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Banana production is having problems in Panama. From European tariffs to infection with “Panama Disease” banana cultivation has become unprofitable in Panama. In Chiriqui Province and Bocas del Toro where Panama banana production is primarily located one of the worker cooperatives that grows and exports bananas is in danger of collapsing.

Chiriqui used to be the Panama home of Chiquita Banana but labor problems among other issues caused them to sell and move out. A cooperative of Panamanian banana workers took over. Now the cooperative is in trouble. There are two issues. One is European Union tariffs that favor non-American producers from former European colonies and the other is Panama Disease.

European Union Tariffs and Panama Banana Producers

According to La Prensa, Panama, “Latin American banana growers rejected a proposal by the European Union to reduce its tariff on banana exports from the region, claiming their produce remains at a disadvantage to exports from former European colonies.

“Previously, the European Commission had shown a willingness to reduce the tariff on Latin American (including Panamanian) banana exports from $$278 per ton to $$183 in 2015. But market heavyweight Ecuador voiced opposition to some of the proposal’s conditions, claiming the deadline for the reduction was too far off.

“Smaller banana-producing countries in former European colonies throughout Africa, the Caribbean and the Pacific refused to support lowering the tariff because it gives them an edge in the European market.”

Guillermo Salazar, head of Desarrollo Agropecuario of Panama, said that he had hoped to see an end to the conflict. “We’ll continue fighting as a country to achieve a just and equitable accord, so that we can support our banana farmers,” he said.

A spokesman for one of the Panama banana cooperatives expressed regret that the EU proposal was rejected as he thought that the proposed agreement would have allowed American growers to negotiate lower tariffs over time.

Panama Disease

The Fusarium wilt or Panama disease has devastated banana production world wide. This fungal disease has been around since the 19th century but took until the 20th century to wipe out entire plantations. Fusarium is a soil fungus which wiped out the most popular banana variety in Panama as else where, Gros Michel. Prior to 1960 almost all export production was this one strain and its susceptibility to Fusarium nearly wiped out banana production. Now that other strains are used the problem is better but the Fusarium fungus keeps evolving and has started to infect previously resistant strains. On top of the tariff disputes with the EU this disease continues to pose a problem for Panama and other Latin American producers.

Panama Banana Industry Debt

La Prensa reports that, “Banana growers in the Barú community of Bocas del Toro [Panana] have taken to the streets again, this time as the local banana industry slides further into crippling debts that some predict could signal its end.

“Workers of the Cooperativa de Servicios Múltiples de Puerto Armuelles (Coosemupar) blocked the road to Puerto Armuelles, a major hub for  [Panama] banana exports, after mounting debts forced the electric company to cut power to the building, halting all activity. As a result, Coosemupar’s 2,800 employees claim they are left in the dark, without water, jobs, insurance and their last paycheck.”

For workers in the banana producing region of Chiriqui, Panama an alternative hope is the prospect on an oil refinery near Puerto Armuellas. This project could dwarf the Panama Canal Expansion and provide ongoing prosperity to the people of Chiriqui Province. This article is provided for its human interest and as an investment “heads up.” If the refinery goes through expect commercial real estate values to skyrocket in and around Puerto Armuellas.

If you are interested in more information regarding investments in Panama contact us at ABPanama. We have over 23 years experience managing real estate portfolios.