Ecuador

Book Review: Globalized Fruit, Local Entrepreneurs

Globalized Fruit, Local Entrepreneurs

Book Review by John Sanbrailo

Written by Douglas Southgate and Lois Roberts

Reviewed by John Sanbrailo, Executive Director of PADF, former USAID Mission Director in Ecuador.

Many books and articles have been written about the banana business, which is hardly surprising in light of its sheer size.  As reported at the beginning of Globalized Fruit, Local Entrepreneurs, banana exports outstrip international shipments of every other fruit and vegetable.  The global banana trade is also more important than the global rice trade, since cross-border shipments of the staple grain are tiny relative to national harvests and domestic consumption in China, India, and other nations.

Another reason for all the books and articles about the banana industry is that no part of the food economy is associated more closely with large corporations headquartered in the United States.  The industry was largely the creation of the United Fruit Company, called the Octopus because of its near monopoly in the U.S. market as well as its control of supplies in the Caribbean Basin for many years after its founding in 1899.  And since the 1930s, the exploits and abuses of United Fruit (now Chiquita Brands International) and other firms in banana republics south of the U.S. border have been a recurring theme of the scholarly literature and writings intended for a general audience.

The book written by economist Douglas Southgate and historian Lois Roberts has a different focus.  Rather than hewing to the standard banana republic narrative, they are primarily interested in the contributions that homegrown entrepreneurs have made to tropical fruit development.  The importance of these contributions in Colombia since World War II is stressed by Marcelo Bucheli, a historian at the University of Illinois.  Southgate and Roberts’s book is mainly about Ecuador.

Ecuador is considerably smaller and poorer than Colombia, just to the north, so one might assume that the Octopus has dominated the country economically and politically.  Reinforcing the perception that Ecuador is just another banana republic is that it has been the world’s leading exporter of tropical fruit since 1953.  As is documented in Globalized Fruit, Local Entrepreneurs, United Fruit and other U.S. firms have left their mark on Ecuador’s banana industry.  However, Southgate and Roberts emphasize that the country became a fruit-exporting powerhouse without sacrificing its independence.

The two authors examine all factors underlying this accomplishment.  For one thing, western Ecuador, where banana production is concentrated, has various environmental advantages, not least fertile soils and a Caribbean climate minus the hurricanes.  Additionally, the national government has at times facilitated expansion of the tropical fruit sector, particularly during the presidency of Galo Plaza Lasso from 1948 to 1952.  But the key players in that expansion have been Ecuadorian entrepreneurs.  Those individuals, Southgate and Roberts contend, deserve much of the credit for the worldwide reach their country has achieved in the banana business – worldwide reach that helped bring down the Berlin Wall in 1989, as some German leaders and writers have maintained.

Individuals such as Juan X. Marcos, Luís Noboa, and Segundo Wong pursued their careers in Guayaquil:  a hub for export-oriented entrepreneurship for more than a century.  Thanks largely to venturesome merchants in the port city, Ecuador was the leading supplier of cacao to European and U.S. chocolate manufacturers during the late 1800s and early 1900s – as described in one of Roberts’s other books.  The cacao boom, which ended after World War I, left Guayaquil with a network of essential business services.  Ecuador’s commercial capital also possesses something not matched by any other banana exporter:  a national market worthy of the name, one in which hundreds of growers (the vast majority with modest holdings) sell their harvests to dozens of exporters and other buyers.  This market, which has not been fully replicated in any banana-exporting nation, is an ideal setting for entrepreneurship and is a fundamental reason why Ecuador has remained atop the global banana industry for decades.

Forgoing a reprise of the familiar narrative about the Octopus and its hold on banana republics, Southgate and Roberts instead set the record straight.  Dr. Joachim von Braun, formerly the director of the International Food Policy Research Institute and now a professor at the University of Bonn, observes that Globalized Fruit, Local Entrepreneurs “refreshingly corrects conventional wisdom about the banana industry.”  In particular, the book sheds light on something inconceivable for adherents of the banana republic narrative:  United Fruit’s old monopoly is gone, thanks largely to the efforts of Marcos, Noboa, Wong, and others like them.

What’s more, the Octopus no longer exists as an independent, U.S.-based industry.  In October 2014, Brazilian investors announced they would be buying Chiquita, “lock, stock, and bananas,” as Southgate and Roberts observe.  Generations of the company’s admirers and critics, they add, would be astonished.

 

Ecuador's Quake: News Wanes, Needs Persist

Capital Wire
By Marcela Miguel Berland
Op Ed   

©UNICEF/ECU/2016/Castellanos

New York City, NY - Nearly 30,000 people are in emergency shelters. Thousands of buildings are destroyed and major damage to infrastructure has burdened a cash-strapped country not equipped to respond to the crisis. That is the situation confronting Ecuador following the devastating 7.8 magnitude earthquake on April 16. 

The sad reality is that media coverage is waning much too quickly for a disaster of this size and, consequently, so is public interest. The needs of Ecuadorians, however, are not waning.  They persist.  A glimpse of news from Ecuador and elsewhere in Latin America reveals great needs of the more than 750,000 people affected: humanitarian supplies, temporary shelter, assistance to traumatized communities, demolition and rubble removal, and rebuilding lives and family incomes. 

Here in the U.S. we are readily distracted from the plight of Ecuador’s quake victims by other international crises and opportunities and, of course, the primary election contests.  But in Ecuador, the suffering continues.

Behind the scenes, one organization is working mightily to channel aid to Ecuador’s quake victims: the Pan American Development Foundation (PADF), an affiliate of the Organization of American States (OAS). Established in the 1960s by John Kennedy’s Alliance for Progress with the dynamic leadership of OAS Secretary General and former Ecuadorian president Galo Plaza Lasso, PADF continues to implement vital development projects in the region. 

Immediately after the quake, the Foundation mobilized its Ecuadorian NGO partners to deliver much-needed humanitarian supplies to isolated rural communities near the earthquake’s epicenter. For nearly six decades, the Foundation has responded to every major disaster in Latin America and the Caribbean. Its story should be better known.

