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Globalized Fruit, Local Entrepreneurs. Douglas Southgate
Читать онлайн.Название Globalized Fruit, Local Entrepreneurs
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isbn 9780812292701
Автор произведения Douglas Southgate
Жанр Экономика
Издательство Ingram
By no means has the Ecuadorian government been a passive observer of banana development. Hoping for an infusion of technology and capital, national leaders courted United Fruit as long ago as the early 1920s. Investment by the company did not actually begin until a decade or so later, by which time the political temper of Ecuador was much more populist and nationalistic. Along with other restrictions, limits were placed on the foreign ownership of agricultural land. Aimed squarely at The Octopus, these limits and restrictions allayed fears of political and economic subservience without being so burdensome that the firm would give up on Ecuador. Accordingly, the government was free to facilitate a boom in banana exports, in which United Fruit played a major role and which began once normal transoceanic commerce resumed after World War II. For example, macroeconomic stability was maintained, which encouraged private investment. Ecuador’s government also saw to the construction of roads and bridges, which accelerated the tropical fruit sector’s geographic expansion.
But while foreign firms and the national government have furnished critical support, Ecuador’s banana industry has been led by competitive, homegrown entrepreneurs and, thanks primarily to them, challenges consistently have been met and overcome. Some of these challenges have been microbial, as when pathogenic depredations required a wholesale switch after the mid-1960s from the traditional variety of bananas to a new, disease-resistant variety. Others have had to do with disadvantageous public policies on the far side of the world, such as trade barriers the European Union adopted during the 1990s to limit fruit imports from Latin America. Ecuadorian entrepreneurs have found ways to deal with these difficulties, sometimes with the government’s involvement or the assistance of multinationals and at other times on their own.
There are no guarantees of similar success in the future. Importing nations regularly succumb to the protectionist temptation. The banana industry is harmed as well by policies with national, not foreign, origins. Thirty to forty years ago, for example, Ecuadorian authorities followed the lead of their counterparts elsewhere in Latin America by pursuing a strategy for economic development that stressed enlargement of the state, favoritism for the manufacturing sector, and weakening of agricultural incentives. The banana industry was not spared the consequences and fruit exports stagnated for many years. Even though the development strategy of the 1970s led to a severe economic crisis in the early 1980s, it has been resurrected in recent years and the tropical fruit sector is paying the price.
Plant pathogens also take a heavy toll. Already representing a large share of overall costs of production, pesticide expenditures are heading upward, mainly because chemical inputs grow less effective as harmful organisms evolve. Worse yet, there are no chemical countermeasures for some plant diseases, which can be overcome only through biotechnology—a tool for agricultural progress that is still not accepted in some quarters.
Notwithstanding pathogenic and other challenges, Ecuador’s banana industry and its independent entrepreneurs continue to survive and prosper. The Octopus, in contrast, no longer does so, at least as a separate business entity headquartered in the United States. In October 2014, Brazilian investors announced they would be buying Chiquita, lock, stock, and bananas.5 So The Octopus—an enduring symbol for many of multinational dominance south of the U.S. border—will henceforth be a Latin American possession.
A note on currency conversions. Ecuador’s long-time currency, the sucre, disappeared in January 2000, when hyperinflation threatened and the U.S. dollar was adopted as the legal national tender. Throughout this book, historical values in sucres are converted into modern dollar equivalents by, first, applying the rate of exchange between Ecuadorian and U.S. currency that prevailed at the indicated date and, second, converting historical dollars into equivalent values in 2014 using the deflator for U.S. gross domestic product (GDP).
CHAPTER 1
The Octopus
Turned out in clean clothes, which his widowed mother insisted he wear while working, the juvenile street vendor stepped forward and addressed one of Guayaquil’s most prominent businessmen: Juan F. Marcos. Twelve years old at the time, Luís Noboa was intent on selling “magic metal” polishing cloths, which he had peddled already to more than a few merchants and housewives in the port city. Making his pitch at the entrance to Marcos’s business, the Sociedad General, Noboa observed, “This building has a lot of brass, but none of it is shiny.” He seized a tarnished pot for an improvised demonstration, and in a few seconds the pot was glistening in the tropical sun.1
Marcos and Noboa might well have been passing acquaintances. Guayaquil, though more populous than any other settlement on the Pacific coast of Ecuador, was not a large city. Also, Noboa had received acclaim the previous year, 1927, for selling more copies of a popular magazine than any other newsboy. This feat related in part to personal deliveries of the magazine to the homes of wealthy subscribers, including Marcos. But whatever his previous contact with the businessman had been, the youngster made the sale. Handing over a few coins for the polishing cloths, Marcos also had something to offer: a job at the Sociedad General.2
Noboa did not accept on the spot. After all, he figured, the starting salary at the bank did not match his earnings as a street vendor. But his mother, left nearly penniless by her husband’s death in August 1924, scolded him later for this hesitancy, emphasizing how much he could learn by working at a leading commercial establishment. Always obedient to her, the boy wasted little time returning to Marcos’s office to take the job.3
So began the career of Ecuador’s most successful businessman of all time. When Noboa died in 1994, he left his heirs more than 650 million dollars.4 However, an enormous fortune was not his only legacy, or indeed his most significant accomplishment. Noboa deserves much of the credit for his country’s rise to the top of the tropical fruit industry. This ascent transformed Ecuador, the smallest Spanish-speaking republic aside from Uruguay in South America and about the size of the U.S. state of Colorado. The industry as a whole changed fundamentally as well.
Banana exports from Ecuador boomed after World War II, which ended the effective monopoly the United Fruit Company had enjoyed since its creation in 1899. The firm’s unchallenged position had been secure as long as the Caribbean Basin, where United Fruit faced little competition, provided most of the bananas consumed in the United States and other importing nations. But once entrepreneurs such as Noboa tapped into Ecuador’s enormous agricultural potential, monopolization of the banana market was beyond the reach of any single company, even the most powerful agribusiness the world has ever known.
Vertical Integration
United Fruit emerged out of a brisk trade in bananas launched after the U.S. Civil War by sea captains eager to profit from their countrymen’s desire for fresh fruit year round—not just in the months when apples, peaches, and other crops are harvested north of the Tropic of Cancer. Before the days of refrigerated shipping, the only way to supply fruit before and after the harvest season was to bring in bananas from the Caribbean Basin—a line of commerce that was fraught with risk, and not only because of the speed at which the fruit ripens, then rots. Between 1885 and 1890, one of every seven sailing ships used to carry bananas to the United States ended up at the bottom of the ocean. Of the 114 banana-importing firms that operated in the United States from 1870 to 1899, 92 went out of business; of the 22 firms that remained at the end of the nineteenth century, all but four were small concerns.5
The largest firm of all, the Boston Fruit Company, was the product of an association between Captain Lorenzo Baker and Andrew Preston. Baker had helped introduce bananas to the United States in 1870 by purchasing 160 stems in Jamaica, catching a favorable wind to sail straight to New York harbor, then selling the odd, exotic fruit at a handsome price.6 A year later, while delivering bananas to Boston, he met Preston, who had little formal schooling yet had a talent for sales,