Yes, We Have No Bananas . . .
The Real Impact of President Trump’s Steel and Aluminum Tariffs
It’s March, 2011, and I’m in Sydney, Australia. I wander into a supermarket to pick up a couple of bananas—and immediately suffer from sticker shock.
Price of two bananas: $7!
Turned out that a few weeks before a combination of floods, followed by Cyclone Yasi, had devastated the northern Queensland farms which produce some 90% of all Australian bananas.
Thanks to the shortage prices soared from around $2.50 a kilogram to $17 per kilo. Prices only fell back to normal around December 2011—ten months after the cyclone hit.
. . . but We Have Apples Aplenty
A similar shortage occurred in 1989—with a very different result.
Washington apples were pulled off the market thanks to a scare that they had been contaminated with Alar, a chemical that helped extend the shelf-life of apples and other fruits, but was feared could cause cancer.
At the time I was living in Hong Kong, where Washington apples had a virtual monopoly. Overnight, apples weren’t to be had for love nor money.
Imagine my surprise when, just one week later, I walked into the supermarket and, lo and behold, there were apples.
From Chile!
At the same price Washington apples had been—even though Chilean apples have to travel twice the distance to reach Hong Kong compared to Washington apples shipped from Seattle.
What’s more, the only way those Chilean apples could have arrived in Hong Kong in such a short time was by air freight. Not the cheapest method of transport.
Why, you might wonder, didn’t Australia’s banana shortage in 2011 spur a flood of bananas from Central America, the Philippines, or elsewhere?
For the simple reason that banana imports into Australia are prohibited, to prevent the importation of diseases that could devastate local production. While Hong Kong was and still is a free port, with no tariffs and almost no restrictions on what can be imported.
Thanks to Australia’s banana ban we can see the dramatic contrast you, the customer, experiences between an open market and a closed one. Between free trade and restricted trade.
Free trade = low(er) prices and abundance.
Protectionism = high(er) prices and shortages.
And you—the customer—always pays the price . . .
Good article, but … are those Aussie dollars or US dollars (I’ll assume your target audience is US)?
Of course, if you DID convert, you’d have to use exchange rates in effect in 2011 (which you might even remember).
PS My last two BMWs (I live in the US) were made in South Africa.
Aussie dollars. But in early 2011 US$1 was about 98 Aussie cents, so near enough the same.