In January 2010, when an earthquake struck Haiti, PADF was among the first responders, shipping relief supplies from Santo Domingo and Miami, and opening a humanitarian corridor to Port-au-Prince.  This is just one example of the agility and speed of PADF.  It has aided victims of drought in La Guajira department in northern Colombia, volcanic eruptions in Colombia and Ecuador, hurricanes and tropical storms in the Caribbean, droughts and earthquakes in Central America, and floods and other humanitarian crises throughout the region.

An independent 501 (c) (3) nonprofit, the Foundation has developed successful public-private partnerships with leading U.S. corporations wishing to invest in the social development of the region.  Today, corporate partners like Royal Caribbean Cruises Ltd. and private donors continue to support PADF programs, such as the response in Ecuador.   

“We have been touched by the overwhelming needs of so many people along the Ecuadorian coast,” says John Sanbrailo, PADF Executive Director. “Families have lost their homes, their livelihoods and their sense of security. The pain they are experiencing is indescribable. This is why we must do more to provide the assistance they urgently need and help them to begin rebuilding their lives.”

As Ecuador begins the recovery process, the country can draw upon experienced international organizations like PADF that specialize in the region and are familiar with and sensitive to the needs of local communities. For my part, I know PADF is dedicated to creating sustainable development that will allow Ecuador to flourish long after the rubble has been cleared. These are the kind of long-term partners it will need to rebuild, and we should support their efforts in any way we can.

As I reflect on Ecuador’s tragedy, I am reminded of the saying, “There but for the grace of God go I.” Contributions can be made at www.padf.org/HelpEcuador

Marcela Miguel Berland, a native of Argentina, is an expert in Latin America and founder and president of New York-based Latin Insights, a political and market research polling firm. She is a member of PADF’s Advisory Committee.

El Diario | Más voces se unen por el país

El Diario

La solidaridad con Ecuador es tan grande que ahora una estrella musical se unió a esta causa.

 El día de ayer, los medios mundiales destacaron que ahora es el cantante venezolano Ricardo Montaner el que encabeza una cruzada solidaria llamada ‘¡Unámonos por Ecuador!’,  proyecto que lidera el artista y la Fundación Panamericana para el Desarrollo (PADF), brazo humanitario de la Organización de los Estados Americanos (OEA).

‘¡Unámonos por Ecuador!’ tiene como objetivo utilizar la influencia de Montaner para obtener más patrocinadores corporativos y donaciones para las familias afectadas por el terremoto que estremeció a Ecuador el pasado 16 de abril.

DECLARACIONES. Según el cantante del éxito ‘La Gloria de Dios’, “es hora de que todo el mundo se conmueva para ayudar a Ecuador. “‘¡Unámonos por Ecuador!’ Tu donativo puede ser una luz de esperanza para los más necesitados. Envía tu donación ahora, por favor”, dijo en un video promocional de la iniciativa solidaria.

Montaner invita además a que las personas que quieran colaborar con alimentos, agua, kits de higiene, materiales para construir refugios, herramientas y otros suministros de socorro, visiten la página web padf.org/helpecuador.

Exponentes ecuatorianos también ayudarán a los damnificados
Por su parte, otro de los artistas que se ha unido a organismos internacionales para recaudar donaciones para Ecuador tras el sismo, es el cantante quiteño Juan Fernando Velasco. Él encabeza la campaña ‘Aquí estoy Ecuador’ con el Programa de Naciones Unidas para el Desarrollo en Ecuador (PNUD), y tiene previsto llevar a cabo un concierto benéfico que está pactado para el 15 de mayo  y que además contará con la presencia de artistas nacionales e internacionales como Noel Schajris, Fonseca, entre muchos más.

Ricardo Montaner and PADF Unite to Help Victims of the Ecuador Earthquake

WASHINGTON -- The Pan American Development Foundation (PADF), the humanitarian arm of the Organization of American States (OAS), joins forces with Venezuelan singer Ricardo Montaner to provide humanitarian aid to Ecuador after a powerful 7.8 earthquake struck the country on April 16. The earthquake, which hit the central coast, has killed more than 650 people and affected some 720,000 others, leaving over 4,600 injured, 29,000 people in shelters, and destroying or damaging more than 3,600 buildings.

PADF’s Disaster Management team is working closely with local partners to support the victims.

“This was the strongest earthquake to strike Ecuador in decades. Our priority is to help the most vulnerable people to minimize the human, economic and social impact that such disasters can have,” said Caterina Valero, PADF Senior Programs Director. “Our Foundation is working with local organizations and community groups to ensure that donations can efficiently reach where they are needed most,” Valero added.

Through an emotional message, Ricardo Montaner urges the public to make a contribution. “Let’s unite for Ecuador! Your donation can be a light of hope for the needy. Send your donation now, please,” asks Montaner. The Venezuelan singer is appealing to the public and corporations through his social media platforms to donate in support of Ecuador. Montaner’s message will be broadcast throughout North and Latin America on Discovery Español, TLC, Animal Planet, CNN in Spanish and more.

Through this effort, which has received the support of Ricardo Montaner, American reggaeton singer and composer Nicky Jam, Nicaraguan singer Luis Enrique, and other public figures, PADF has issued an international appeal to raise $1 million dollars to meet the immediate needs of the victims in Ecuador. PADF has already sent urgent supplies to the affected communities of Tosagua and Portoviejo in the Province of Manabí, providing clean drinking water, hygiene kits, and other emergency supplies.

To join this humanitarian campaign or for additional information, please visit: www.padf.org/HelpEcuador.

