanipulated crops through cross-pollination or the evolution of toxin-resistant “superweeds” that require ever more venomous agents to be treated effectively. All of these bear unforeseeable risks for the future. In addition, GMOs are developed and sold by huge transnational corporations. Their increasing control over the global food market entails harmful consequences particularly for poor farmers. It not only decreases their choices regarding crops to be produced but also forces them to pay for the seeds.

The books by Motta and Lapegna focus on the social, political, and environmental consequences of the expansion of genetically modified soybean cultivation and related pesticide use in Brazil and Argentina. In an analytical sense, both are interested in the factors that shape social contention over soybean production in particular and food regimes in general.

Brazil and Argentina are currently the dominant producers of genetically modified soybeans in Latin America. However, their paths towards the adoption of GMOs were quite different. Whereas Argentina introduced GMOs as early as in 1996 without any meaningful social or political opposition, in Brazil, contention over GMOs emerged as soon as the subject entered the political agenda. Moreover, while in both countries social mobilizations were unable to prevent the use of GMOs altogether, Brazilians did manage to shape GMO-related politics and regulations; they reached a moratorium on GMO use in 1998 and managed to influence the content of the Biosafety Bill ratified in 2005. In Argentina, by contrast, opposition to GMOs did not reach any policy impact. These path differences are at the heart of Renata Motta’s Social Mobilization, Global Capitalism and Struggles over Food. To explain them, Motta draws on a contentious politics framework that includes organizational factors and networks, framing processes, and political, discursive and legal opportunities. She complements it with two insights from political economy: the power to influence public decisions by economic actors (commodity exporters) and the position of a given country in a global commodity chain: countries depending on the production of a certain commodity are supposed to be less receptive to social claims demanding changes in their productive structure.

Motta covers in her book more than two decades of anti-GMO struggles to understand the country-specific patterns of contention and their outcomes. Much of her study confirms rather established knowledge from the contentious politics literature. The main difference between Brazil and Argentina that explains their diverging paths was the prior existence of social organizations able to mobilize support (alliances and general audience) and to make use of different opportunities. Argentina lacked an organized peasant movement, and other social organizations, particularly the unions, were weakened in the aftermath of structural reforms (in 1991) that included, among others, large-scale privatizations. In Brazil, to the contrary, strong and organized movements among peasants (Movimento Sem Terra, MST) and urban agro-ecology activists existed when GMOs entered the political agenda. They allied and achieved further support, particularly from the oppositional Partido do Trabalhadores (Worker’s Party, PT).

The inclusion of political economy into the explanatory framework permits truly innovative insights: it uncovers how global and national economic dynamics shape politics over GMOs in the sense that neither Argentineans nor “contentious Brazilians” (Motta, 80) managed to halt their introduction. Given enormous price hikes on the global market, the soy sector had grown to be the most important source of revenues in the 2000s. Both Néstor Kirchner in Argentina as well as Luiz Inácio “Lula” da Silva in Brazil (both became presidents in 2003) supported soybean production, which provided them inter alia with resources for their extensive social programs. The political use of agroindustry for social purposes and its perception as sustaining the national economy also had a strong general demobilizing effect: people would not engage in protests against an activity they perceived as economically beneficial. Moreover, peasants started to use GMOs, which created a problem of legitimacy for mobilizers. Lastly, agrarian elites increased their opposition to the movement by using legal means and extralegal violence that raised further barriers to collective action.

Pablo Lapegna’s Soybeans and Power constitutes an important complement to Motta’s book. His local perspective on the peasants who actually suffer from GMO use particularly contributes to our understanding of why these people accept and accommodate to activities that ultimately prove harmful to them. Lapegna studies the Argentinean province of Formosa, a stronghold of soy production where grievances produced by the spraying of pesticides are enormous. During his fieldwork the author observed a puzzle: after a drift of agrochemicals used to spray the soy plantations to the small-scale farmers’ fields in 2003, peasants organized disruptive protests to oppose soy production. When it came to a very similar incident of agrochemical exposure in 2009, they did not protest it any more.

