BANANAS ARE Jamaica's second most important crop after sugar. They earn some US$30 million per annum in foreign exchange and provide a direct income to some 20,000 farmers and others workers across the island. Many more are dependent on its fortunes. In St. Thomas, for example, sugar and bananas grow side by side, emphasising the importance of retaining competitive export crops to the livelihoods of many in the rural community.
Since January 1, Europe has been operating a new banana import regime.
This imposes a single tariff on imports of fruit from third world countries, while allowing African, Caribbean and Pacific (ACP) nations duty-free entry for 775,000 tonnes of fruit per annum, but liable for the full duty rate outside of this.
The new regime is meant to provide a measure of protection and market equilibrium for ACP producers. But there are already signs that it may not do so and that those who will suffer will be the banana farmers of the Caribbean.
By Europe's own calculations, its new tariff is far below the level required to provide all in the ACP with previous levels of market support. Worse, the European Union is allocating the ACP duty-free quota on the basis of 'first come, first served'. This means that because total ACP exports are greater than the quota, there will come a time when this is exhausted and all in the ACP will have to pay duty. This will favour those least in need. That is to say the low-cost producers in West Africa that can afford to incur duty payments on a part of their exports and still remain in profit.
The industry also faces other challenges. Last month, Central American officials noted that they would decide by May whether to launch free-trade talks with Europe. If this happens, their producers will undoubtedly seek new arrangements for their bananas. Potentially more beneficial could be the third and final phase of the negotiations for an Economic Partnership Agreement with Europe that have just begun. These could lead to some new form of tariff arrangement or quota-free treatment for the Caribbean. Less promisingly, rapidly rising oil prices complicate the industry's future.
Here in Jamaica, the industry has, with European support, survived the ravages of successive tropical storms and hurricanes, but continues to face the dangers of black sigatoka and moko disease.
The banana market is hugely price-competitive. It is an example of an industry that is gradually adapting to the international environment in which it has to operate. Some have diversified into other export crops, have sought fair trade recognition, developed the local market for first grade fruit and have created by-products including snack foods and condiments. Despite this, only sustained competitiveness will determine how much of a future the industry has in Jamaica.
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