Press contact:
Hearly Mayr, Office of Communications, PADF
+1-202-280-3846
hmayr@padf.org

or

To join this humanitarian campaign:
María-Esmeralda Paguaga, Office of Innovation and Strategy, PADF
+1-571-237-2290
mepaguaga@padf.org

El Nuevo Herald | Ricardo Montaner pide ayuda para las víctimas del terremoto en Ecuado

El cantautor venezolano Ricardo Montaner es la nueva cara de una campaña humanitaria en la que pide donaciones para los ecuatorianos afectados por el terremoto que sacudió al país el 16 de abril.

“¡Unámonos por Ecuador! Tu donativo puede ser una luz de esperanza para los más necesitados. Envía tu donación ahora, por favor”, solicita Montaner en un video publicado en YouTube el lunes.

La iniciativa es parte de una colaboración entre el artista y la Fundación Panamericana para el Desarrollo (PADF), el brazo humanitario de la Organización de los Estados Americanos, que tiene como objetivo utilizar la influencia de Montaner para obtener más patrocinadores corporativos y donaciones.

“Este terremoto ha sido el más fuerte que ha sufrido Ecuador en décadas. Nuestra prioridad es ayudar a los más vulnerables para minimizar el impacto humano, económico y social que este tipo de situaciones provoca en un país”, dijo Caterina Valero, Gerente General de Programas de PADF. “Nuestra Fundación trabaja con organizaciones locales y grupos comunitarios para asegurar que su donativo llegue eficientemente a donde más se necesita”.

El sismo de 7.8 en la escala Richter, que afectó principalmente la costa central, dejó un saldo de más de 650 muertos, 4,600 lesionados, y más de 25,000 damnificados permanecen en albergues.

La organización indicó que las necesidades prioritarias más importantes son: alimentos, agua potable, kits de higiene, materiales para construir refugios, herramientas y otros suministros de socorro.

De esta manera, Montaner se suma a otros artistas como el reggaetonero Nicky Jam, y el cantautor nicaragüense Luis Enrique, que están brindado su apoyo a las víctimas del terremoto.

Para hacer donaciones al PADF visite padf.org/helpecuador.

La comunidad del sur de la Florida se volcó este lunes en ayuda a las víctimas del desastroso terremoto que azotó a Ecuador la noche del sábado 16 de abril.

Ecuador: Never a Banana Republic

Ecuadorean Banana Entrepreneurs*

Published in Latin Business Chronicle May 29, 2012
See: http://www.latinbusinesschronicle.com/app/article.aspx?id=5689

Editor’s Note: The following article is based on the Spanish edition of “Empresarios Ecuatorianos del Banano” by historian Lois Roberts.  It is a significant publication because of the many misunderstandings about banana companies and their role in economic development.  Illustrating this confusion is the book by President Rafael Correa, “Ecuador: de Banana Republic a la No Republic”, in which he argues that a citizens’ revolution was needed to free his country from foreign influence that converted it into a “banana republic”.  Lois Roberts and others maintain that Ecuador was never controlled by foreign companies or international agencies.  As discussed below, the banana industry led largely by local entrepreneurs transformed this Andean nation and can serve as a model for its future development. LBC

ECUADOR: NEVER A BANANA REPUBLIC

JOHN SANBRAILO**
 

Those interested in the history of Ecuador will be grateful to Lois Roberts for preparing a pioneering book published in Spanish on how it became the world’s leading exporter of bananas.  For over sixty years this has been one of Ecuador’s greatest successes, yet the story is not well known or fully appreciated.  Building on her many decades of research in Guayaquil, Dr. Roberts demonstrates how national policy-makers, local entrepreneurs, foreign investors and international markets promoted banana production, accelerating the country’s socio-economic development.  This book fills a gap in the historiography of an often forgotten Andean nation and provides the context for understanding an important chapter in U.S. cooperation.

How Ecuador and bananas became almost synonymous is one of the most fascinating stories in Latin American history.  Yet it has been largely ignored because this country never became the stereotypical “banana republic” dominated by foreign companies, a scenario perhaps more applicable to some Central American countries in the past.  Dr. Roberts raises fundamental questions about the conventional view of banana production and the role of the United Fruit and Standard Fruit Companies.  She shows what an exception Ecuador has been in the region—a true “Andean Enigma,” as described by economist David Schodt.  Her book should encourage greater research on how the banana industry and local entrepreneurs revolutionized a highly traditional society, allowing its bananas to play a role in major world events such as the fall of the Berlin Wall.

Beginning in the late 1940s, the banana boom began dramatically changing Ecuador, encouraging large numbers of people to migrate from depressed rural areas of the Sierra highlands and urban squatter settlements to work on coastal plantations, banana farms, road construction and infrastructure improvements.  As a result, the 1950s produced some of the country’s highest economic growth rates marking the only time when international press accounts like that in Time magazine praised Ecuador for a “decade of development and democracy”.  One cannot understand the history of Ecuador in the 20th century without appreciating how bananas fundamentally transformed the country, converting this Andean nation from an indigenous to a mestizo society and integrating it into world markets.

Ecuadorean Success

A number of observers have noted that one of Ecuador’s most salient characteristics is a deep national pessimism and a pronounced negative self-image.  Even referring to a “national success” seems like an oxymoron for many Ecuadoreans, especially in its Sierra highlands.  The country has had great difficulty identifying the nation’s achievements and building upon them. This worldview has often misled it into unproductive debates and strident populist rhetoric, leaving its citizens hobbled by a mistaken sense of exploitation, victimization and conspiracy theories that have distorted its own history.  Many with Marxist or leftist orientations have accentuated these self-destructive attitudes by re-enforcing the country’s sense that it is incapable of determining its own destiny. Such approaches have contributed to paralysis and an inability to articulate to younger generations positive views of their own achievements.  Not encouraging its citizens to learn from important national successes has undermined their ability to promote their own development and modernization.

The history of Ecuador’s banana industry illustrates this phenomenon.  Most often it is described in highly negative terms, distorting what is in fact a great national success as presented by Dr. Roberts.  In a very short period, the country moved from the almost total collapse of its cacao exports in the early 1920s to become the world’s leading banana exporter in the 1950s and subsequently maintaining its leadership for over sixty years to the present.  Today the banana sector represents over 60 percent of its agricultural GDP (USD $1.9 billion) and has consistently been its most important export product after petroleum.  Ecuador is the source of about one third of all bananas traded internationally and the fruit sector provides direct and indirect employment to 2.5 million people, or 17 percent of the population.     