In contrast to Motta, Lapegna bases his explanation in cultural factors and actors’ interpretations of specific situations. He found that in the case of Formosa, social contention was motivated by feelings of disrespect for peasants and their worlds as expressed in the denial of their grievances by public officials, among others (Lapegna, 97). Culture (particularly political culture) and interpretations (or individual calculations) also explain the subsequent lack of mobilizations in 2009. In particular, Lapegna stresses the impact of Argentinean patronage politics, defined as an exchange of resources or public employment (or its promise) in return for political support (votes, rallies), on the dynamics of social contention. Patronage politics and the patronage mind-set also pervade social movements in that they often function to provide resources for their constituents. In Formosa, poor people participated in the anti-soy movement because they needed to address basic needs by gaining access to resources. This constituted pressure from below for movement leaders, who had to deliver something in order to maintain participation. Leaders obtained resources by accessing public funds provided directly by the national governments (led by Presidents Néstor and Cristina Kirchner) or administered by peak social organizations allied with the government (such as the Federación de Tierra, Vivienda y Hábitat or FTV, which controlled several public programs). However, accepting these resources came at a cost, namely to support the government and make sure that political stability would not be threatened by social contention. Together with the pressure from below, this pressure from above caused a paradox: local organizations grew stronger with the resources they obtained (in part they could use them for organization building) but their capacity of mobilization and claims-making declined. Lapegna calls this mechanism “dual pressure” (118). At the same time, economic needs and the lack of alternatives led peasants to plant genetically modified cotton (which was promoted by the regional government), ultimately accepting negative environmental and health consequences and desisting from contention.

The author identifies two additional mechanisms of demobilization: “institutional recognition” and “impression management” (126). The first refers to the tendency of challengers to decrease protests when institutional channels for participation are offered, as the governments of Néstor and Cristina Kirchner did by launching several platforms for exchange between the government and peasant organizations (such as the Foro Nacional de Agricultura Familiar or FoNAF). The second relates to the demobilizing effect of responses by authorities that address peoples’ demands without addressing underlying causes (23). When people perceive that something is being done, protests decline.

The analysis of the mechanisms of demobilization is certainly the most important contribution of the study and adds to a still incipient body of research that aims at understanding why people desist from protests although underlying grievances have not been solved. Lapegna’s mechanisms are convincing. One might add that political loyalty to the Kirchners—who were perceived as fierce opponents to a common adversary, the national agricultural elites—as well as old fashion clientelist politics by the Peronist party certainly also did their part in processes of demobilization in Formosa.

Resource Politics in Bolivia: Historical Perspectives and Path Dependencies

The last two books to be reviewed, Kevin Young’s Blood of the Earth and Stephen Cote’s Oil and Nation, are historical studies that question the troubled history of Bolivian natural resource politics in the twentieth century. Throughout this period, Bolivia’s economic fate was tightly connected to the export of natural resources (first silver, than tin, and currently natural gas, and to a minor extent, oil). Natural resources were the source of high hopes of development and serious social conflicts, including the disastrous Chaco War (1932–1935) and massive social movements headed by one of the most radical labor organizations on earth: the Bolivian miner unions. Together with the party Movimiento Nacional Revolucionario (MNR) the miners brought the National Revolution of 1952 to victory. While research has dedicated much attention to both of them,Footnote ² Blood of the Earth puts urban labor unions at the forefront. The book argues that urban unions, like their counterparts in the mines, participated actively in Bolivian politics before, during, and after the National Revolution.

