1 00:00:05,160 --> 00:00:09,200 Speaker 1: Hello, welcome to add Thoughts. It's Monday, January eleventh. I'm 2 00:00:09,240 --> 00:00:12,480 Speaker 1: Tracy Alloy, Executive editor of Bloomberg Markets, and I'm Joe 3 00:00:12,560 --> 00:00:15,920 Speaker 1: Wi Somethal, Managing editor of Bloomberg Markets. Hey, Joe, I 4 00:00:16,560 --> 00:00:21,079 Speaker 1: brought you something. It's sort of a belated Christmas present. Oh, thanks, Tracy. 5 00:00:21,200 --> 00:00:26,480 Speaker 1: What is it? Uh? Banana? Thanks? Thanks so much? Thanks 6 00:00:26,480 --> 00:00:29,120 Speaker 1: for this banana. Why did you bring me a banana? 7 00:00:30,240 --> 00:00:32,199 Speaker 1: Because today we're going to talk about one of the 8 00:00:32,240 --> 00:00:36,080 Speaker 1: world's most fragile commodities markets. And I'm not talking about oil. 9 00:00:36,360 --> 00:00:39,960 Speaker 1: I am, of course talking about bananas, the banana market. 10 00:00:40,280 --> 00:00:43,560 Speaker 1: I'd never even thought before that there was a banana market, 11 00:00:43,720 --> 00:00:46,559 Speaker 1: or even really thought of banana as a commodity. But 12 00:00:46,640 --> 00:00:49,519 Speaker 1: why are we talking about it? Why are bananas interesting? 13 00:00:49,920 --> 00:00:54,200 Speaker 1: Bananas are interesting because they face a big threat in 14 00:00:54,240 --> 00:00:57,000 Speaker 1: the form of a fungal disease, and as we're about 15 00:00:57,040 --> 00:01:00,240 Speaker 1: to find out, that disease could end up having far 16 00:01:00,360 --> 00:01:04,759 Speaker 1: reaching implications for the world's food supply. Yeah. One thing 17 00:01:05,160 --> 00:01:08,520 Speaker 1: that about bananas, right is that you know, with like apples, 18 00:01:08,720 --> 00:01:11,000 Speaker 1: there are tons of varieties and the sword Granny smith 19 00:01:11,120 --> 00:01:14,320 Speaker 1: and fuji or Fiji apples and all these, But there's 20 00:01:14,319 --> 00:01:17,120 Speaker 1: pretty much just one banana, isn't there. That's exactly right. 21 00:01:17,240 --> 00:01:19,959 Speaker 1: Not only is there just one banana, the banana that's 22 00:01:20,000 --> 00:01:24,480 Speaker 1: grown in of the world's crops, and most likely the 23 00:01:24,560 --> 00:01:26,680 Speaker 1: type of banana that you are holding in your hand 24 00:01:26,800 --> 00:01:31,320 Speaker 1: right now, called the Cavendish, is actually a clone. It's 25 00:01:31,319 --> 00:01:33,520 Speaker 1: a clone of itself and it's just been cloned over 26 00:01:33,560 --> 00:01:36,080 Speaker 1: and over and over. So it's very very susceptible to 27 00:01:36,200 --> 00:01:38,160 Speaker 1: this fungus, as we're going to find out. And so 28 00:01:38,319 --> 00:01:41,280 Speaker 1: because there's just one banana, if it were to get sick, 29 00:01:41,360 --> 00:01:43,240 Speaker 1: so to speak, that would not be good for the 30 00:01:43,440 --> 00:01:46,920 Speaker 1: banana eaters and growers of the world. No, it definitely wouldn't, 31 00:01:46,920 --> 00:01:49,280 Speaker 1: and it would mean that maybe one day you would 32 00:01:49,280 --> 00:01:52,600 Speaker 1: actually appreciate the banana that I just put into your hands. 33 00:01:52,640 --> 00:01:55,520 Speaker 1: So here with us today is Dan Copple. He is 34 00:01:55,640 --> 00:01:58,440 Speaker 1: author of Banana, The Fate of the Fruit That Changed 35 00:01:58,480 --> 00:02:00,720 Speaker 1: the World, And we're going to be talking about the 36 00:02:00,760 --> 00:02:04,840 Speaker 1: market forces that brought us the Cavendish banana currently sitting 37 00:02:04,840 --> 00:02:07,360 Speaker 1: in front of Joe, how it got to be there, 38 00:02:07,360 --> 00:02:10,960 Speaker 1: how we eventually ended up with this monoculture and the 39 00:02:11,000 --> 00:02:25,120 Speaker 1: problems facing the world's collective banana crops. Now, Dan, welcome 40 00:02:25,160 --> 00:02:27,919 Speaker 1: to the show. Thank you so much. So I want 41 00:02:27,919 --> 00:02:30,680 Speaker 1: to start at the beginning. Let's go back to four 42 00:02:30,720 --> 00:02:33,560 Speaker 1: when the banana split was invented in Pennsylvania and that 43 00:02:33,720 --> 00:02:36,200 Speaker 1: kicked off a craze for bananas in America and a 44 00:02:36,320 --> 00:02:39,519 Speaker 1: huge jump in the number of bananas imported. Wait, what's 45 00:02:39,560 --> 00:02:43,040 Speaker 1: the beginning. Uh, you want to go back even earlier? 46 00:02:43,120 --> 00:02:47,200 Speaker 1: Is that what you're saying? Yeah, like prehistory? Yeah, I do. Okay, alright, 47 00:02:47,280 --> 00:02:50,560 Speaker 1: let's start at the very very beginning. Um, why are 48 00:02:50,560 --> 00:02:55,880 Speaker 1: bananas special? Well, bananas are, and we're talking, you know, 49 00:02:56,200 --> 00:03:00,200 Speaker 1: ten thousand years ago now, are one of the to 50 00:03:00,240 --> 00:03:04,160 Speaker 1: one of the agricultural products that actually helped humanity emerge 51 00:03:04,400 --> 00:03:09,480 Speaker 1: from hunter gatherer cultures and into communities. Bananas are are 52 00:03:09,600 --> 00:03:13,880 Speaker 1: very easy to cultivate, and and it's believed that wild bananas, 53 00:03:13,919 --> 00:03:16,680 Speaker 1: which are basically inedible and have a lot of seeds 54 00:03:16,720 --> 00:03:20,200 Speaker 1: in them on that mutant versions of them that were unseated. 55 00:03:20,720 --> 00:03:24,480 Speaker 1: We're taken by these hunter gatherers and planted um and 56 00:03:24,480 --> 00:03:26,640 Speaker 1: and you know when you plant, you have to stay 57 00:03:26,639 --> 00:03:29,320 Speaker 1: put to watch you grow. So you need to form communities, 58 00:03:29,400 --> 00:03:32,560 Speaker 1: you need to develop language, you need to develop history 59 00:03:32,639 --> 00:03:35,480 Speaker 1: so you can pass knowledge on. So the banana emerges 60 00:03:35,640 --> 00:03:38,560 Speaker 1: very early as as the first staple fruits. That that 61 00:03:38,680 --> 00:03:41,120 Speaker 1: helps us, you know, literally get out of the jungle 62 00:03:41,200 --> 00:03:45,040 Speaker 1: and into villages. And the way bananas are planted is 63 00:03:45,360 --> 00:03:48,680 Speaker 1: kind of special as well, right, Yeah, So you know, 64 00:03:48,680 --> 00:03:50,880 Speaker 1: wild bananas would and some of them still exists, have 65 00:03:50,960 --> 00:03:54,240 Speaker 1: seeds um, and they can reproduce like from like like 66 00:03:54,320 --> 00:03:57,040 Speaker 1: many plants. But but what makes banana so unique is 67 00:03:57,080 --> 00:04:00,600 Speaker 1: that they also can reproduce when they're seedless um through 68 00:04:00,840 --> 00:04:04,640 Speaker 1: a planting a shoot. A mother plant will will fruit 69 00:04:04,680 --> 00:04:06,960 Speaker 1: once and then give off a daughter plant, and that 70 00:04:08,160 --> 00:04:11,160 Speaker 1: generation can go on and on and on for hundreds 71 00:04:11,160 --> 00:04:13,680 Speaker 1: and hundreds of years. And apparently the banana is so 72 00:04:13,720 --> 00:04:16,800 Speaker 1: crucial to humanity that it might have actually been the banana, 73 00:04:16,920 --> 00:04:19,880 Speaker 1: not the apple, that Eve gave to Adam and the 74 00:04:19,920 --> 00:04:23,000 Speaker 1: Garden of Eden. Yeah, I mean, let's let's let me 75 00:04:23,000 --> 00:04:25,360 Speaker 1: be clear, you know, and I am not suggesting or 76 00:04:25,440 --> 00:04:27,880 Speaker 1: I'm not not suggesting that the Garden of Eden was 77 00:04:27,920 --> 00:04:31,080 Speaker 1: a real place, but that's a theological question. But if 78 00:04:31,080 --> 00:04:33,520 Speaker 1: you look at the story of the Garden of Eden 79 00:04:33,920 --> 00:04:37,160 Speaker 1: as as historic metaphor Adam and Eve are those hunter 80 00:04:37,279 --> 00:04:40,280 Speaker 1: gatherers we're talking about. They live in the garden and 81 00:04:40,320 --> 00:04:42,359 Speaker 1: they can pick whatever they want. They have no worries. 82 00:04:42,960 --> 00:04:48,080 Speaker 1: But once the forbidden fruit is consumed, they are condemned 83 00:04:48,080 --> 00:04:51,040 Speaker 1: to emerge. And literally the Bible says to work the earth, 84 00:04:51,200 --> 00:04:54,200 Speaker 1: to till the soil. Um. And so they know the 85 00:04:54,240 --> 00:04:56,400 Speaker 1: story of of Adam and Eve is the story of 86 00:04:56,440 --> 00:05:00,599 Speaker 1: the emergence from hunter gathering its community. And so it 87 00:05:00,640 --> 00:05:03,280 Speaker 1: makes a lot of sense for a lot of reasons, Um, 88 00:05:03,320 --> 00:05:06,400 Speaker 1: that the banana was that fruit. Um. And the apple, 89 00:05:06,560 --> 00:05:09,600 Speaker 1: we're pretty sure you know, appears mostly because of our 90 00:05:09,600 --> 00:05:14,320 Speaker 1: experience with Renaissance paintings, and the Renaissance painters misinterpreted um, 91 00:05:14,440 --> 00:05:19,279 Speaker 1: the Hebrew and Greek Bibles and so painted apples when 92 00:05:19,320 --> 00:05:22,360 Speaker 1: when they probably should have painted something else. Never trusted 93 00:05:22,400 --> 00:05:25,320 Speaker 1: those renaissances. Pomegran people are going to tell you something 94 00:05:25,360 --> 00:05:29,040 Speaker 1: totally different, you know. Let's not bring the pomegranate crowd, 95 00:05:32,200 --> 00:05:34,920 Speaker 1: all right. So we have these bananas that are relatively 96 00:05:34,960 --> 00:05:37,839 Speaker 1: easy to cultivate. More importantly, you can carry them around 97 00:05:37,839 --> 00:05:40,159 Speaker 1: with you all over the world and plant them and 98 00:05:40,200 --> 00:05:43,400 Speaker 1: get new banana plants. How do we get to the 99 00:05:43,480 --> 00:05:47,640 Speaker 1: point where banana crops really start to become industrialized, and 100 00:05:47,720 --> 00:05:51,000 Speaker 1: you see, you know, the big, big growth in the industry. 101 00:05:51,600 --> 00:05:54,360 Speaker 1: Well that that that happens, you know, thousands and thousands 102 00:05:54,400 --> 00:05:58,320 Speaker 1: of years later, and and it's almost impossible. The banana 103 00:05:59,440 --> 00:06:02,480 Speaker 1: is barely known to places where the banana camp grows. 104 00:06:02,560 --> 00:06:04,960 Speaker 1: So the banana is a tropical fruit, so for it 105 00:06:05,040 --> 00:06:08,080 Speaker 1: to appear in some place like North America or Europe 106 00:06:08,600 --> 00:06:12,240 Speaker 1: is crazy. And and in fact, you know, if you 107 00:06:12,240 --> 00:06:14,919 Speaker 1: look at old ettukin manuals, the banana was known to 108 00:06:16,080 --> 00:06:18,400 Speaker 1: Thomas Jefferson, for example, he had to he had some 109 00:06:18,440 --> 00:06:21,760 Speaker 1: books that mentioned but it was considered literally a forbidden fruit. 110 00:06:21,920 --> 00:06:25,159 Speaker 1: It's shape with two suggestive were in the Victorian era 111 00:06:25,279 --> 00:06:28,080 Speaker 1: for ladies to eat um and and so the banana 112 00:06:28,120 --> 00:06:30,440 Speaker 1: had to be sort of prepared in this if you 113 00:06:30,440 --> 00:06:32,000 Speaker 1: could find one, it had to be prepared in this 114 00:06:32,080 --> 00:06:33,760 Speaker 1: crazy way that you know, you cut it up so 115 00:06:33,800 --> 00:06:36,120 Speaker 1: it wouldn't have any sort of suggestive shape. And by 116 00:06:36,120 --> 00:06:38,760 Speaker 1: then it was all mushy who wanted to eat it. Um. 117 00:06:38,760 --> 00:06:43,120 Speaker 1: It took transportation and sort of audacity. Um in the 118 00:06:43,160 --> 00:06:47,800 Speaker 1: banana was exhibited at the Centennial Exhibition in Philadelphia in 119 00:06:48,160 --> 00:06:51,320 Speaker 1: seventy six, and not long after that, a cape called 120 00:06:51,400 --> 00:06:55,839 Speaker 1: sea captain named dal Baker had just failed to find 121 00:06:55,839 --> 00:06:59,920 Speaker 1: gold in Venezuela, and he was sailing back to Massachusetts 122 00:07:00,640 --> 00:07:03,440 Speaker 1: with nothing in his in his in his pockets. He 123 00:07:03,560 --> 00:07:07,000 Speaker 1: stopped in Jamaica for repairs um and he saw abouts 124 00:07:07,000 --> 00:07:09,080 Speaker 1: of bananas and thought, gosh, you know, maybe I could 125 00:07:09,120 --> 00:07:12,440 Speaker 1: cut my loss by bringing these bananas to the US, 126 00:07:12,520 --> 00:07:13,920 Speaker 1: and maybe I can sell a few of them. It 127 00:07:14,040 --> 00:07:17,160 Speaker 1: was a crazy idea because the ship was was a 128 00:07:17,200 --> 00:07:20,880 Speaker 1: schooner sail driven, but the winds were favorable, the bananas 129 00:07:20,880 --> 00:07:23,000 Speaker 1: didn't go bad. It took him about eight days and 130 00:07:23,080 --> 00:07:26,320 Speaker 1: lo and behold the bananas were a hint um. The 131 00:07:26,400 --> 00:07:29,520 Speaker 1: company Baker found it was called Boston Fruit. It later 132 00:07:29,600 --> 00:07:31,760 Speaker 1: changed his name to United Fruit, and today it's called 133 00:07:31,800 --> 00:07:34,920 Speaker 1: shakida Um. But the but the industry didn't really take 134 00:07:34,920 --> 00:07:38,200 Speaker 1: off until they could ship them quickly in refrigerated chips. 