Unlike other countries, bananas were developed not only on large plantations but also on many small and medium-size farms, thereby opening new opportunities for hundreds of thousands trapped in poverty.  This was virtually unprecedented in Latin America.  Approximately 70 percent of the area planted in bananas (totaling about 170,000 hectares) is still cultivated by small and medium-size producers.  If unregistered farms are included (another 60,000 hectares) the latter percentage is even higher. 

Historically the country’s banana sector has been a little-known model of how local entrepreneurs and government officials worked constructively with foreign companies like United Fruit and Standard Fruit in developing an entire new industry while maintaining national control of what became a leading global export.  Here is an example from 1948-1952 of how a visionary President and his equally visionary Minister of Economy--Galo Plaza and Clemente Yerovi--successfully established the conditions for the country’s banana development and a social revolution for which they have never received full recognition.

What we see in Lois Roberts’s book is the emergence of dynamic local entrepreneurs who rapidly learned from the technological, production and marketinginnovations introduced by United Fruit and Standard Fruit starting in the 1930s, especially those in and around Hacienda Tenguel.   Out of this milieu came one of the greatest entrepreneurs in Latin American history-- Luis Noboa Naranjo and the creation of the region’s first multinational banana company, the Noboa Group, which eventually competed on an equal basis with foreign companies, even prevailing over them in some international markets.

As described in “Luis Noboa Naranjo: Profile of a Winner” by Isabel Noboa Pontón, national banana entrepreneurs dominated production and marketing, undermining the view that Ecuadoreans always lose out to multinationals. This is a very different model of development than the one that emerged in Central America and even in Colombia. Yet when one mentions Noboa today, some Ecuadoreans comment on his opposition to labor unions, his reluctance to pay taxes, and his lobbying for government subsidies, rather than any of his major business or export achievements.  As with Luis Noboa and others like Segundo Wong, bananas provided the basis for the economic and social advancement of many who came from humble, even destitute circumstances, demonstrating that Ecuador has not always been the exclusionary society so often portrayed.

In the second half of the 20th century bananas opened Ecuador’s tropical coastal plain between the Andes and the Pacific Ocean, more than doubling its agricultural frontier while providing access to land, new sources of income and social advancement for many of its poorest people.  The new tropical products developed in these zones would not have been possible without the infrastructure and labor provided by bananas.  It was bananas that did more to redistribute land and income than most subsequent government policies, while generating and sustaining permanent employment for well over two million people.  Export revenues and tax collections dramatically increased, financing the expansion of the country’s earliest social programs. Bananas produced a revolution by making Guayaquil into the largest metropolitan area with a population today of over three million, and turning Ecuador into a predominantly coastal country.

Perhaps no example better symbolizes the positive impact that bananas had on this society than the family of Luis Felipe Duchicela Huaraca Ramírez (a direct descendant of Atahualpa Duchicela, the last Inca Emperor and Shyri Lord of the Kingdom of Quitus) who as a young man in 1945 was employed by United Fruit’s subsidiary, Compañía Bananera del Ecuador, serving in Guayaquil and Tenguel until 1965. Bananas and the United Fruit Company facilitated Duchicela’s rise in Ecuadorean society, as they did for so many others.  This family was able to improve its income and educate its children at leading U.S. universities, again highlighting how bananas made a little-known contribution to social change.

Other Views

While such successes have been recognized in a few international reports and books such as “The United Fruit Company in Latin America” by Stacy May & Galo Plaza, and “Ecuador: An Andean Enigma” by David Schodt, they have largely been ignored and rarely discussed.  Indeed, the centennial celebration of the birth of Galo Plaza in 2006 made almost no mention of his extraordinary achievement in developing the country’s banana industry through his association with the United Fruit Company.  For many, this contribution continues to be a “taboo” subject.  It is not even cited in the otherwise excellent materials on the banana sector presented by the Asociacion de Exportadores de Bananos del Ecuador (AEBE).

Instead, the literature is dominated by ideologically-driven accounts that have misled many through incomplete and unbalanced analyses, most often produced by non-historians with political agendas.  They accentuate the banana industry’s negative impacts, ignore its positive contributions and downplay its unique role in the development and transformation of Ecuador.  They reflect prejudices against local entrepreneurs, multinational enterprises, private investors and globalization that are particularly pronounced among Quito’s intellectual establishment and the anti-market biases of some academics. The latter promote ideas presented in the famous novel Ariel by Enrique Rodó, the poetry of Pablo Neruda, the writings of Gabriel García Márquez and lesser-known authors who demonize banana companies and often use them as a foil for their concerns about modernization. When incorporated into the county’s education system and political debates, such attitudes undermine national development, as described so well in “Manual del Perfecto Idiota Latinamericano” and “Fabricantes de Miseria” by Plinio Apuleyo Mendoza, Carlos Alberto Montaner and Alvaro Vargas Llosa   

These tendencies are seen in Carlos Larrea’s “El Banano en el Ecuador”, Oswaldo Albornoz Peralta’s  “Las Compañías Extranjeras en el Ecuador”, Steve Striffler’s “In the Shadow of State and Capital”, Carol Pier’s “Tainted Harvest”, Alberto Acosta’s “Breve Historia Económica del Ecuador”, Peter Chapman’s “Bananas: How the United Fruit Company Shaped the World”, Carlos de la Torre’s “Galo Plaza y su época”, and Rafael Correa’s “Ecuador: de Banana Republica a la No República”. While each provides intriguing personal insights, they largely disregard the favorable impacts created by increased incomes and exports produced by the banana sector, exaggerate the political influence of banana companies, convey outdated stereotypes, and lack historic perspective.  These writers appear more interested in demonstrating the evils of a market economy than recognizing the significant changes bananas produced for low-income people.  Many are self-proclaimed Marxists or socialists who promote conspiracy theories and even paranoia of multinationals while rejecting the benefits of globalization.

