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Free trade agreements boost Latin and Central American banana exports to EU but with variable performance

10 May 2014

According to press reports, Panamanian banana exports in 2013 increased by 8.63% to reach 14.3 million boxes, valued at US$90.4 million. In the same period, banana exports to European countries grew by 44.89%, accounting for 14.1 million boxes. The country’s 2013 exports to the US fell by 96% to a mere 144,996 boxes, thus making European countries by far the most important destination market for Panamanian banana exports.

The German and Belgian markets account for 45.4% and 14.9% respectively of Panama’s exports to European countries, while the non-EU member state Georgia accounts for 9.9%. Overall, EU statistics show that imports of bananas from Panama were up 32.4% in 2013 compared to 2012 (which had been a bad year, with imports 19.4% below 2010 levels). By 2013, imports of bananas from Panama were 6.7% above 2010 levels. According to Panama’s National Directorate for Bananas, this is attributable to “the tariff preferences” obtained on European markets. There is reportedly growing interest from transnational corporations in investing in production of bananas in Panama, with Del Monte, Dole and even “banana producers from the Canary Islands” showing interest.

Of the five other countries exporting bananas that are benefiting from additional FTA tariff reductions (see table), Guatemala and Peru have shown the highest percentage increase in exports to the EU28 states (up 312.5% and 178.1% respectively). Peru also showed the highest absolute increase (+91,891 tonnes). Press reports indicate that leading Peruvian banana exporters have seen exports of organic bananas to destination markets such as France, Italy and Germany increase by 20%.

The situation of countries from the dollar zone that have not received additional tariff preferences through an FTA has been less positive. Ecuador has seen its exports of bananas to the EU grow since 2010, but at a lower rate of 4.5%, while Brazilian exports have fallen by nearly 32.7%, around 21,000 tonnes. Ecuadorian exporters have complained that in 2014, countries whose governments have concluded FTAs with the EU will only be charged an import tariff of US$117, compared to the US$179 tariff charged on Ecuadorian banana imports.

Between 2010 and 2013, total imports of bananas from the dollar zone increased by 6.4% (from 3,541,760 tonnes to 3,767,328 tonnes).

Imports of bananas from ACP countries fell by 4.4% in 2011, before recovering in subsequent years to a level 3.5% above 2010 levels. EU imports from six ACP countries increased between 2o10 and 2013, while imports from four ACP countries fell: traditional Windward Island Caribbean exporters were the worst affected, but exports from Ghana also fell.

Over the same period, the EU’s own banana supplies fell by 6.8%, on a variable trend.

Trends in exports of bananas to EU28 countries (tonnes)*

Country 2010 2011 2012 2013 % change 2010–2013
Latin American countries with recent FTAs
Colombia 1,166,658 1,143,202 1,136,523 1,159,287 –0.6
Costa Rica 779,987 849,268 774,733 827,538 +6.1
Panama 184,714 161,124 148,832 197,088 +6.7
Peru 51,598 64,646 80,699 143,489 +178.1
Guatemala 3,315 3,002 5,215 13,673 +312.5
Honduras 15,084 17,459 5,749 6,472 –57
Sub-total 2,201,356 2,238,701 2,151,751 2,347,547 + 6.6
ACP states
Dominican Republic 303,655 326,851 294,589 322,658 +6.3
Côte d’Ivoire 244,313 224,140 224,944 252,175 +3.2
Cameroon 242,981 235,216 213,868 249,239 +2.6
Belize 78,817 71,064 99,288 96,763 +22.8
Surinam 70,437 62,912 83,126 80,956 +14.9
Ghana 52,357 47,155 50,691 42,612 –18.6
St Lucia 23,154 6,159 12,145 12,367 –46.6
Dominica 3,729 4,066 2,268 1,443 –61.3
Mozambique 36 106 601 563 +1,463.9
St Vincent & Grenadines 4,054 764 710 191 –95.3
Other ACP 134 110 107 118 12
Sub-total 1,023,665 978,540 982,335 1,059,085 +3.5
Total EU imports 4,565,425 4,658,711 4,540,556 4,826,413 +5.7

* Countries listed in order of volume of exports to EU in 2013.

Source: Extracted from EC, ‘Banana supply in the EU’, Table 4, 12 March 2014

http://ec.europa.eu/agriculture/fruit-and-vegetables/product-reports/ban...

Editorial comment

Under the FTA agreements signed with the EU since 2010, tariffs have been reduced faster than under the Geneva Agreement on Trade in Bananas (GATB). Tariffs charged under the agreements are now 14.5% below the tariffs charged in 2010 and €8 per tonne lower than applicable under the GATB, while the quota for reduced-duty imports has been expanded by 15% since 2010 (see Agritrade article ‘ Central American and Andean Pact association agreements signed’, 12 August 2012). While some ACP exporters are rapidly losing market share, others are expanding their exports to the EU and hence expanding their market share.

However, the concern is that as tariff reductions are progressively extended under existing EU FTA agreements, so the established highly competitive dollar zone will become an increasingly attractive investment location. This poses real challenges for even the most competitive ACP banana exporters, who will face increasing competition for banana sector investment, in a context of growing market concentration (see Agritrade article ‘ Banana sector mergers and acquisitions, from Suriname to leading traders’, 11 May 2014) and the stripping of value out of some EU banana supply chains as a result of the banana pricing policies of some EU supermarkets.

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