135 00:07:38,320 --> 00:07:41,480 Speaker 1: Now let's talk about you know, before you joined US, 136 00:07:41,520 --> 00:07:44,520 Speaker 1: I was sort of talking to Tracy. I find bananas 137 00:07:44,520 --> 00:07:47,320 Speaker 1: to be a little boring that I don't They don't 138 00:07:47,320 --> 00:07:50,080 Speaker 1: have all the same varieties as like apples and apples. 139 00:07:50,120 --> 00:07:52,239 Speaker 1: You know, there's so many different types you can buy 140 00:07:52,280 --> 00:07:55,240 Speaker 1: in the grocery store of apples. But there's just one banana, 141 00:07:55,680 --> 00:07:59,160 Speaker 1: the big yellow one. It's kind of plain and boring. 142 00:07:59,400 --> 00:08:01,080 Speaker 1: How did that up and how did we end up 143 00:08:01,080 --> 00:08:04,120 Speaker 1: with there's one big, boring banana? So so let's let's 144 00:08:04,120 --> 00:08:07,120 Speaker 1: talk first of all about that. You know, the myths 145 00:08:07,120 --> 00:08:09,680 Speaker 1: that there's only one banana, and and yeah it's true. 146 00:08:09,760 --> 00:08:12,080 Speaker 1: Let's let's face it. If if McDonald's had its way, 147 00:08:12,120 --> 00:08:13,960 Speaker 1: you think there was only one hamburger, and it wouldn't 148 00:08:13,960 --> 00:08:18,200 Speaker 1: be something very good to eat. It would be a cheap, disposable, dull, 149 00:08:18,640 --> 00:08:21,520 Speaker 1: not very tasty commodity. The cavendish banana that's the breed 150 00:08:21,600 --> 00:08:24,400 Speaker 1: we eat, is the same. But I can tell you, 151 00:08:24,560 --> 00:08:28,120 Speaker 1: having traveled the world for ten years um tasting banas, 152 00:08:28,120 --> 00:08:31,320 Speaker 1: there are over a thousand different varieties of banana, and 153 00:08:31,440 --> 00:08:34,800 Speaker 1: every single one of them tastes better. It's it's all 154 00:08:34,840 --> 00:08:38,320 Speaker 1: about McDonald's. We cannot think of the banana that we 155 00:08:38,360 --> 00:08:40,560 Speaker 1: get as an agricultural product. We take a bit more 156 00:08:40,640 --> 00:08:43,080 Speaker 1: of a as an industrial product, the same way McDonald's 157 00:08:43,120 --> 00:08:47,000 Speaker 1: produces an industrial hamburger. And it's all about uniformity. The 158 00:08:47,040 --> 00:08:51,160 Speaker 1: banana is a tough product to ship even today. Uh, 159 00:08:51,200 --> 00:08:52,960 Speaker 1: it has to have a lot of activiuties. It has 160 00:08:53,000 --> 00:08:55,160 Speaker 1: to survive the voyage. It has to ripen at the 161 00:08:55,240 --> 00:08:59,240 Speaker 1: right speed. Banana trees have to resist certain diseases. They 162 00:08:59,320 --> 00:09:02,160 Speaker 1: can't be too or they're hard to hard to harvest. 163 00:09:02,240 --> 00:09:05,800 Speaker 1: So as an industrial product of the banana industry made 164 00:09:05,880 --> 00:09:09,440 Speaker 1: systematic in some genius ways and some terrible ways, the 165 00:09:09,520 --> 00:09:12,520 Speaker 1: production of the fruit. And so I'd like to tell people, 166 00:09:12,760 --> 00:09:16,120 Speaker 1: it's like there's a banana tube from Central America to 167 00:09:16,640 --> 00:09:20,280 Speaker 1: the United States, but this tube only fits one kind 168 00:09:20,280 --> 00:09:22,880 Speaker 1: of banana. It's it's a metaphoric to not a physical 169 00:09:23,320 --> 00:09:28,040 Speaker 1: size um and every banana requires different growing and and 170 00:09:28,040 --> 00:09:31,240 Speaker 1: and shipping technique. Some are unshippable. So the banana industry 171 00:09:31,240 --> 00:09:33,480 Speaker 1: will tell you, and I'm not sure I totally agree, 172 00:09:33,480 --> 00:09:35,640 Speaker 1: but they've set it up this way that they are 173 00:09:35,679 --> 00:09:39,280 Speaker 1: only capable of bringing one banana to the United States 174 00:09:39,320 --> 00:09:41,640 Speaker 1: at the prices that we want to pay. The banana 175 00:09:41,720 --> 00:09:44,920 Speaker 1: is the cheapest fruit in the supermarket by far, astonishing 176 00:09:45,120 --> 00:09:47,559 Speaker 1: for a fruit that shipped great distances and goes bad 177 00:09:47,679 --> 00:09:51,400 Speaker 1: so quickly. It's all because of the industrialization. So at 178 00:09:51,440 --> 00:09:53,880 Speaker 1: the turn of the century when bananas are really sort 179 00:09:53,920 --> 00:09:58,600 Speaker 1: of taking off the industrial standard of banana was a 180 00:09:58,679 --> 00:10:02,200 Speaker 1: variety called the grow Michelle. Am I saying that right, 181 00:10:02,240 --> 00:10:07,080 Speaker 1: the grow Michelle banana um and that was a great banana. 182 00:10:07,760 --> 00:10:11,560 Speaker 1: It actually tastes better than the Cavendish. It's tougher, it's 183 00:10:11,559 --> 00:10:13,200 Speaker 1: easier to ship. If you look at some of the 184 00:10:13,200 --> 00:10:15,800 Speaker 1: old movies, you'll see, you know, pictures of grocery storces 185 00:10:15,800 --> 00:10:18,840 Speaker 1: bananas ay and big bunches. That's because those bananas were 186 00:10:18,880 --> 00:10:20,439 Speaker 1: so tough you could throw them into a boat and 187 00:10:20,480 --> 00:10:25,520 Speaker 1: they wouldn't bruise. Um. The cavendish banana, by comparison, doesn't 188 00:10:25,520 --> 00:10:27,880 Speaker 1: taste as good um and and it's much more France, 189 00:10:27,920 --> 00:10:30,400 Speaker 1: and it has to be boxed and bagged to ship. 190 00:10:30,760 --> 00:10:35,439 Speaker 1: And the grow machell was industrialized and and it became 191 00:10:35,440 --> 00:10:39,280 Speaker 1: a monoculture. And what happened, as often happens with monocultures, 192 00:10:39,360 --> 00:10:44,480 Speaker 1: it was attacked by disease. And so between fifty you 193 00:10:44,480 --> 00:10:48,200 Speaker 1: see the banana industry struggling and and doing terrible things 194 00:10:48,240 --> 00:10:51,400 Speaker 1: to sort of acquire more land to replace their shallowed 195 00:10:51,480 --> 00:10:54,600 Speaker 1: farms that are blighted by this disease. But eventually the 196 00:10:54,600 --> 00:10:58,240 Speaker 1: grow michelle goes functionally extinct. It still exists, I've tasted it, 197 00:10:58,280 --> 00:11:01,080 Speaker 1: but it cannot be grown commercially. And they adopt the 198 00:11:01,160 --> 00:11:05,160 Speaker 1: cavendish um kicking and screaming. Really they thought it was 199 00:11:05,200 --> 00:11:08,160 Speaker 1: a lousy banana. And it is explain You mentioned that 200 00:11:08,200 --> 00:11:11,640 