In this context, Lois Roberts’s book provides urgently needed perspective and objectivity.  Given her long association with Guayaquil and the coast, dating back to 1949, and her previous writings such as “El Ecuador en la Época Cacaotera” and the “Lebanese in Ecuador”, Dr. Roberts brings to this subject the training of a Ph.D. historian who was the first American to be inducted into the country’s prestigious Academia Nacional de Historia.  Her career with Ecuador spans the most dramatic developments of the banana industry when she was drawn to Guayaquil by its increasing prosperity. Over the past sixty years, she has experienced Guayaquil’s growth into the country’s largest city and one of South America’s dynamic urban-industrial centers, due in great part to bananas.  She is uniquely qualified to write the history of Guayaquil’s greatest entrepreneurs and record how they transformed the country with American and other international support.

United States Cooperation  

In a similar manner, the role that the United States played in encouraging banana production and exports has likewise been clouded in mystery and suspicion.  Thanks to Dr. Roberts the historic context for understanding this cooperation has now been provided, with its successes and failures, its highs and lows, its triumphs and tragedies.  She demonstrates very well that banana development nurtured local entrepreneurship and modernization, although further research is needed on the complex interaction between the growth of the banana industry and U.S. assistance. 

The expansion of banana exports, in my view, is one of its most significant American contributions to Ecuador.  It is analogous to early United States support for the county’s independence and national consolidation and to the building of the Guayaquil-Quito Railroad during the 1900s that geographically unified its coastal and Andean regions.  It is similar in significance to U.S. encouragement to abolish the huasipungo peonage system in the 1960s, thereby facilitating indigenous sociopolitical mobilization as seen today in the CONAIE native federation and its political party Pachacutik.

From the very beginnings of the commercial banana industry in the 1920s and 1930s, United States companies, advisors, investors, aid workers and even Presidents made little-known contributions.  For example, some of the most important preconditions were established by the completion of the Guayaquil-Quito Railroad in 1908 led by an American enterprise headed by Archer Harman, the founding of the Ecuadorean Corporation in 1913 by E. Hope Norton, and the opening of the Panama Canal in 1914.  The eradication of yellow fever and other diseases in Guayaquil by 1920, with help from the Rockefeller Foundation and U.S. public health doctors, was of critical importance. 

The exploratory work of Dr. Wilson Popenoe in 1921 generated new data about the country’s underexploited agricultural potential.  The Kemmerer mission from Princeton University in the late 1920s supported reforms that improved Ecuador’s investment climate, as recognized by President-elect Herbert Hoover in his goodwill visit to Guayaquil in December 1928. The publicity surrounding Hoover’s trip, the reports of Popenoe and Kemmerer, the sanitation improvements in Guayaquil, the excitement of the railroad and the establishment of the Ecuadorean Corporation attracted international attention, despite the Great Depression and the county’s pronounced political instability in the 1930s. 

At the depth of the Great Depression, the United Fruit Company led by its legendary CEO Samuel Zemurray, made one of the most significant contributions when it purchased Hacienda Tenguel and surrounding lands to convert them into a modern banana plantation. United Fruit transferred to Tenguel its most advanced technology, production and marketing expertise, and scarce capital.  While some writers have dismissed this courageous decision as nothing more than United Fruit fleeing banana diseases and labor unrest in Central America, they do not fully appreciate how risky such ventures were in the 1930s.  Without United Fruit’s early investments, and later contributions by Standard Fruit and other foreign enterprises, Ecuador would not today be the world’s leading exporter of bananas.

Few other companies would have invested in this very unstable and unknown country, especially given the populist policies aggressively pursued in the 1930s by then President General Alberto Enríquez Gallo.  United Fruit even supported pioneering national legislation in 1937-38 that mandated that at least half of its exported bananas be produced on Ecuadorean farms, thereby ensuring the emergence of small and medium-size producers. As Lois Roberts shows, Zemurray and the United Fruit Company, together with Standard Fruit, served as incubators and catalysts for developing the banana industry in the 1940s and 1950s. 

As a major supporter of Franklin Roosevelt, Zemurray converted Hacienda Tenguel into a model of corporate social responsibility, a true “New Deal in the Tropics” that has been incorrectly depicted as just another example of multinational exploitation.  While Ecuadorean entrepreneurs assumed the lead role in expanding production after the 1950s, they quickly learned from the foreign companies, taking advantage of the export-oriented policies put in place by Galo Plaza that produced the country’s most dynamic period of economic growth and democratic development in the fifties.

Contributing to this unprecedented progress was World War II and the provision of large amounts of U.S. aid to Ecuador to rehabilitate El Oro province after the Peruvian invasion in late 1941, to develop strategic and other commodities needed for the War effort, and to begin modern development programs.  In February 1942 the first U.S. bilateral aid agreements were signed to improve public health;  to establish Hacienda Pichilingue as a tropical agricultural research center; to develop the country’s transport infrastructure;  to expand cultivation of products needed for the War effort, including balsa wood, chinchona bark (for quinine), rubber, and rice. These in turn provided additional stimulus for bananas and other tropical exports following the War.  

Building on these precedents, the U.S. provided assistance to Galo Plaza’s initiatives through the new U.S. Point Four aid program (launched by President Truman in 1949), while funding was increased for infrastructure projects from the U.S. Export-Import Bank and the newly formed International Bank for Reconstruction and Development.  In the 1940s and 1950s, the U.S. and Ecuador created Cooperative Servicios for Public Health Improvements (SCISP), Malaria Eradication (SNEM), Agricultural Development (SCIA), Education Advancement (SCIE) and Industrial Development (SCIAM).  The Servicios assisted many projects that accelerated growth, especially among smaller farmers. The Rockefeller and Kellogg Foundations provided additional assistance that complemented these efforts.

