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New banana realities pose challenges for EU and Caribbean island producers

10 June 2011

While banana producers from the Spanish Canary Islands are reported in the Spanish press as complaining of a 40% loss on every kilo of banana produced and marketed, in April 2011 it was announced in Jamaica that EU assistance was being deployed to support their banana industry in repositioning itself following ‘the suspension of local banana exports to Europe in 2008’.

The aim of the EU support, matched by Jamaican government counterpart funding, is to assist Jamaican banana producers in serving ‘new and emerging markets, including domestic markets’. In this context there is an increased focus on adding value to bananas. According to the General Manager of the Banana Board, Janet Conie, ‘a major drawback to developing a value-added market is to make the raw material available and at a cost that would make the value product financially feasible.’ This is likely to require the production of new varieties of bananas for particular market components. Improved research on banana varieties and appropriate extension to encourage production for particular markets are therefore priorities for the initiative.

Placing current EU assistance programmes to EU and Caribbean banana producers in context, CTA/ECDPM have posted a comparison of EU assistance programmes to banana- and sugar-sector adjustments in ACP countries and internal support extended to EU producers under Axis 1 rural development programmes. A companion paper also looks at the experience of implementing EU Axis 1 rural development initiatives in the sugar sector in the French overseas territories and ACP states in the Caribbean. This analysis draws a number of conclusions:

  • the need for a coherent and integrated approach to meeting adjustment challenges in ACP agricultural sectors, based on a strategic vision of the future trends in the food and agricultural markets concerned;
  • the constraints faced in working through government structures in supporting what need to be private sector-led processes of production and trade adjustment;
  • the centrality of supporting market-led production and trade adjustments, which address human resource, physical infrastructure and marketing constraints on adjustment;
  • the need for effective engagement with the private sector to ensure proactive, market-led responses;
  • the difficulties faced in getting to grips with the particular challenges faced by smallholder producers, and hence the need to strengthen producers’ organisations;
  • the need for clearly defined rules for support programme measures setting out both what can and cannot be supported, and who can and cannot receive support from the public purse;
  • the need for dedicated financial instruments of support to production and trade adjustment processes that are insulated from the normal development aid programming process.

By May 2011 EU banana prices were declining from the highs of January 2011, during the supply shortages that followed lower production resulting from bad weather and from the political conflict in Côte d’Ivoire. Banana production is however now recovering in Ecuador and Costa Rica.

Editorial comment

The current losses on domestic EU banana production in the Canary Islands highlight the importance of EU direct aid payments and the expenditures of the POSEI programme (of options ‘relating to remoteness and insularity’) in sustaining EU banana production in some of the outermost regions of the EU.

As far as Jamaica is concerned, it will be important to ensure that the scale and nature of programme interventions are consistent with the production adjustments required to exploit emerging market opportunities (e.g. the planting of new banana varieties to serve emerging market components), and, at the same time, recognise the necessity to invest in building the markets for new products. In this context, the successful experience under the EU-supported Caribbean rum programme could usefully be drawn on.

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