Unifruit Under Fire

The United Fruit Co. is a $500 million enterprise. Its annual net earnings are greater than the national budget of any of the Central American countries in which it grows its big, sweet Gros Michel bananas for the U.S, and Europe. Years ago, the company used to operate in Guatemala and elsewhere with all the freewheeling methods that characterized the era of "dollar diplomacy." Since then, however, Unifruit has changed with the times, becoming a model big employer in the Caribbean. Paradoxically, Unifruit's reforms have only brought it under heavier attack by government and labor in Guatemala, especially since the leftist revolution of 1944

Nevertheless, the fruit company's Guatemala operation went along profitably until last August. Then Unifruit suffered three body blows:

P: Communist-led banana-worker unions demanded that United Fruit, already paying minimum wages three times greater than top wages on Guatemalan-owned farms, jack up wage floors from $1.36 daily to $2.50.

P: A month later a hurricane--one of the worst natural disasters in United Fruit's history--blew down 95% of the banana trees at Tiquisate on the Pacific coast.

P: Last fortnight, the government unofficially disclosed its determination to cancel and renegotiate the company-government contracts under which Unifruit operates.

In new contracts, Guatemala will insist that the company: 1) pay income taxes equal to those paid by corporations (up to 43%); 2) turn over to the government the country's major ports, which Unifruit built and operates; 3) cut freight rates on the rail network it controls and on the ships of the "Great White Fleet"; and 4) pay higher prices for bananas it buys from independent Guatemalan producers.

Instead of talking about new taxes, Unifruit felt that it needed assurance against extra tax burdens now, and an end to Moscow-wired union squabbles, before it could safely invest the millions necessary to rebuild wrecked Tiquisate. Last week company officials, received by Guatemala's young President Jacobo Arbenz, tried to get such assurance. They did not. Arbenz bounced the issue down to the "ministerial level," where it remained deadlocked.

If United Fruit has to quit in Guatemala, that will liquidate an investment of some $30 million for the parent company in Boston. But for Guatemala's 13,000 best-paid agricultural workers, and for 6,000 best-paid railroad workers, it will be an even greater disaster.

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