The significant improvements in health conditions on the coast encouraged additional migration and allowed for rapid urban expansion that supported banana production. In the 1940s and 1950s Pichilingue evolved into one of the leading tropical research centers in South America, with assistance from U.S. Department of Agriculture technicians such as Lee Hines and those from SCIA and the Rockefeller Foundation.  It pioneered some of the earliest small-farmer technologies for controlling sigatoka and other banana diseases. SCIA technicians Norman Ward, Russell Desrosiers, Robert Smith, Enrique Ampuero, Felipe Orellana, and others, literally saved the banana crop from near collapse in 1956-57 because of rapid spread of diseases. 

SCIA helped producers establish the private-sector Asociacion Nacional de Bananeros del Ecuador (ANBE) to expand technical and marketing assistance to those who did not have access to them.  This in turn supported a major increase in credit for the banana sector provided through the Banco Nacional de Fomento (BNF) that evolved from the Banco Hipotecario established as part of the earlier Kemmerer reforms.  The expansionary monetary policy recommended by the Triffin mission of 1948 provided the basis for the credit growth that was mainly directed to smaller producers.

In the 1960s the Alliance for Progress implemented by USAID and the Inter-American Development Bank increased funding for coastal infrastructure, malaria eradication, rural electrification, agricultural cooperatives, and research and extension that further accelerated banana development. This facilitated the shift from the Gros Michel banana to the more disease-resistant Cavendish by establishing enterprises to facilitate marketing of the new variety.  At the same time, the Alliance supported policies that were not always favorable to banana exports, such as Import Substitution Industrialization that discriminated against investments in the agricultural sector and promoted agrarian reform that unintentionally encouraged land invasions that disrupted production.  As a result of these protectionist policies, changes in banana markets, the advent of petroleum exports in the 1970s, an overvalued exchange rate, and the rise of a military government, the banana sector stagnated but survived throughout the 1960s and 1970s showing its great resiliency. As explained by Dr. Roberts, this was due to dynamic entrepreneurs like Luis Noboa Naranjo who, despite being exiled by the military government in the seventies, kept the sector growing by developing new markets in Europe, especially in the communist countries of Eastern Europe through innovative barter deals.

Ecuador’s Second Banana Revolution

The international debt crisis of the 1980s brought greater recognition of the damage done to exports and employment by protectionist policies and the overvalued exchange rate.  As a result of fundamental changes in international policies, new trade liberalization and market reforms were gradually implemented starting in the mid-1980s with the León Febres Cordero administration.  They were accelerated during the Administrations of Rodrigo Borja and Sixto Durán Ballén in the late 1980s and 1990s, greatly stimulating the growth of exports and creating what one writer termed “Ecuador’s second banana revolution”.   

Again, we see a combination of national initiatives with little-known American political and technical support.  Following successful policies in Chile, it was Ronald Reagan who encouraged President León Febres-Cordero to accelerate trade liberalization and market reforms that were undertaken from the mid-1980s through the 1990s. This was similar to John Kennedy’s efforts in the early 1960s in urging President Carlos Julio Arosemena to eliminate the huasipungo system and initiate land reform. The change in economic policies in the late 1980s and 1990s provided the incentives to increase investment in banana production and encouraged the introduction of new technologies that further consolidated the country’s leadership in banana exports, dramatically expanding its share of international markets, especially following the fall of the Berlin Wall in 1989. 

American economists led by Morris Whitaker of Utah State University (financed by USAID) provided the most important technical advice for formulating these reforms, working through the Ministries of Agriculture and Finance and various private groups like Fundación Idea, FUNDAGRO, PROEXANT, and Fundación Ecuador.  Given the expansion and diversification of the country’s exports during these years, Whitaker and his team made one of the most significant contributions since the Kemmerer mission of 1926-27 and the Triffin mission of 1948.  It was national policy-makers, however, who actually implemented their recommendations and made them a success with support from private sector leaders and the United States PL-480 program.

These measures helped the Noboa Group and others increase banana exports to the European Union and to Eastern Europe and Russia, well ahead of other companies. During this period Segundo Wong opened the Chinese and Asian markets to bananas and positioned Ecuador as an early leader in that region. As a result of the country’s growing exports to the EU in the 1990s, there emerged what came to be called the “Banana War” as the EU limited imports, threatening the sector’s continued growth and development. This trade dispute intensified up to Ecuador’s victory in the World Trade Organization (WTO) in 2001, which forced the EU to provide greater access to its banana markets, although intermittent disputes have continued to dilute these gains during the past decade.

Here again the United States provided important assistance in disputes with the EU.  The leadership of the Clinton administration, through its United States Trade Representative and the active lobbying by Chiquita (formerly the United Fruit Company), helped Ecuador with what the World Bank indicated was one of the most significant trade accomplishments of any developing country in WTO history.  Yet Ecuador’s triumph in the “Banana War” went almost unnoticed, further demonstrating how difficult it is to focus on this country’s achievements. 

At the same time, the dispute with the EU almost bankrupted the Chiquita Company, while Ecuador emerged with one of the greatest commercial victories in its history.  In these years it was even rumored that the Noboa Group might purchase Chiquita.  One of the great ironies in the history of bananas would have been the former United Fruit company--the symbol to many of American imperialism--being absorbed by a little-known upstart from Ecuador founded by Luis Noboa, so similar in many ways to Samuel Zemurray.  Both played key roles in developing the commercial banana industry that produced fundamental changes in the Ecuadorean economy and society.

Emerging Challenges

As the country has moved into the 21st century, newer challenges have emerged. As a result of the WTO ruling, international human rights groups began focusing more attention on the labor practices of Ecuador’s leading banana plantations and became very critical of abuses, although some may have been exaggerated for political purposes.  Since the inauguration of President Rafael Correa in January 2007, the trade reforms that led to a dynamic banana sector have been demonized as a “long neoliberal nightmare” and gradually reversed, with a return to the protectionist measures that undermined the country’s agricultural growth and exports in the 1960s and 1970s. Most economists now recognize that protectionist policies increase costs to consumers, produce windfall profits for selected enterprises favored by the government, subsidize inefficient industries, and weaken the country’s competitiveness. 

