UK banana wars reignited
25 October 2011
Press reports indicate a relaunch of the banana ‘retail price wars’ among UK supermarkets, with Asda cutting ‘the price of 1kg of loose bananas from 68p to 58p’. The Grocer magazine reports that this is but ‘the latest episode in an ongoing tussle over bananas that has run for more than a year’. Other supermarkets are expected to follow Asda’s lead in cutting banana prices in line with the experience in November 2010, when prices of bananas on supermarket shelves in the UK fell as low as £0.55 per kg.
Editorial comment
The fierce banana price wars in the UK suggest there will be little or no scope for passing on tariff increases in the banana sector if Côte d’Ivoire, Cameroon and Ghana are withdrawn from the list of beneficiaries of EU Council regulation 1528 (2007) from 1 January 2014, as a result of the approval of the EC’s proposal of 30 September 2011 to amend the December 2007 regulation. An MFN duty of €176/tonne would be equivalent to 15 pence/kg in extra costs faced by the West and Central African banana exporters. This also needs to be seen in the context of the granting of new EU tariff preferences to Latin American banana suppliers in both a multilateral and bilateral context.
This contrasts sharply with other potentially affected sectors such as horticulture and fisheries. In the case of horticultural products, only moderate tariffs are applied and exporters can adjust their export mix to target low-duty markets. Similarly in the fisheries sector, the operation of a seller’s market at the present time means that the additional duties charged could be more easily absorbed.
This situation highlights the importance of resolving outstanding issues in the EPA negotiations and thereby preserving current duty-free quota-free access for these African banana exporting non-LDCs. However, complex regional realities overhang further bilateral action in an EPA context. In the case of Ghana and Côte d’Ivoire, the question of reconciling existing bilateral EPA commitments with the product coverage of the newly agreed ECOWAS fifth tariff band represents a major regional issue.