Speaker 1: the grown machelle can no longer be produced industrially. Is 201 00:11:11,679 --> 00:11:14,040 Speaker 1: that because of that same disease or what's the reason 202 00:11:14,080 --> 00:11:17,720 Speaker 1: for that? Right, So, this disease um, which is a fungus, 203 00:11:17,760 --> 00:11:21,000 Speaker 1: it's called therium wilt. It's commonly known as Panama disease, 204 00:11:22,120 --> 00:11:26,200 Speaker 1: renders banana fields shallow. The banana plants can no longer produce, fruit, 205 00:11:26,280 --> 00:11:28,440 Speaker 1: can no longer grow, and it stays in the soil 206 00:11:28,600 --> 00:11:31,920 Speaker 1: pretty much forever. So what happened in Latin America where 207 00:11:31,920 --> 00:11:34,199 Speaker 1: they were growing was one field would get contaminated and 208 00:11:34,280 --> 00:11:37,520 Speaker 1: they'd go cut down some rainforests and you know, plant 209 00:11:37,559 --> 00:11:39,800 Speaker 1: for a few years, and then the disease would spread 210 00:11:39,840 --> 00:11:42,120 Speaker 1: and spread and spread and spread. So at this point 211 00:11:42,200 --> 00:11:44,840 Speaker 1: there's probably no place in the world where you could 212 00:11:44,840 --> 00:11:47,920 Speaker 1: grow the grow machelle and industrial quantities. But you'll still 213 00:11:47,960 --> 00:11:51,280 Speaker 1: find it um in many places as a garden banana, 214 00:11:51,679 --> 00:11:55,760 Speaker 1: as a local banana. So I'm wondering, as Panama disease 215 00:11:55,880 --> 00:11:58,480 Speaker 1: was kind of um overtaking banana crops in the early 216 00:11:58,559 --> 00:12:01,959 Speaker 1: nineteen hundreds, what did the route companies do other than 217 00:12:02,080 --> 00:12:05,440 Speaker 1: just find new land and use pesticides. Did they try 218 00:12:05,480 --> 00:12:10,400 Speaker 1: any other methods? Tom They did terrible, terrible things, and 219 00:12:10,920 --> 00:12:12,960 Speaker 1: they were warned by their scientists. I mean, I have 220 00:12:13,120 --> 00:12:15,079 Speaker 1: I have you know reports that they wrote in the 221 00:12:15,440 --> 00:12:19,319 Speaker 1: Takeda's scientists wrote in the Twins thing, You've got to diversify. 222 00:12:19,440 --> 00:12:21,920 Speaker 1: We need We can't do monoculture. It's not gonna work. 223 00:12:22,080 --> 00:12:24,480 Speaker 1: There's so many reasons. This is a terrible thing. But 224 00:12:25,040 --> 00:12:27,920 Speaker 1: it was cheaper and easier. Remember, the whole idea of 225 00:12:28,000 --> 00:12:30,320 Speaker 1: banana was that would be the cheapest fruit in the supermarket. 226 00:12:30,360 --> 00:12:33,200 Speaker 1: This was their business model, and so in order to 227 00:12:33,280 --> 00:12:35,840 Speaker 1: keep cost down, they had to do terrible things that 228 00:12:36,000 --> 00:12:40,200 Speaker 1: literally take over countries. Literally massacre workers happened over and 229 00:12:40,280 --> 00:12:42,600 Speaker 1: over again in Latin America. These countries were known as 230 00:12:42,600 --> 00:12:45,720 Speaker 1: banana republics because with the support of the U. S Government, 231 00:12:45,720 --> 00:12:48,640 Speaker 1: they were run by the banana companies and they were 232 00:12:48,720 --> 00:12:53,800 Speaker 1: run as terrible, terrible dictatorships. All this to keep bananas cheap. 233 00:12:54,160 --> 00:12:57,280 Speaker 1: And so when the land starts becoming fallow and the 234 00:12:57,280 --> 00:13:00,760 Speaker 1: grown Michelle starts having to be chased by this this disease, 235 00:13:01,240 --> 00:13:04,079 Speaker 1: they become even more brutal. They start to take more land. 236 00:13:04,559 --> 00:13:07,120 Speaker 1: They become very aggressive about it that it's it's a 237 00:13:07,160 --> 00:13:09,160 Speaker 1: it's a cash twenty two. In a way, demand for 238 00:13:09,200 --> 00:13:12,880 Speaker 1: bananas is increasing because their genius marketers. The number of 239 00:13:12,880 --> 00:13:16,280 Speaker 1: places you can grow bananas is decreasing. Um. The costs 240 00:13:16,280 --> 00:13:18,560 Speaker 1: are going up, but their business model requires the cost 241 00:13:18,600 --> 00:13:23,280 Speaker 1: to stay down. So with with no real hesitation, they 242 00:13:23,400 --> 00:13:28,320 Speaker 1: went out and for example, in Massacre, a thousand banana 243 00:13:28,360 --> 00:13:31,280 Speaker 1: workers and their families as they're emerging from church in 244 00:13:31,280 --> 00:13:34,680 Speaker 1: a village square in Colombia, all because the workers want 245 00:13:34,720 --> 00:13:37,320 Speaker 1: more money and because they're running out of land because 246 00:13:37,320 --> 00:13:39,559 Speaker 1: the banana has to be so cheap, the banana industry 247 00:13:39,600 --> 00:13:42,720 Speaker 1: decides they can't do that. Yeah, I remember that scene. 248 00:13:42,800 --> 00:13:47,520 Speaker 1: Makes it into a hundred years of solitude, right yeah. Um. 249 00:13:47,559 --> 00:13:51,760 Speaker 1: So instead of diversifying crops, though, the fruit companies essentially 250 00:13:51,800 --> 00:13:55,160 Speaker 1: just switched to another monoculture, which is the cavendish. Right 251 00:13:55,320 --> 00:13:58,560 Speaker 1: you think you think they've learned their lesson by nineteen 252 00:13:58,679 --> 00:14:01,160 Speaker 1: fifty and and I have to. You have two main 253 00:14:01,200 --> 00:14:03,600 Speaker 1: banana companies as a smaller one is Standard Fruit now 254 00:14:03,640 --> 00:14:06,480 Speaker 1: known as doll and the larger one is Taquita. Actually 255 00:14:06,520 --> 00:14:10,480 Speaker 1: Takeda by n is on the verge of bankruptcy because 256 00:14:10,480 --> 00:14:12,959 Speaker 1: it won't switch to Cavenist because it doesn't believe in it. 257 00:14:13,160 --> 00:14:17,120 Speaker 1: And Standard Fruit, being smaller and perhaps you know, more nimble, 258 00:14:17,640 --> 00:14:20,360 Speaker 1: is able to make the switch and immediately gained about 259 00:14:20,360 --> 00:14:23,240 Speaker 1: fifty of the banana market. It becomes dull, and so 260 00:14:24,040 --> 00:14:27,240 Speaker 1: it's really the story of Takeda losing about its market 261 00:14:27,240 --> 00:14:30,760 Speaker 1: share that it never really regained um and ultimately they 262 00:14:30,800 --> 00:14:33,680 Speaker 1: had to adopt the Cavendish too, and and they pretty 263 00:14:33,760 --> 00:14:36,400 Speaker 1: much thought all as well, you know that. I mean, 264 00:14:36,400 --> 00:14:40,360 Speaker 1: it's kind of crazy because anyone who grows even a