Young organizes his analysis around the concept of “resource nationalism,” which he defines as “the idea that resource wealth should be used for the benefit of the nation” (1). After the Chaco War, resource nationalism became the central theme of the political debate and functioned as a “master frame”Footnote ³ uniting different groups and actors (rural and urban, elite and popular). Until today, Bolivian resource nationalism has often been characterized as a kind of collective trauma rooted in a biased interpretation that blames outsiders (foreigners and nationals) for the countries’ lack of wealth and overemphasizes the development potential of the resource sector. Young challenges this assumption on two grounds. First, he stresses that Bolivian resource nationalism is rooted in very real historical occurrences such as the appropriation of natural resource rents by national elites (for instance the “tin barons” Simón I. Patiño, Carlos Víctor Aramayo, and Mauricio Hochschild) or rent-skimming in the oil sector by US companies (17). Second, while resource nationalism certainly was the dominant political discourse of the time, the actual projects discussed under the label were much more sophisticated. In his case study of worker unions in La Paz between 1920 and the 1950s, the author found fairly coherent debates on economic issues that connected to the major macroeconomic discussions of the time (such as dependency theory and structuralism).

Because of potential spillover effects, the National Revolution and particularly resource nationalism were also a source of concern for the US government. While it managed to influence the course of the MNR government mainly by filling its budget with aid money, it tried to tame widespread resource nationalism with a large public relations campaign designed to win Bolivians’ hearts and minds. Reviewing recently declassified documents and propaganda material, Young provides fascinating insights into this campaign (chapter 4). It included showing films in schools, factories, and neighborhoods; the organization of public photo exhibitions; the publication of a trilingual (Spanish, Quechua, and Aymara) monthly news bulletin that promoted “US-values” (for instance individual entrepreneurial spirit); the distribution of educational leaflets, and a radio teaching program (also in Quechua and Aymara). All radio stations in the country used materials provided by the US Information Service (USIS), the agency in charge, and the newspaper space it occupied in Bolivia was the highest in Latin America at that time.

The detailed description of this campaign is certainly enlightening as it brings a hitherto unknown side of US interventions in Latin America to our attention. However, while it neatly explains US motivation and the objectives driving the campaign, it leaves the reader asking for the reasons that explain its ultimate failure. As US officials repeatedly complained in the archive material (112), Bolivians proved largely resistant to US propaganda efforts. The failure to connect with Bolivian lived realities (inequality) and perceptions (resource nationalism) as well as an underlying racism may account for this outcome.

Oil and oil politics strongly fueled Bolivia’s resource nationalism. Since the first pioneers left their homes in search of black gold at the end of the nineteenth century, oil has been always neatly connected to nationalist sentiments and projects of nation building. However, research has hardly covered Bolivia’s oil sector so far, probably because of the minor role oil has played in the Bolivian economy (according to data from the World Bank it never exceeded 6 percent of GDP since the 1970s).Footnote ⁴ With Oil and Nation Cote fills this gap and delivers the first comprehensive history of Bolivia’s petroleum sector. The book is full of intriguing details but makes two particularly important contributions. First, it clarifies the role of oil in the Chaco War between Bolivia and Paraguay, “the world’s first oil war” (Cote, 62). As the author states (84–91), historians, politicians, journalists, and novelists alike have portrayed this war as the result of two US corporations (Standard Oil and Shell) bribing the two South American countries into a war over oil fields. Cote’s careful historical research paints a different picture. He shows that the war was instead motivated by Bolivia’s need for oil revenues in order to strengthen and diversify its crisis-shaken economy. The Chaco War ended in a huge disaster with an enormous human death toll and loss of territory to Paraguay; it also altered the way Bolivians perceived oil, which was converted “into a sacred national resource and a symbol of the nation” (91) that had suffered to defend it. Oil became the subject of massive popular claims and social movements that demanded the nationalization of the sector. Consequently, in 1936, the Bolivian government founded the national oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and, in the following year, it nationalized the US company Standard Oil, which had been operating in Bolivia since the 1920s. Cote further argues that Standard Oil was made a scapegoat for the war, even though its intervention was minimal. The prima facie evidence he delivers for this is that the company actually refused to support the Bolivian government in its martial activities. After the war, Bolivia not only filed legal charges against the company for that but this also became the major justification for its expropriation.

