Abstract: An American Multinational Enforcing Business Contracts in the Third World Countryside: The United Fruit Company and the Colombian Banana Planters, 1900-1970

Marcelo Bucheli

Abstract

In the first half of the twentieth century the United Fruit Company (now Chiquita) created an impressive network of production and distribution of bananas from the Magdalena region in Colombia to the American and European markets. Its banana exports came from its own plantations and local planters that signed purchase contracts with the company. The literature on the United Fruit operations in Colombia has been focused on the company's labor relations, neglecting the relationship between this multinational and the local planters, or minimizing the planters' importance to mere providers of the fruit. I show that there was a very dynamic and changing relationship between these Colombian providers and United Fruit. In the first half of the twentieth century United Fruit faced the constant threat of holdup by the local planters, so it used foreign courts, loans tied to purchase contracts, and a special timing in the contracts as mechanisms to enforce them. The locals made several attempts to be independent from United Fruit's contracts, all of them unsuccessful. In the 1960s due to labor problems the company decided to move from Magdalena to the region of Uraba. When doing this, they could not find a way to oblige the Magdalena planters that were not tied to any purchase contract to pay back their loans. In Uraba, United Fruit used only subcontractors to provide it with the fruit and avoided the post-contractual opportunism problem by using a Colombian financial institution as a third agent to enforce the loan contracts. This paper is based on the internal archives of United Fruit in Colombia and the Colombian planters. These archives have never been used by any other scholar.