garden, 265 00:14:40,320 --> 00:14:42,160 Speaker 1: who grew up on a farm nose you can't just 266 00:14:42,280 --> 00:14:45,000 Speaker 1: put all your bananas or whatever in one basket. You've 267 00:14:45,000 --> 00:14:47,680 Speaker 1: got to have diversity. But the banana industry b lively 268 00:14:47,720 --> 00:14:49,800 Speaker 1: goes on and then thinks everything is going to be okay, 269 00:14:49,800 --> 00:14:52,240 Speaker 1: but it turns out it's not right. So fast forward 270 00:14:52,240 --> 00:14:56,080 Speaker 1: to today and we have yet another disease threatening yet 271 00:14:56,120 --> 00:14:59,600 Speaker 1: another monoculture in bananas. Right not yet another disease is 272 00:14:59,680 --> 00:15:03,200 Speaker 1: the same disease. It's it's a different variation of Panama 273 00:15:03,240 --> 00:15:06,560 Speaker 1: disease UM. But but it's the same disease. It's the 274 00:15:06,600 --> 00:15:11,440 Speaker 1: same story, except this disease appears to be more aggressive. UM. 275 00:15:11,520 --> 00:15:16,640 Speaker 1: It seems to render plants fallow faster. And this variation 276 00:15:16,640 --> 00:15:20,040 Speaker 1: of Panama disease first killed a cavendist crop in Malaysia 277 00:15:20,080 --> 00:15:25,120 Speaker 1: around at least that's what most people believe, UM, and 278 00:15:25,120 --> 00:15:28,360 Speaker 1: and then has since spread around the world. UM. This 279 00:15:28,480 --> 00:15:31,560 Speaker 1: disease has jumped oceans. UM. It is now in Australia, 280 00:15:31,640 --> 00:15:36,720 Speaker 1: it's in Indonesia, UM, it's in UM in Pakistan, it's 281 00:15:36,760 --> 00:15:39,760 Speaker 1: in the Philippines, it's in Taiwan. UM. And it was 282 00:15:39,880 --> 00:15:43,000 Speaker 1: recently discovered in the Middle East and in parts of Africa. 283 00:15:43,440 --> 00:15:46,080 Speaker 1: And so, even though it hasn't affected our banana crop yet, 284 00:15:46,120 --> 00:15:48,800 Speaker 1: which has grown in South and Central America, you can 285 00:15:48,880 --> 00:15:51,720 Speaker 1: see the sort of jaws on the map beginning to 286 00:15:51,840 --> 00:15:56,400 Speaker 1: encircle the most rich commercial banana lands in the world, 287 00:15:56,400 --> 00:15:59,000 Speaker 1: which are the ones that supply US. So do the 288 00:15:59,000 --> 00:16:03,280 Speaker 1: growers of banaaannas have any strategy or better effective techniques 289 00:16:03,320 --> 00:16:06,400 Speaker 1: to fight this disease. Than they did decades ago the 290 00:16:06,480 --> 00:16:08,880 Speaker 1: last time, or are they sort of is it going 291 00:16:08,920 --> 00:16:11,760 Speaker 1: to be the same story. Well, until very recently, the 292 00:16:11,800 --> 00:16:16,840 Speaker 1: banana companies were in astonishing denial, literally not mentioning this disease, um, 293 00:16:17,400 --> 00:16:20,400 Speaker 1: refusing to discuss it. And then finally when they did discussed, 294 00:16:20,400 --> 00:16:21,920 Speaker 1: they said, it's not a problem. It's going to happen 295 00:16:21,920 --> 00:16:24,800 Speaker 1: a long time from now. We'll be prepared. You now 296 00:16:24,840 --> 00:16:28,720 Speaker 1: they started making some noise about it. Um and and 297 00:16:29,440 --> 00:16:32,440 Speaker 1: I mean there was a huge commercial plantation in in 298 00:16:32,600 --> 00:16:35,520 Speaker 1: Mozambique last year that was devastated, and that was that 299 00:16:35,560 --> 00:16:38,640 Speaker 1: was a wake up call. That plantation was started by chachida. 300 00:16:38,760 --> 00:16:42,480 Speaker 1: So so Chaquina can't deny that that the disease exists. 301 00:16:42,920 --> 00:16:46,240 Speaker 1: But what to do is a real problem. This fungus 302 00:16:46,240 --> 00:16:49,840 Speaker 1: remains incurable. There are no there are there are some 303 00:16:50,000 --> 00:16:53,440 Speaker 1: possible replacement varieties, but none have been thoroughly tested, and 304 00:16:53,480 --> 00:16:56,160 Speaker 1: we don't know if they really resist or how well 305 00:16:56,160 --> 00:16:59,680 Speaker 1: they resist. Uh And and there doesn't seem to be 306 00:16:59,720 --> 00:17:03,440 Speaker 1: any to control of this fungus. The answer again is 307 00:17:03,480 --> 00:17:06,280 Speaker 1: going to be diversity. You have to have more than 308 00:17:06,320 --> 00:17:09,159 Speaker 1: one banana. This protects the business, that protects the plant. 309 00:17:09,680 --> 00:17:12,679 Speaker 1: But the question is can the banana industry pull up 310 00:17:12,680 --> 00:17:16,960 Speaker 1: its big board pants and embrace diversity when it's hundred 311 00:17:17,040 --> 00:17:20,600 Speaker 1: year business model is completely opposed to that, And so 312 00:17:20,680 --> 00:17:23,199 Speaker 1: far the jury is out on that. Dan. Are we 313 00:17:23,240 --> 00:17:27,400 Speaker 1: seeing any price increases or shortages showing up yet from 314 00:17:27,440 --> 00:17:30,200 Speaker 1: this disease? Have we seen it impact the end consumer 315 00:17:30,240 --> 00:17:34,080 Speaker 1: in any way yet? Not yet? Um, There have been 316 00:17:34,280 --> 00:17:37,080 Speaker 1: there there, you know, there there have been some shortages 317 00:17:37,119 --> 00:17:40,560 Speaker 1: in other places that have been affected by the disease. 318 00:17:40,920 --> 00:17:44,720 Speaker 1: Banana prices, for example, in the Middle East have increased, 319 00:17:44,960 --> 00:17:47,520 Speaker 1: but you know, the banana industry is very price sensitive. 320 00:17:48,000 --> 00:17:51,560 Speaker 1: You know, a bad mud slide and Ecuador will raise 321 00:17:51,600 --> 00:17:54,880 Speaker 1: the price by tens a pound. And there's a big 322 00:17:54,960 --> 00:17:57,760 Speaker 1: question about how high bananas can go. But we saw 323 00:17:57,760 --> 00:17:59,879 Speaker 1: a few years ago banana prices went up to about 324 00:18:00,040 --> 00:18:04,399 Speaker 1: seventy cents a pound and people kept buying them. Uh, 325 00:18:04,600 --> 00:18:06,840 Speaker 1: fifty nine to sixty nine pound is the is the 326 00:18:06,960 --> 00:18:10,080 Speaker 1: usual price traded Joe selling for forty nine cents a pound. 