Valle Del Chira, in the province of Piura, North of Peru, is a bucolic region of leafy vegetation whose inhabitants are highly dependent on banana production to make a living. Years ago, local banana producers solely sold their products on the highly unstable domestic market, notorious for its low producer margins. The situation changed ten years ago when a growing European demand for organic bananas convinced many producers to make the shift and export their products internationally.
The producers however faced two major obstacles: their land parcels were small (between 0.25 and 2 hectares on average) and they lacked export experience, making any attempt to export products extremely difficult without the support of a major exporter.
It is in this context that in 2002 FLO started working with four Fairtrade producer organizations, representing approximately 700 small producers, and three Fairtrade registered exporter companies in Valle del Chira. Fairtrade exporters played from the beginning a key role: they brought in their expertise of the banana industry and helped producers monitor and improve product quality and transportation. The exporters furthermore assumed responsibility of the harvest, packaging and the export processes, thus allowing producers to focus on the production of the fruit. Due to this special situation, FLO made an exception and redefined the minimum price for bananas in Peru, effectively creating a new price specifically for the fruit "on plant", which means that the producers are only responsible for the production of the fruit and that they receive a price for their fruit without harvesting.
As time passed by, Fairtrade certified banana producer organizations gained experience and learned not only about banana production but also about international market requirements in terms of quality and competitiveness. Taking into account this new situation, the FLO Standards Committee decided to act: following a consultation of the relevant stakeholders, the Committee approved at its September 2005 meeting a resolution changing the minimum price from a fruit “on plant” one to a farm gate and/or free on board (FOB) price. Starting January 2006, Fairtrade certified producers have to deliver their harvested, packed fruit and put them in the container (Farm Gate level) or take their fruit ready for export to the port (Free on Board level). The decision was taken after a rigorous evaluation of the situation of Fairtrade bananas in Peru and taking into account the interest of the small producers which with the new system will be able to take a greater part of the value chain for their bananas. On October 5th and 6th 2005, the FLO Producer Business Unit (PBU) organized a training session for producers and exporters on “the Production Chain of Fairtrade organic banana”. During this meeting all the participants requested from the Standards Unit an extension of 6 months for the applicability of the new level of minimum price, which was accepted by the Standards Unit. The extension ended on July 1.
In the last months and in preparation to the implementation of the new system, FLO coordinated different activities with the purpose of facilitating the positive advance of this process. The FLO Liaison Officer in Peru, Manuel Aguirre, prepared a series of joint activities between the producer organizations and their respective exporters: one training in Ecuador to visit other producer organizations that cover all the production chain; legal studies and facilitation of bilateral meetings between producers and exporters. "It has been a great experience. Thanks to FLO support we have been able to grow as producers and to learn more about the banana business" says Jorge Nunjar, President of APOQ, Asociación de Pequenos Productores Orgánicos de Querecotillo. “In terms of time, efforts and resources investment, I have to highlight all the work developed jointly by producers and exporters. It is also worth mentioning the impact that this process will have not only in Peru, but for the Fairtrade movement worldwide. It represents a great example for other organizations involved in Fairtrade” says Tatiana Mateluna Estay, FLO Regional Manager for Latin America
“The new system has only been introduced two weeks ago but so far the work of all the groups has been admirable and we are convinced that we will succeed and will be able to deliver the current fruit volume to the markets with the same quality and punctuality, or even in better conditions. We believe that this case is a good example of how Fairtrade can bring greater levels of development to small producers” adds Manuel Aguirre, Liaison Officer in Peru.
The new system leads to more value remaining with the producer groups and more control of the production chain. "If we managed to harvest and to pack our fruit, our conditions of negotiation will improve, we will be more independent and this will allow us to improve the situation of our members by providing better services and offering better commercial conditions " says Mr. Valentin Ruiz, President of APPBOSA, Asociación de Productores de Saman y Anexos, one of the four Fairtrade Certified banana cooperatives in Valle del Chira.