Second, the book highlights that in the 1950s, particularly after the National Revolution, oil was on the way to becoming the key resource of the country. Supported by the nationalist government of Gualberto Villarroel (1943–1946), the Bolivian oil company YPFP improved its productivity slowly but steadily, and oil rents became the most important source of revenues for the producing departments. Once in power, the MNR also invested heavily in the sector by diverting some thirty-six million pesos from the mining sector (Cote, 136). The investment proved successful: Already in 1954, YPFB had achieved energy independence for the country.

Yet, this success story would not last. The liberalization of the petroleum sector in 1956 heavily lobbied for by the US opened the Bolivian market for more powerful US companies (such as Gulf Oil). YPFB could barely stand against this competition and shrank to a shadow of its former self. Once again, widespread hopes of development based in the extraction of a natural resource were frustrated, adding to the resource nationalist feelings in the country.

The books by Cote and Young are not only important because they shed light on the past. They also stress the path dependencies that the countries’ particular histories created for the present (both dedicate their final chapters to this question) and thereby provide a fresh perspective on the dynamics of current politics over natural resources. Since the mid-twentieth century, resource nationalism has been a constituent part of Bolivian political culture that shapes the present in at least two aspects: First, natural resources are still widely perceived as the key for development. Moreover, nationalist tones in resource politics continue to have a strong mobilizing and cohesive effect, as the popular protests against the export of natural gas to Chile in 2003 (“guerra del gas”) and the nationalization of the sector by President Evo Morales in 2006 illustrate. Second, because it connects an economic strategy to patriotism, resource nationalism prevents larger opposition against the extractivist model. Opponents (for instance from lowland indigenous groups) can be easily labeled as antipatriotic. This in turn limits debates on economic alternatives beyond the extraction of natural resources, with detrimental consequences for the countries’ economic, social, and environmental sustainability.

Concluding Remarks: Further Research

By elaborating on the global-national-local link, the six books under review advance our understanding of current politics on natural resources in Latin America in important ways. Additionally they depict several venues for further research on the complex relationship between natural resources and social conflicts and, in doing so, they raise important questions concerning the opportunities for more sustainable economic, social, and political arrangements in the region.

In detail, the books suggest that more research focusing on domestic and conventional food systems is urgently in need to understand the barriers for more sustainable modes of agricultural production (following Galt). Particularly the causes accounting for the lack of regulation therein or their deficient implementation should be of concern.

Second, following Motta, political economy is certainly important for national movements not only in the context of food politics. It may also help to understand the dynamics of other local conflicts over natural resources such as minerals. In particular, the ways in which companies massively try to influence public decisions and opinion is still a rather unexplored question in the context of Latin American extractivism. Moreover, recent developments raise a further question: How will social contention over extractivism and the prospects for reform toward more sustainable arrangements develop in times of post-boom? Will the shrinking economic weight of the sector provide opportunities for social opposition to press for more or stronger regulation? Or will governments further slacken environmental restrictions in order to maintain or attract new investments, thereby causing even more social conflicts and reducing the prospects for a greater sustainability?

Finally, as advanced by Lapegna, Cote, and Young, scholarship should pay closer attention to the structuring potential of the local economic context and political culture when addressing contention over resources and possibilities for more sustainable ways of production and livelihoods. Economic pressures are key not only to understanding processes of demobilization or the adaption to GMOs but also other harmful activities (i.e., mining). Research should look into this relationship and explore ways and instruments to overcome local dependencies on unsustainable modes of production as well as the (political and social) barriers to such a change. In the same manner, a political cultural perspective guided by the concept of resource nationalism can help us to understand one-sided visions of national “development” that limit discussions of alternatives. This is not only important for Bolivia but also for other Latin American countries with long-standing natural resource sectors, such as Ecuador, Chile, or Venezuela.