327 00:18:10,720 --> 00:18:14,000 Speaker 1: The bananas industry has traditionally believed that there's a dollar 328 00:18:14,080 --> 00:18:18,640 Speaker 1: a pound threshold at which point the whole business model collapses. Um. 329 00:18:18,680 --> 00:18:23,639 Speaker 1: And clearly if Panama disease hits this hemisphere, that threshold 330 00:18:23,640 --> 00:18:27,000 Speaker 1: will be met and we'll have to see. How big 331 00:18:27,080 --> 00:18:30,880 Speaker 1: is the banana industry billions of dollars. I mean, it's 332 00:18:30,920 --> 00:18:34,840 Speaker 1: the it's the it's the most. The industry is the most. 333 00:18:34,960 --> 00:18:36,760 Speaker 1: It makes the most popular fruit in the world. It's 334 00:18:36,760 --> 00:18:39,959 Speaker 1: the most. Um. We Americans eat more bananas than apples 335 00:18:39,960 --> 00:18:42,520 Speaker 1: and oranges put together, and that's pretty pretty standard all 336 00:18:42,520 --> 00:18:45,280 Speaker 1: over the world. Um. But even bigger than that is 337 00:18:45,320 --> 00:18:49,119 Speaker 1: the subsistence banana world, where in places like Africa and 338 00:18:49,119 --> 00:18:51,560 Speaker 1: Asia where people rely on bananas for their daily nutrition, 339 00:18:51,640 --> 00:18:54,120 Speaker 1: and in the Lakes region of Africa and Central Africa, 340 00:18:54,720 --> 00:18:57,200 Speaker 1: if some people get nine of their calories from bananas. 341 00:18:57,240 --> 00:19:00,680 Speaker 1: So it would be a business disaster to to lose 342 00:19:00,680 --> 00:19:03,320 Speaker 1: the banana or see that that that configuration of the 343 00:19:03,320 --> 00:19:06,800 Speaker 1: industry change. But it could also be a humanitarian disaster, 344 00:19:07,119 --> 00:19:10,040 Speaker 1: which is something that I've worried about a lot. All Right, 345 00:19:10,480 --> 00:19:12,800 Speaker 1: on that depressing note, we're going to end it. Dan, 346 00:19:12,920 --> 00:19:15,000 Speaker 1: thank you so much for joining us today. We have 347 00:19:15,040 --> 00:19:18,400 Speaker 1: one more question. If someone listening to this who wants 348 00:19:18,440 --> 00:19:21,520 Speaker 1: to eat a truly delicious banana, where should they go 349 00:19:21,840 --> 00:19:24,480 Speaker 1: and what variety should they get. I can tell you 350 00:19:24,560 --> 00:19:27,359 Speaker 1: without a doubt. Um, it's a banana that is called 351 00:19:27,480 --> 00:19:33,040 Speaker 1: in Swahili ebota ibota, which means fertile, fertile um. And 352 00:19:33,160 --> 00:19:36,720 Speaker 1: it is called that because this banana tree produces two 353 00:19:37,160 --> 00:19:41,000 Speaker 1: plants per bunch. But the banana itself is I mean, 354 00:19:41,040 --> 00:19:43,440 Speaker 1: I'm going to sound like a fufy wine critic. It's 355 00:19:43,480 --> 00:19:46,920 Speaker 1: got like complex taste. You bite into a nes sour 356 00:19:46,960 --> 00:19:48,960 Speaker 1: and then it gets sweet in the middle, and the 357 00:19:49,000 --> 00:19:53,720 Speaker 1: texture is very firm and wonderful. It's not mushy. It's 358 00:19:53,720 --> 00:19:57,400 Speaker 1: a great banana. Unfortunately, this banana suffers from something called 359 00:19:57,480 --> 00:20:00,359 Speaker 1: finger drop, which means that when you pull the fruit 360 00:20:00,400 --> 00:20:03,320 Speaker 1: off the plant, all the fruits fall off the plant, 361 00:20:03,480 --> 00:20:06,199 Speaker 1: which exposes them to air and makes it impossible for 362 00:20:06,240 --> 00:20:09,040 Speaker 1: them to survive more than a day. So the odds 363 00:20:09,080 --> 00:20:11,880 Speaker 1: of us getting one here are pretty weak. But man, 364 00:20:11,920 --> 00:20:13,720 Speaker 1: that is a great banana. I tasted it in the 365 00:20:13,720 --> 00:20:18,800 Speaker 1: Democratic Republic of Congo. I send a Congo chirpy said, 366 00:20:19,600 --> 00:20:23,360 Speaker 1: in a Democratic Republic of Congo to uh our banana 367 00:20:23,440 --> 00:20:26,760 Speaker 1: tasting tour, just for the banana. But if you get 368 00:20:26,760 --> 00:20:29,239 Speaker 1: something else to do their seek out that all right, 369 00:20:29,520 --> 00:20:45,600 Speaker 1: thanks so much. Joe, do you appreciate your cavendish banana 370 00:20:45,720 --> 00:20:48,359 Speaker 1: more or less now? It just makes me depressed because 371 00:20:48,480 --> 00:20:50,800 Speaker 1: I love fruit, and you know, I have had some 372 00:20:50,800 --> 00:20:54,720 Speaker 1: good bananas in my life, and it's depressing that there 373 00:20:54,760 --> 00:20:57,240 Speaker 1: could be this great fruit that we have and instead 374 00:20:57,280 --> 00:21:01,360 Speaker 1: we have this really mediocre one. But I really fascinated 375 00:21:01,359 --> 00:21:04,400 Speaker 1: by the industrial aspect of it, because it is true. 376 00:21:04,440 --> 00:21:06,040 Speaker 1: We know how hard it is to store bananas. You 377 00:21:06,040 --> 00:21:08,960 Speaker 1: can't put them in the refrigerator. They bruise really easily. 378 00:21:09,200 --> 00:21:11,680 Speaker 1: So I am kind of an awe of the fact 379 00:21:11,720 --> 00:21:15,200 Speaker 1: that this banana, it's so cheap, and it travels these 380 00:21:15,240 --> 00:21:18,000 Speaker 1: distances and it comes arrives in pretty good shape. Yeah, 381 00:21:18,000 --> 00:21:20,960 Speaker 1: and the banana business and market is really a story 382 00:21:20,960 --> 00:21:25,160 Speaker 1: of technology and globalization. But those same things and industrialization 383 00:21:25,480 --> 00:21:28,560 Speaker 1: and those same things, though, are now kind of threatening. 384 00:21:28,600 --> 00:21:31,159 Speaker 1: It something that I was thinking about. It was interesting 385 00:21:31,200 --> 00:21:34,280 Speaker 1: the point you made that that one guy became a 386 00:21:34,320 --> 00:21:37,720 Speaker 1: banana industrialist after a failed search for gold, and that 387 00:21:37,800 --> 00:21:40,400 Speaker 1: made me think, especially later, talking about the horrible things 388 00:21:40,440 --> 00:21:42,400 Speaker 1: that were done in the early days of the banana 389 00:21:42,600 --> 00:21:45,360 Speaker 1: industry reminded me of a lot of the horrible things 390 00:21:45,440 --> 00:21:48,200 Speaker 1: that have been done in the name of acquiring gold 391 00:21:48,240 --> 00:21:50,680 Speaker 1: for thousands of years, So there are some interesting parallels there. 