Bananas are the product that Americans are used to seeing on store shelves. Even though the climatic conditions for growing this product require its cultivation in countries with a high average annual temperature, that is, in the equatorial and subequatorial zones, the price of this product is lower than that of products grown on local soils, such as potatoes or onions. Therefore, it is not surprising that the consistently low price of 57 cents per pound, after the latest increase, is the result of an artificial undervaluation of the product (Fasler, 2019). This paper argues that more solutions are needed to minimize externalities in banana production.
The article describes the twisted social trends associated with banana prices and gives some history of the issue, but does not offer approaches that work, but only describes the dire state of affairs. Therefore, first of all, it is necessary to determine what the problem of externalities in banana production is. The most influential external factor that affects the price is demand, or more precisely, the relationship between the seller and the buyer of goods. Thanks to the efforts of larger producers who stubbornly undercut prices, more ethical farmers are unable to sell products at a cost that includes adequate labor wages, transportation, ethical land use, and safe growing and storage. It is worth noting that under the condition of ethical production, the price of the fruit should be around 1 dollar. With the seller’s markup, which would include the costs of rent and storage, the price would be about $1.25.
Based on the article, the main reason for price undercutting, apart from the will of monopolists, is public opinion. The low price of bananas has been ingrained in the public mind for two hundred years, and the author suggests that even if Congress had signed acts to regulate banana prices, producers would have faced the problem of a lack of demand. In my opinion, public opinion should not be considered a problem because most Americans may not even notice the price increase given the average standard of living, while the actual demand for the product will remain high due to the traditional tastes of consumers who have been buying bananas for over 150 years (Fasler, 2019). In other words, political will is the only weapon against monopolists, and therefore fixing a certain price for fruit could change the situation fundamentally. Of course, in addition to the displacement of competing small farmers, there is still the problem of unethical production, and it is more important than the problem of unfair competition.
Unethical production includes such bad practices as extremely low wages for banana lookers – about $1 a day in African countries and Puerto Rico. This approach to paying employees is the true capitalist philosophy of the monopolists, and this approach has been implemented throughout the 150 years of relations with the American consumer, about which the author speaks. Therefore, in addition to fixing prices for bananas, it is necessary to establish strict penalties for non-compliance with ethical production practices. Incentives and other ‘down-top initiatives’ are, firstly, an illogical step to solve the problem, and, secondly, they are not effective. Therefore, once again, the political will of local or federal self-government bodies is the only reliable source of change. US laws exist to protect the nation’s citizens, including buyers and sellers, such as smaller market participants. These laws are also intended to enforce the United States’ international obligations, which include ethical manufacturing practices, labor employment, and environmental protection.
Thus, it was argued, that more solutions are needed to minimize externalities in banana production. Banana price-fixing laws should be passed, as well as laws that would guarantee the United States’ international obligations on jobs and environmental protection. In addition, the law must protect the ethics of doing business in the country and prevent unethical competition practices. Most importantly, the responsibility for artificial undercutting of prices and unethical production should not be taken for granted and the initiative should not be expected from consumers.
Reference
Fasler, J. (2019). Bananas are getting cheaper: That low price comes with hidden costs. The Counter.