In this context, major questions have arisen: Will inward-looking protectionist policies weaken Ecuador’s comparative advantage as it confronts increasing banana competition from the Philippines, Colombia, Costa Rica and others?  Will Ecuador in fact lose its world leadership to the Philippines, which has come to dominate banana exports to the growing Chinese market due to its lower costs and geographic proximity, despite earlier successes of Segundo Wong and his group?  Or will the resurgence of fungal diseases (“Panama disease”) in the Philippines provide new opportunities to Ecuador, as hurricane damages in Central America and the Caribbean have done in the past?  Will further progress be made to expand banana markets in EU countries or will they too continue to be limited despite WTO rulings?  Will the Correa government follow through on threats to nationalize unlawful exporters or other parts of the banana industry? 

With its large number of small and medium-sized producers, can Ecuador meet the labor and environmental certifications that are increasingly required by many buying countries, thus increasing production costs?  In the face of an administration that is weakening the investment climate, can Ecuador modernize outdated banana policies and provide greater incentives for stimulating broader introduction of productivity-enhancing technologies that lower costs and combat diseases?  Will it continue to embitter relations with foreign investors while rejecting one of the country’s greatest production and export achievements?  In its search to save the country, will the Government in fact allow the banana sector to decline and lose its international competitiveness?  Will this sector become one of the battlegrounds and causalities of the citizens’ revolution, as is happening in petroleum, mining and other areas?

At the same time, will the 21st century generation of banana leaders be able to move beyond past provincial attitudes and better articulate the great achievements that their enterprises have made?  Can they graduate to a new level of development, rather than just preventing the country from becoming a “banana republic” or depending mainly on markets like Russia and Iran that have no labor or environmental standards for imported products?  Can this vital industry better demonstrate how Ecuador’s “banana revolution” and global markets benefit workers and disadvantaged people?  Will the banana sector continue to flourish, or will it too decline, as happened to others that lacked the vision of their founders and lost the dynamism of their earlier development?  Will the passing of Luis Noboa and Segundo Wong in fact mark a watershed in this important industry and a deterioration in Ecuador’s leadership in international banana markets?

Making History

 Dr. Roberts provides valuable context for addressing these questions by demonstrating that the banana sector has been far more significant than many had previously imagined.  In this small and often ignored corner of the Andes, history was made by banana men who transformed it into a coastal country.  Prior to bananas, most of Ecuador’s population lived in the Sierra highlands and was recognized as mainly indigenous.  Largely as a result of the expansion of banana production, the majority now lives permanently on the coast; less than ten percent of the country’s population identified itself as indigenous in the 2000 census and declined to 6.8 percent in the 2010 population census.

Bananas facilitated a social revolution that is still unfolding.  Dr. Roberts shows that the banana revolution was made possible by successful entrepreneurs and national policy-makers who came to direct the industry in a manner not seen in other countries.  While international support was important, the story of bananas was a local success that demonstrates the longstanding orientation of American cooperation of strengthening Ecuador’s capacity to develop and control its own natural resources. And this process had important impacts not only nationally but also internationally. 

For example, the Noboa Group led the way in the 1970s and 1980s in opening markets in Eastern Europe that, as strange as it may seem, played a role in undermining communism, with bananas coming to symbolize Western-life styles, freedom and democracy that German leaders like Eric Honecker and Chancellor Hermit Kohl used to explain in part the fall of the Berlin Wall.  In Honecker’s book on the collapse of the communist regime in East Germany, he attributed a key event to its inability to import a sufficient quantity of bananas. They were so closely identified with the West that demonstrators tearing down the Berlin Wall chanted to Chancellor Kohl, “Take our hand, lead us to bananaland”, and their first purchases in freedom were bananas. Unknown to the world, most were Ecuadorean bananas that would never have been exported without the vision of Galo Plaza, the entrepreneurship of Luis Noboa and other national producers, and early support from foreign companies and international cooperation.

The dramatic expansion of bananas constitutes only one in a series of export booms that characterize Ecuador’s history.  For almost 300 years Guayaquil was a leading shipbuilding center in the Spanish empire that nurtured its entrepreneurial culture and global vision.  In the early republican period the California gold rush of 1849-50 stimulated its first exports of straw hats to the 49ers crossing Panama (now called “Panama Hats” for that reason), later generating resources to finance Eloy Alfaro’s Liberal Revolution beginning in 1895.

The country’s cacao boom in the late 19th century transformed Guayaquil into an export-banking center, generated revenues for the construction of the Guayaquil-Quito railroad, and provided the entrepreneurial and infrastructure base for the subsequent “banana boom” after diseases devastated the cacao crop. During World War II, the export of balsa wood for life rafts and lightweight aircraft, and chinchona bark for quinine, saved thousands of U.S. and Allied servicemen. As Dr. Roberts shows, Ecuador’s unique banana history is explained in large part as building on previous cacao and other export experiences that were generated mainly by local producers and exporters.  

This same dynamism was further demonstrated in the 1960s and 1970s with the country’s growing exports of marine products, facilitated by a “TunaWar” with the United States that ended with the ratification of a United Nations-sponsored Law of the Seas Treaty.  It recognized the thesis of a 200-mile coastal zone that Ecuador regulated and controlled, marking another diplomatic victory. The petroleum boom of the 1970s, with support from Texaco-Gulf consortium, expanded the role of the Ecuadorean state, fueled import-substitution industrialization, and strengthened the position of Quito and the military in politics and society.  Rafael Correa’s citizens’ revolution would have been impossible without oil exports.