392 00:21:50,800 --> 00:21:53,320 Speaker 1: Absolutely all right, we're going to move on to a 393 00:21:53,359 --> 00:22:00,400 Speaker 1: different commodity market now is of course oil. But kept 394 00:22:00,400 --> 00:22:03,200 Speaker 1: his family and then one day he was shooting that 395 00:22:03,400 --> 00:22:05,760 Speaker 1: some food and up to the ground come a bubble 396 00:22:07,400 --> 00:22:12,280 Speaker 1: oil that is black gold Texas. So there's this big 397 00:22:12,320 --> 00:22:15,880 Speaker 1: news tracy going on in the world of oil right now. 398 00:22:15,960 --> 00:22:19,280 Speaker 1: Obviously oil has been getting clawbered. It's putting a lot 399 00:22:19,320 --> 00:22:25,360 Speaker 1: of pressure on Saudi Arabia obviously highly dependent oil economy, 400 00:22:25,440 --> 00:22:28,640 Speaker 1: and there's this possibility that Saudi Arabia might do an 401 00:22:28,680 --> 00:22:32,280 Speaker 1: I p O of its gigantic state owned oil company, 402 00:22:32,400 --> 00:22:36,159 Speaker 1: Saudi Aramco. It's the it's the biggest oil company in 403 00:22:36,200 --> 00:22:39,600 Speaker 1: the world in terms of volume. Nobody ever thought that 404 00:22:39,680 --> 00:22:43,040 Speaker 1: it would possibly there be a public flotation before. But 405 00:22:43,080 --> 00:22:46,280 Speaker 1: it sort of speaks possibly to where we are in 406 00:22:46,640 --> 00:22:50,720 Speaker 1: the oil cycle and stresses that Saudi Arabia is feeling 407 00:22:50,920 --> 00:22:54,000 Speaker 1: that it's even thinking about taking public this oil giant. 408 00:22:54,119 --> 00:22:56,439 Speaker 1: It's a huge, huge deal for the market and I 409 00:22:56,480 --> 00:23:01,080 Speaker 1: can you know, uh, envision hundreds of the bankers and 410 00:23:01,840 --> 00:23:04,919 Speaker 1: lawyers salivating over the prospect of this company going public. 411 00:23:05,080 --> 00:23:07,520 Speaker 1: It could be epic alright. So with us to discuss 412 00:23:07,720 --> 00:23:10,480 Speaker 1: the possibility of an i p O of Saudi Aramco 413 00:23:11,080 --> 00:23:15,760 Speaker 1: is Haveavier Blass. He's a star Bloomberg oil reporter in London. 414 00:23:15,880 --> 00:23:17,720 Speaker 1: Have you a thank you very much for joining us 415 00:23:18,160 --> 00:23:22,800 Speaker 1: by pressure. Have you tried to describe the significance of 416 00:23:22,840 --> 00:23:24,760 Speaker 1: this i p O were it to happen for people 417 00:23:24,760 --> 00:23:29,040 Speaker 1: who don't appreciate the size and scale of Saudi Aramco. Well, 418 00:23:29,119 --> 00:23:32,320 Speaker 1: let me just put it on very simple money terms. 419 00:23:32,320 --> 00:23:36,760 Speaker 1: An IPO Saudi Aramco could mean that that ten trillion 420 00:23:37,080 --> 00:23:41,840 Speaker 1: company comes to the market. That is, compare that with Apple, 421 00:23:42,000 --> 00:23:45,240 Speaker 1: that is six hundred billions. Did you see ten billion 422 00:23:45,280 --> 00:23:49,400 Speaker 1: dollars compared to ten trillion dollars ten trillion dollars? How 423 00:23:49,400 --> 00:23:52,280 Speaker 1: could it be worth that much? Well, just to start 424 00:23:52,359 --> 00:23:58,280 Speaker 1: with the amount of exce Mobil, the largest and most 425 00:23:58,359 --> 00:24:02,359 Speaker 1: valuable oil company, Excell is about three hundred and twenty 426 00:24:02,359 --> 00:24:06,400 Speaker 1: billion dollars okay, and Excellent has about twenty five billion 427 00:24:06,520 --> 00:24:11,399 Speaker 1: oils or barrels of oil on his reserve. That compared 428 00:24:11,480 --> 00:24:16,560 Speaker 1: that's about a large jung less that Saudi Arangco, which 429 00:24:16,600 --> 00:24:20,440 Speaker 1: has two hundred and sixty billion that's eleven times bore 430 00:24:21,280 --> 00:24:25,760 Speaker 1: and and the numbers are just Chianti for Sudi a Anco. 431 00:24:26,119 --> 00:24:28,960 Speaker 1: They produce about fifteen percent of the oil that we 432 00:24:29,080 --> 00:24:33,639 Speaker 1: consume globally. They have refineries in Texas, in Saudi Arabia, 433 00:24:33,720 --> 00:24:37,399 Speaker 1: in uh South Korea, in China, in Japan, they are 434 00:24:37,440 --> 00:24:40,720 Speaker 1: building now a refinery in Indonesia. They have one of 435 00:24:40,760 --> 00:24:44,879 Speaker 1: the world's largest fleet of super tankers to transport oil 436 00:24:44,920 --> 00:24:49,399 Speaker 1: around the world. And also they are in effect the 437 00:24:49,480 --> 00:24:52,840 Speaker 1: central bank of oil. If we have a problem elsewhere 438 00:24:52,880 --> 00:24:55,720 Speaker 1: and we need more oil because someone else is going 439 00:24:55,800 --> 00:24:59,240 Speaker 1: through a strike or whether problems, is Saudi a Anco 440 00:24:59,440 --> 00:25:03,600 Speaker 1: who and increase the production. It's just a gigantic company. 441 00:25:03,680 --> 00:25:06,680 Speaker 1: I love their phrase, the central bank of oil. It's 442 00:25:06,760 --> 00:25:09,960 Speaker 1: like if the FED was to I p O itself, 443 00:25:10,359 --> 00:25:13,320 Speaker 1: that's a kind of significance for the oil market. But 444 00:25:13,520 --> 00:25:17,880 Speaker 1: why I p O now with oil something like well, 445 00:25:18,200 --> 00:25:21,119 Speaker 1: it is a very off timing. So there are many theories, 446 00:25:21,240 --> 00:25:24,960 Speaker 1: and Saudia a Ankle has not explained why is thinking 447 00:25:25,119 --> 00:25:29,240 Speaker 1: right now? Neither the Deputy Crown Prince Muhammad bin Salman, 448 00:25:29,520 --> 00:25:33,280 Speaker 1: who first told the Economist newspaper that these plans was 449 00:25:33,359 --> 00:25:36,560 Speaker 1: under consideration, has given much of an explanation of why. 450 00:25:36,880 --> 00:25:39,359 Speaker 1: But you could think of several options. One is that 451 00:25:39,480 --> 00:25:42,119 Speaker 1: Saudi Arabia needs the money and they're gonna I p 452 00:25:42,240 --> 00:25:45,040 Speaker 1: O to raise more cash to be able to survive 453 00:25:45,080 --> 00:25:47,920 Speaker 1: when oil prices are the lowest in twelve years. You 454 00:25:47,960 --> 00:25:52,480 Speaker 1: could also think that Saudi Arabia has decided to let 455 00:25:52,520 --> 00:25:55,959 Speaker 1: the market works as a market and in that case, 456 00:25:56,200 --> 00:26:00,119 Speaker 1: why not to make their company the national company, were 457 00:26:00,200 --> 00:26:03,000 Speaker 1: more like Exomobile and at the same time race of money. 458 00:26:03,560 --> 00:26:05,439 Speaker 1: It could be also a case that they want to 459 00:26:05,480 --> 00:26:08,640 Speaker 1: give up son shares to the local population to keep 460 00:26:08,680 --> 00:26:11,359 Speaker 1: everyone happy. Now the oil prices are low, in a 461 00:26:11,400 --> 00:26:14,640 Speaker 1: way a transfer of wealth from the state owned company 462 00:26:14,720 --> 00:26:17,560 Speaker 1: into the citizens that they are suffering from the low price. 