The Multinational Monitor

NOVEMBER 1982 - VOLUME 3 - NUMBER 11


G L O B A L   N E W S W A T C H

Castle & Cooke Drops Nicaragua

Castle & Cooke announced on October 25 that it was ending its banana operations in Nicaragua, a move that will throw 4,000 Nicaraguan banana farmers out of work.

The company has controlled 100% of Nicaragua's exports for the past 12 years, buying the fruit from local farmers and selling it on the world market.

"We are stopping purchasing bananas in Nicaragua permanently," says Dave DeLorenzo, a spokesperson for Castle & Cooke. The "depressed demand for bananas around the world" underlies the decision, DeLorenzo says; the company has "been losing money" on its banana trade.

"I don't buy the argument that they are losing money," says Juan Gazol, economic officer of the Nicaraguan embassy. "They want to reduce the amount of bananas in this region in order to get better prices" in the U.S. market, Gazol contends, claiming that this latest move is a manipulation of supply and demand by the company.

Nicaragua "is the only place where we're completely stopping" banana operations, says Castle & Cooke's DeLorenzo, adding that "there are reductions elsewhere." Nicaragua is just "a small division" within the company's worldwide operations, he points out, accounting for less than 5% of its worldwide supply.

The Nicaraguan government is upset about the way the decision was made, and about its effects on Nicaraguan employment. "Without notice, they said they're getting out," objects Gazol. DeLorenzo admits that the decision was "rather sudden"; "we just advised the Nicaraguan government at the same time" the press release was issued on October 25, he says.

"They don't care about the social impact in Nicaragua," says Gazol, who thinks the pullout is "really worrying." Castle & Cooke's decision will mean "4,000 people out of jobs" and "4,000 families" will suffer as a consequence, Gazol claims.

The effect on Nicaragua's economy may be less severe, however. "A long time ago," bananas were important to the economy, but "not anymore," says Angela Saballos, press secretary at the Nicaraguan embassy. Bananas rank a distant fifth in export earnings for Nicaragua, with "cotton and coffee" the two chief cash crops, Saballos explains.

Castle & Cooke's decision to pull out of Nicaragua ends a turbulent relationship the company has had with the young socialist country.

Two years ago, the company stopped buying Nicaraguan bananas for the good part of a month, protesting a Nicaraguan decree mandating an increase in government participation in the banana industry (See MM, Feb. 1981). That dispute was settled when the company agreed to stay in Nicaragua for a transitional five year period. "We at Castle & Cooke have a better understanding of the needs and interests of the Nicaraguan nation," said then-chairman D.J. Kirchoff.

But now that "better understanding" appears to have vanished. "We had an agreement" with Castle & Cooke, says Nicaragua's Saballos. "In that agreement Castle & Cooke guaranteed that they would market bananas for five years. And now they've left after two."


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