During the 1980s and 1990s Ecuador also became a leader in exporting cultivated shrimp, cut flowers, non-traditional agricultural products and eco-tourism services.  It will also experience a significant mining boom if government policies provide adequate incentives and address social and environmental issues.  Reflecting the country’s longstanding export orientation, even indigenous groups have increased their involvement in international markets, as described in Lynn Meisch’s “Andean Entrepreneurs: Otavalo Merchants and Musicians in the Global Arena”. Other Indian communities have experienced similar growth that is often not fully appreciated.  This export tradition highlights why Ecuador was successful in quickly dominating international banana markets, despite those who maintain that the country rarely prevails in the global arena.

These successes usually receive little attention.  They often get overlooked in international reporting and in the academic literature by negative images that mainly portray Ecuador as a victim of multinational enterprises and globalization that appear disconnected from reality on the ground.  In a similar way, most analysts have downplayed the significance of the county’s growing emigration, which represents the equivalent of yet another non-traditional export.  Starting in the 1990s, increasing numbers of Ecuadoreans emigrated to the United States, Spain, Italy, Canada, Chile, Venezuela, Australia and other countries.  Emigrants living abroad now send home more than $2.0 billion per year in remittances.  In the coming years income generated by these labor exports may in fact become even more important than petroleum revenues and ultimately produce in the 21st century a modernization revolution as significant as the one that bananas produced in the last century.

Likewise, Ecuador’s commercial victory in its protracted “Banana War”, and the WTO ruling in 2001 that gave it greater access to EU markets, played a critical role in maintaining the country’s worldwide banana leadership, even with the negative policy environment of recent years.  For many this achievement did not reflect the conventional image of the country and therefore was largely ignored.  Yet this seminal event demonstrated anew how Ecuador can use constructive engagement with the United States and international agencies to achieve its most important national objectives.

Such cases provide specific examples that can motivate younger generations to learn from and replicate national successes. They demonstrate that the most revolutionary force in Ecuadorean history has been its ability to export and to seize opportunities in global markets, as the banana entrepreneurs and Otavaleños have shown so well.  Unfortunately, many continue to reject this history, proposing instead a retreat into protectionist policies and confrontational approaches to the detriment of the country’s long-term development. 

Conclusions 

Lois Roberts has produced a valuable book that shows the importance that bananas played in Ecuador’s history. Her analyses break new ground and hopefully will encourage others to look more closely at the fascinating stories of the banana entrepreneurs and how their examples can inspire greater progress in the 21st century. As she demonstrated in her book the “Lebanese in Ecuador”, culture and values do matter in promoting development.  It was the entrepreneurial culture of Guayaquil and the coast that produced figures like Luis Noboa and Segundo Wong who made possible the “banana revolution”.  While many continue to argue that Ecuadoreans do not have the ability to determine their own progress, Dr. Roberts clearly has shown the contrary, thereby making a major contribution to better understanding of this country.

The growth of the banana industry is also an important chapter in the history of U.S. cooperation with Ecuador extending over two centuries.  Even before this country achieved its national independence in 1830, American citizens like General José de Villamil from Louisiana supported its first development projects, serving as precursors of those who have continued to the present. They are symbolized by Ecuadorean-American partnerships like those of Vicente Rocafuerte and the Wheelwright brothers, Manuela Sáenz and Alexander Rudin, Gabriel García Moreno and Henry McClellan, Eloy Alfaro and the Harman brothers, José Luis Tamayo and Wilson Popenoe, and Isidro Ayora and Edwin Kemmerer. 

Partnerships among Galo Plaza, Samuel Zemurray, Nelson Rockefeller, and other Ecuadoreans and Americans further highlight how they advanced the country’s production and exports, allowing it to evolve into the “Saudi Arabia of bananas”.  While this history may not have always been free of conflict, the perfect should not be the enemy of the good.  Negative and ideological interpretations, designed to diminish and deprecate, even when cloaked in academic works, do a disservice to the goodwill and hard work of those who were dedicated to nurturing local entrepreneurship that dramatically changed the lives of many Ecuadoreans.

Dr. Roberts’s book allows us to see a key chapter in national development with greater historic perspective and clarity.  She challenges us to learn from the past and to move beyond the negative stereotypes and caricatures that have distorted views of the banana sector, local entrepreneurs and foreign investors.  She showcases positive examples of how entrepreneurship, exports and global markets have benefited hundreds of thousands and fundamentally transformed Ecuador in a manner that is still not recognized to this very day.  This book provides the basis for why Hacienda Tenguel and Hacienda Pichilingue should be seen as enduring legacies of Ecuadorean-American cooperation with worldwide impacts. It demonstrates that experiences like bananas can move the two countries beyond outdated paradigms and help achieve a breakthrough in dealing with each other that build upon longstanding friendship, prior cooperation and mutual goodwill.

John Sanbrailo**

Washington, D.C.
May 2012

* Published in Spanish as “Empresarios ecuatorianos del banano” by Corporación para el Desarrollo de la Educación Univerrsitaria, September 2009. Copies can be obtained at:  información@codeu.org.ec

** The author is Executive Director of the Pan American Development Foundation.  He served as USAID Mission Director in Ecuador and other countries and retired from the Senior Foreign Service as a Career Minister.  He is preparing a book on American Encounters with Ecuador: 1825-2025.  Comments can be sent to: jsanbrailo@padf.org  The views expressed herein are those of the author and do not necessarily reflect those of the Pan American Development Foundation.

Related LBC Articles by John Sanbrailo: “Ecuador and the United States: Useful Strangers or Faithful Friends”, May 5, 2008, see: http://www.latinbusinesschronicle.com/app/article.aspx?id=2350; “Explaining an Andean Enigma”, August 10, 2010, see: http://www.latinbusinesschronicle.com/app/article.aspx?id=3587.  Also see “We Cannot Escape our History” in “Railroad in the Sky” (CODEU June 2008) and “La Historia Sí Importa” (“History Matters”) in “Estados Unidos y Ecuador: Conflicto y Convergencia, 1830-1946” (CODEU October 2011).