463 00:26:17,880 --> 00:26:20,840 Speaker 1: But certainly the timing is rather odd, because you will 464 00:26:20,880 --> 00:26:23,600 Speaker 1: have expected that the Sudists wanted to sell, they would 465 00:26:23,640 --> 00:26:25,600 Speaker 1: have sold in two thousand and eight when oil prices 466 00:26:25,640 --> 00:26:28,960 Speaker 1: were a hundred and fifty dollars a barrel. And certainly 467 00:26:29,000 --> 00:26:31,760 Speaker 1: I cannot remind what numbers analysts will put for the 468 00:26:31,800 --> 00:26:35,520 Speaker 1: valuation of our anco. Let's talk about the history real quickly. 469 00:26:35,520 --> 00:26:39,639 Speaker 1: How did Saudi Aramco get to be what it is today? Um, 470 00:26:39,800 --> 00:26:43,520 Speaker 1: the predecessor of Texaco and Chevron went to Saudi to 471 00:26:43,640 --> 00:26:46,439 Speaker 1: Saudi Arabia reach a deal with the government at that 472 00:26:46,480 --> 00:26:49,800 Speaker 1: point and they started exploring for In nineteen thirty three, 473 00:26:49,960 --> 00:26:53,399 Speaker 1: they created the first company what will become later Saudi 474 00:26:53,440 --> 00:26:56,280 Speaker 1: a Anco Oil was discovered in Saudi Arabia a few 475 00:26:56,359 --> 00:27:00,480 Speaker 1: years later in nineteen thirty eight, and then American companies 476 00:27:00,520 --> 00:27:03,400 Speaker 1: in there since then were heavily active and in in 477 00:27:03,600 --> 00:27:08,960 Speaker 1: fact the company was was an American company under an 478 00:27:09,040 --> 00:27:13,159 Speaker 1: umbrella of Saudi Arabia. The kingdom took over slowly. The 479 00:27:13,200 --> 00:27:16,200 Speaker 1: company started in the seventies and complete in the eighties, 480 00:27:16,440 --> 00:27:18,960 Speaker 1: but the mentality of Saudi Arabia, even it is now 481 00:27:19,000 --> 00:27:23,400 Speaker 1: a fully owned, stay owned company and the leadership is Saudi, 482 00:27:23,800 --> 00:27:27,040 Speaker 1: you still feel very much that it operates an American company. 483 00:27:27,080 --> 00:27:32,320 Speaker 1: It's very meritocratic, pioneering technology. It's very different to other 484 00:27:32,640 --> 00:27:37,360 Speaker 1: national or stay owned companies which are associated with corruption 485 00:27:37,480 --> 00:27:41,760 Speaker 1: and bad practices. Saldia Ranco probably is the closest that 486 00:27:41,800 --> 00:27:45,280 Speaker 1: you could find in a national company to an Excell mobile. 487 00:27:45,400 --> 00:27:47,479 Speaker 1: So something that you wrote when you think about how 488 00:27:47,520 --> 00:27:51,480 Speaker 1: the market might value this typically stayed on oil companies 489 00:27:51,560 --> 00:27:54,240 Speaker 1: when they sell to the public. They don't command a 490 00:27:54,280 --> 00:27:57,680 Speaker 1: particularly high valuation. People don't pay much of a multiple 491 00:27:57,720 --> 00:28:00,480 Speaker 1: for their earnings. But do you think because Saudi Aramco 492 00:28:00,600 --> 00:28:04,000 Speaker 1: is run more like an American merito credit corporation, that 493 00:28:04,080 --> 00:28:06,520 Speaker 1: it could be valued at some kind of premium to 494 00:28:06,560 --> 00:28:08,720 Speaker 1: another one. I think that it could get a better 495 00:28:08,800 --> 00:28:11,320 Speaker 1: price because of that and because of its size, But 496 00:28:11,480 --> 00:28:14,280 Speaker 1: there will be many pitfalls for it for to convince 497 00:28:14,320 --> 00:28:17,400 Speaker 1: investors to to put money in Saudi Arabia, for the status, 498 00:28:18,320 --> 00:28:21,879 Speaker 1: the political rates of putting money in Saudi Arabia. Also 499 00:28:22,600 --> 00:28:25,679 Speaker 1: an investor in effect, if the boy shures of of 500 00:28:25,720 --> 00:28:29,280 Speaker 1: a rancor will be subsidized in the Saudi government, something 501 00:28:29,280 --> 00:28:31,879 Speaker 1: that some investors may have a problem with. And the 502 00:28:31,880 --> 00:28:34,439 Speaker 1: I think that the critical aspect is that the amount 503 00:28:34,520 --> 00:28:37,840 Speaker 1: of disclosure that Rancor will need to do. We know 504 00:28:38,120 --> 00:28:41,600 Speaker 1: very little of the company. We have never seen a 505 00:28:41,600 --> 00:28:44,760 Speaker 1: balance sheet, we have not seen a profit and loss statement, 506 00:28:45,040 --> 00:28:47,600 Speaker 1: and we have not seen an audit of its reserves. 507 00:28:47,640 --> 00:28:50,280 Speaker 1: So a lot of disclosures will need to happen to 508 00:28:50,320 --> 00:28:53,720 Speaker 1: convince skeptical investors that actually need they need to put 509 00:28:53,760 --> 00:28:57,160 Speaker 1: the money. But yes, probably it is not going to 510 00:28:57,240 --> 00:29:00,560 Speaker 1: be a ross for a petrogras they're involved in political 511 00:29:00,840 --> 00:29:04,000 Speaker 1: political race or corruption scandals. This is a company that 512 00:29:04,080 --> 00:29:07,880 Speaker 1: probably could could be closer to the evaluation of Excemobile 513 00:29:08,080 --> 00:29:10,040 Speaker 1: than anyone else in the in the world of stay 514 00:29:10,080 --> 00:29:13,120 Speaker 1: own companies. I still don't envy anyone having to do 515 00:29:13,240 --> 00:29:17,880 Speaker 1: due diligence on that. Well, and also bear in mind 516 00:29:17,920 --> 00:29:22,600 Speaker 1: that potentially we're also Sharia law involvement, so it's gonna 517 00:29:22,600 --> 00:29:27,320 Speaker 1: be Islamic finance. Um, it will not be if it happens, 518 00:29:27,720 --> 00:29:29,960 Speaker 1: it will not be an easy I p O. But 519 00:29:30,160 --> 00:29:33,120 Speaker 1: certainly the size is so big that every bunker in 520 00:29:33,120 --> 00:29:38,520 Speaker 1: the oil industry salibrating until uh, just because images happen. Alright, well, 521 00:29:38,520 --> 00:29:41,680 Speaker 1: thank you so much, Javier. Obviously this is going to 522 00:29:41,760 --> 00:29:45,480 Speaker 1: be a fascinating story, particularly if it unfolds, and we'll 523 00:29:45,520 --> 00:29:48,400 Speaker 1: be watching your writing and your reporting on Bloomberg TV 524 00:29:48,840 --> 00:29:51,600 Speaker 1: over the coming months. Thank you for joining us, Thank 525 00:29:51,640 --> 00:29:59,880 Speaker 1: you for having me. All Right, this concludes another episode, 526 00:30:00,040 --> 00:30:04,000 Speaker 1: lad lots, Thank you very much for listening. I'm Joe Wisenthal, 527 00:30:04,120 --> 00:30:06,880 Speaker 1: Managing editor of Bloomberg Markets. You can follow me on 528 00:30:06,880 --> 00:30:09,760 Speaker 1: Twitter at the Stalwart, and I'm Tracy Alloway. 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