The New Export Cartel

Ever since the Organization of Petroleum Exporting Countries began raising oil prices unilaterally last fall, the industrialized world has had a nagging fear that producers of some other major commodity would follow their example. Last month it happened: seven nations that produce 80% of the world supply of a widely used commodity banded together to increase export taxes a staggering 4,900%. The product: bananas.

The new cartel, named Union de Paises Exportadores del Banano (Union of Banana Exporting Countries), was formed by Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua and Panama. It proposes to slap a $1 export tax on every 40-lb. box of bananas leaving Latin America, 50 times the present 20 tax paid by major exporters. In the U.S., which is the world's top banana in imports of the yellow fruit, the tax boost could raise retail prices from the present 16%0 per Ib. to as much as 190. The International Longshoremen's and Warehousemen's Union has threatened to boycott such Latin American imports as bananas, sugar and coffee if the tax is imposed.

The banana republics claim that they need extra revenue partly to pay the higher oil prices posted by the petroleum cartel. The export price of bananas has remained flat for two decades at about 80 per Ib., while retail prices have climbed steadily, mostly to the benefit of three U.S.-owned companies that grow, ship and market the fruit: United Brands, Del Monte and Standard Fruit & Steamship. Acting singly, the growing countries could not get a bigger slice of the banana pie. Unlike petroleum, bananas cannot be stockpiled; in fact, they must be eaten within twelve days of being picked or they become too soft fpr most palates. So if any one country tried to raise taxes, the three companies could stop dealing with it and leave that nation buried under fast-ripening fruit.

Fragile Unity. When the banana exporters bunched together, the three companies indicated that they would pay the proposed tax. Yet the banana growers already are having trouble holding ranks. World demand for bananas is not rising appreciably, and General Guillermo Rodriguez Lara, President of Ecuador, the most prolific banana producer (90 million boxes last year), fears consumer resistance if prices rise too rapidly. He pulled his country out of the cartel almost as soon as it was formed and announced that he would not raise export taxes. If he sticks to his plan, the banana republics may wind up illustrating once again the difficulty that nonpetroleum commodity producers have in forging even the fragile degree of unity achieved by the Arab oil countries.

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