Bitter when ripe

The beleaguered Caribbean banana industry could slide into deeper trouble as it faces more survival challenges in the coming months in the European Union (EU) market. With the industry yet again facing an uncertain future, leaders, farmers and activists from the Windward Islands, St Vincent and the Grenadines, Grenada, Saint Lucia and Dominica have developed a number of strategies to help keep the banana export trade alive. The strategies were developed during the Caribbean’s first international conference on bananas held in St Vincent and the Grenadines in early June to deal with the impending threats facing their main export industry. With the May 1 enlargement of the EU by the accession of 10 new states from Eastern Europe and the Mediterranean, the EU is now required to announce   details of its arrangements for imports of bananas into the new member states before the start of next year.

The EU is also committed to an April 2001 decision, which it made with the United States, to end the prolonged dispute over bananas in the WTO. That decision is to abolish the Tariff Quota System for bananas and implement a simple tariff only system by January 2006 for the African, Caribbean and Pacific (ACP) banana-producing countries. A recent study on the potential job loss from the banana fall-out between  1994-2000 estimated that in St Lucia alone some 27,064 jobs were lost and at worst 31,064. The real price of bananas internationally is also less than two-thirds that of 1990 and in the last 18 months alone, banana prices in the UK market fell by more than 30 percent. St Vincent Prime Minister Dr Gonsalves said both the changing market regime in Europe after July 1, 1993 and the evolving market condition in the UK supermarket trade have left the Windward Islands’ banana industry ravaged.

“The high cost of production, comparatively low yields, and uneven fruit quality have limited the capacity of the producers to respond adequately at every adverse twist and turn in both the market regime and the market condition,” he said. However he said the banana farmer in the Windward Islands has been the most  adaptable producer, forcing them to be the most innovative and creative in the business of surviving. According to Edwin Laurent, a former Caribbean Ambassador to Brussels there are two issues for consideration. “ Since the Caribbean banana producers were not traditional suppliers of  the markets outside of the UK, then it is the dollar bananas which stand to benefit from the expanded European markets,” he said at the conference.The ‘dollar banana’ is referred to suppliers who do not belong to the ACP group.

He noted that if the volume of bananas from the Caribbean remains the  same, then the percentage share of the market for Caribbean bananas will be reduced. “With respect to voting rights,” Laurent said, “the expanded Europe could work against the ACP’s interest of maintaining protection since these countries have been operating in a liberalised market enjoying bananas at prices one-third that of traditional Europe.” Looking at the implications of a tariff only system, the former ambassador said it poses enormous challenges to the ACP group and in particular, Caribbean banana producing states.   “While there is some level of commitment by the European Commission to maintain the same level of protection for European Union and ACP banana producers through the introduction of a tariff that will be just and satisfactory to all, the major concern seems to be the inability to find the level of tariff that will guarantee such protection and, at the same time, prevent any retaliatory actions by the multi-nationals, trans-nationals and Ecuador.”

“If the tariff is not high enough - perhaps close to 300 Euros per tonne - it could spell disaster for the banana industry in the Windward islands,” said Gonsalves. “So, respond we must if we are to survive in the market and to rescue the livelihood of the tens of thousands of those directly or indirectly  dependent on the banana dollar,” Dr. Gonsalves, who is also the Caribbean Community’s (CARICOM) spokesman on bananas, said. Dr Gonsalves, together with the Prime Ministers of Dominica and St Lucia, Roosevelt  Skerrit and Dr. Kenny Anthony, respectively, went to Brussels last February and held talks with EU Trade Commissioner Pascal Lamy, EU Agricultural  Commissioner, Franz Fischler, EU Development Commissioner Paul Nielsen, and Ireland’s Permanent Representative to the EU, Ambassador Anne Anderson, representing the EU Presidency. The Caribbean leaders highlighted the problem of bananas production and  exports in the Windward Islands, reminding the EU of its commitment under the Cotonou Agreement to take measures to ensure the viability of Caribbean banana exporting enterprises as well as the maintenance of outlets for ACP bananas on the Community markets.

They urged that proposed changes to the autonomous quota for bananas consequent on EU enlargement should not undermine the stability of the EU market or further threaten the viability of Caribbean banana exports. Also, the tariff-only regime for bananas to be introduced by the EU as from 1st January 2006 must be set at a level which ensures the continued viability of the Caribbean banana industry. They noted that since 1992 banana exports and earnings from the Windward Islands had plummeted by two thirds resulting in an intensification of rural poverty and unemployment. Should this situation continue it could lead to social unrest and its attendant consequences. Further, the banana industry in the Windward Islands was at the minimum level necessary to sustain a viable shipping service between the islands and Europe. Agricultural diversification therefore could only take place if there was guaranteed shipping services. It is  for this reason that the maintenance of viable banana industry was a sine qua non for agricultural diversification and the economic survival of the Windward Islands.