Sun | May 27, 2018

Jolyan Silvera | Jamaicanise the Banana Protocol

Published:Sunday | January 28, 2018 | 12:00 AM
Jolyan Silvera

I grew up in the Pembroke Hall Valley in western St Mary, where banana was king and was known to be 'green gold'. It was the largest banana-producing belt in St Mary prior to the emergence of St Mary Banana Estate. Throughout the 1970s, and up to the year 2000, the banana boom caused economic growth and stability. Several villages and townships emerged with a range of businesses and housing developments.

My family home was one of the three largest banana plantations in the valley, and I am prepared to say that it was solely banana that afforded me a first-class education and a fulfilling childhood.

As the preferential trade agreement under the Lome IV between the African Caribbean and Pacific States (ACP), and the European Union (EU) came to a close at the end of the 20th century; the new millennium brought with it a new ACP-EU accord known as the Cotonou Agreement, under which ACP banana exporters would no longer enjoy duty-free access to the EU market and be subject to a new regime of the Banana Protocol, which commenced January 1, 2006.

Jamaica, as an ACP-exporting country, would now be granted access to export banana to the EU with a duty of EU176/tonne.

Notwithstanding the fact that this new banana regime was announced in 2004, Jamaica failed to put in the mechanism or requisite investment to sustain the export of banana, which contributed US$30,000,000 annually to our GDP and represented some 34,000 tonnes of banana produced annually for export. Jamaica had well over 10,000 acres planted in banana, which was the lifeline of many villages such as Pembroke Hall.

The last large export of banana from Jamaica was 2007-2008, led by the large estate producers. One could then surmise that when these large private-sector entities moved their banana-producing acreage for export from Jamaica, the entire banana export industry came to an abrupt halt. The Banana Board reported annual exports of 412 tonnes in 2016, which is dismal and almost negligible compared to 10 years prior.

The Government of Jamaica, now 18 years under the Cotonou agreement, needs a blunt instrument and conduit through which to resuscitate banana exports to the EU.

The Cotonou agreement ends in 2020. Jamaica has two years to implement a deliberate plan to produce banana in export quantity; in other words, have exportable quantities of banana for the 2020-2021crop year; and, as a prerequisite, Jamaica has four to six months to create and approve a banana export business model for the country. This timeline is essential, as we will need to arm our negotiating team to carry the message that Jamaica will be back into the banana export business under a new ACP-EU deal in 2021.

This will allow us to be a voice in the vanguard promoting more favourable terms for the ACP and, by extension, Jamaica. The European Commission in Brussels is expected to develop a negotiating mechanism for the ACP and talks with the EU are to commence on the terms of the new deal in the fourth quarter of this year. Jamaica must prepare to participate meaningfully, and the only way to do that is to be deliberate and become a banana-exporting ACP member once again.

The Government can no longer afford to centralise or depend on large private-sector corporations to keep entire industries alive in Jamaica, and must now look to pivoting its industry growth strategic plans around the medium- and small- enterprise citizens.

A blunt instrument is needed to fast-track the resuscitation of banana production for export to the EU. This instrument must come in the form of a direct investment by the Government of Jamaica (GOJ) structured to utilise the GOJ as the exporter and marketer to the EU, and the small and medium growers broadly represented by the All Island Banana Growers Association, being contracted by the Government to grow bananas for export.

Under the Cotonou Agreement, the EU proposed an amount of €190 million to €200 million to assist 10 ACP banana-exporting countries in the adjustment phase of the new banana regime through the Banana Accompanying Measures (BAM). This was approved in 2011by the EU to be a one-off measure intended to be implemented over a four-year period. In 2012, Jamaica submitted its BAM multi-annual support strategy to the EU, which proposed a support package of 78 million euros for Jamaica in the form of 16 million euros annually for the first three years.

Jamaica has received €50 million from the EU's BAM over the last 10 years, and we still have not been able to resuscitate banana exports to the EU.

 

Breakdown

 

If we look at the breakdown of the math, it costs on average of J$700,000 to produce one acre of banana. In order to return banana to its glory days, where Jamaica produced annual banana exports of 34,000 tonnes per year (assuming that the yield is a conservative 10 tonnes per acre and 50 per cent of the yield is deemed exportable), the GOJ would need to plant an additional 7,000 acres of banana within the next two years to ready itself for banana trade with the EU under a new deal when the Cotonou Agreement ends in 2020.

The Government would have to invest J$4.9 billion to produce 34,000 tonnes per year of banana for export to the EU. This, in the past, has contributed US$30 million annually towards Jamaica's GDP, and with the reduction of the duty from €176/tonne to €114/tonne as at 2017, the conditions are trending favourably for ripened returns on the required investment by the GOJ.

The use of the Jamaican allocation of the BAM in a bottom-up approach, where funding has been given to farmers who wish to be certified for Global Good Agricultural Practices under the Banana Export Expansion Programme (BEEP), has not reaped much fruit in terms of actual export tonnes to the EU.

The required investment by the GOJ to produce 7,000 additional acres of banana for export should involve the capitalisation of a new government agency that will operate and market the Government's banana export business, as a profit centre for the GOJ. This means the new agency would operate outside of the budgetary constraints of central government and be self-sufficient; similar to PICA in the Ministry of National Security and Petrojam in the Ministry of Energy.

The business model could take the form of the new agency contracting small and medium farmers ('growers') to produce banana on suitable lands that can be reasonably mechanised for irrigation. Under the contract, the new agency could be responsible for providing the banana suckers, fungicides, pesticides, fertilisers, sleeves, technical support, irrigation and all required infrastructure to bring the growers farms to be certified for Global Good Agricultural Practices. Crop insurance could also be a responsibility for the new agency.

The growers could be responsible for provision and preparation of their lands for planting, and their direct labour costs. This model proposes a closed-loop, controlled environment for the specific production of banana for export to the EU.

The new agency should adopt best practices that had existed before, where the grower is paid by the tonne for exportable fruit at a premium price relative to the price for domestically consumed banana.

This new agency should also operate the logistics of the export of banana, which means it will be responsible for the entire supply chain, sales and marketing of banana exports. This includes procuring transportation via ship and/or containers and negotiating the terms of the export contract(s) directly with the market.

This type of model will result in the small and medium farmers having the opportunity to generate an income in the first instance, which would bring forth revival of commercial activities around the villages and townships of Jamaica's banana belts in St Mary, Portland, St Thomas and St Catherine. The growers will eventually matriculate into becoming eligible to receive a commercial loan to capitalise their entrepreneurial appetites, should they choose to invest in becoming an exporter in their own right, as the sector gains momentum.

The production of 7,000 acres of banana for export will employ an additional four persons per acre, totalling an increase of Jamaica's workforce by 28,000 persons by the end of 2020.

- Jolyan Silvera is a former councillor for the Gayle division and former MP for Western St Mary.

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