TRADE:
Banana War Looms Over EU Expansion

Stefania Bianchi


BRUSSELS,  (IPS) - Banana growers are preparing for a new confrontation with the EU after its expansion May 1 this year.

African banana-producing countries fear they will lose out when the European Union (EU) increases its banana import quotas to allow for enlargement.

The EU is set to increase import quotas when ten new members (Cyprus, the Czech Republic, Estonia, Latvia, Lithuania, Malta, Hungary, Poland, Slovakia and Slovenia) join the Union.

The accession countries have so far imported bananas free of duty and at very low prices, but from May they will be subject to European Community (EC) common tariff and to an import regime governed by quotas.

Importers say banana prices could double in the new member states once they join the EU.

But sale of more bananas has not meant good news to ACP producers. Expanded quotas will only lower prices because the European market is already flooded with bananas, and producer prices have been dropping, they say.

In France, Germany, Italy and Britain, banana prices have fallen from an annual average of two dollars per kilo in 1990 to 1.5 dollars in 2000.

The price of bananas is far less in some of the new member countries. The current price in Estonia is 60 cents a kilo. But producers do not expect more profits from greater sales at higher prices. A big price hike in the new member countries could mean lower consumption.

In the worst-case scenario, producers fear falling prices due to larger quotas and excessive stock, and lowered demand in new member countries because prices will rise relative to current prices there.

Another fear is that this will lead to re-export within the enlarged EU.

The Union of Independent Producers of African Bananas (UPIBA), an association comprising small and medium banana producers from the Ivory Coast and Cameroon says it is vital that the quota set for the new member countries does not exceed consumption.

The union declared at a meeting of specialists from the banana sector at the European Parliament in Brussels this week that the difference in perceptions between what is believed to be the European Commission's estimate for quotas and that of banana-producing countries ”is extremely worrying.”

The European Commission, the executive arm of the EU, has not officially unveiled its figures. But it is reported to be considering an increase in quota by 650,000 tonnes. African banana producers say the increase should be no more than 350,000 tonnes.

Banana prices vary widely. The price of Latin American bananas averaged 678 dollars per tonne in 1999, while bananas from ACP countries cost on average 784 dollars per tonne. Inevitably, ACP producers are more worried than others.

Competition between 'ACP bananas' (principally African) and the 'dollar bananas' from Latin America has always been fierce.

In 2000, some four million tonnes of bananas were imported into the EU. Of these about 2.5 million tonnes (62.1 percent) came from Latin America. About 782,000 tonnes (19.2 percent) came from France, Spain, Portugal and Greece, and the rest came from the ACP group of countries.

”It is essential that the quotas attributed to the ten new member states correspond to their consumption levels because of an existing surplus in the banana market,” Christian Métadier, one of the co-founders of UPIBA told journalists following the meeting at the European Parliament Tuesday.

The current surplus is due to the excessive quotas attributed following the last enlargement in 1995 when Austria, Finland and Sweden joined the bloc.

The EU increased quotas to an average of 16kg a year per inhabitant, which was more than the actual consumption in the three new member states. This excess quota caused banana prices to fall considerably.

”The same mistake must not be repeated,” said Métadier. ”Such an excessive quota would lead to a further drop in prices, which are already dramatically low.”

Daniel Guéguen, managing director of Clan, a leading European public affairs consultancy firm, says that decreased margins on the EU market will have serious consequences for African banana-producing countries such as Cameroon and the Ivory Coast.

”The African producers are thus faced with a real challenge,” he told the Brussels meeting. ”Increasing production, decreasing quotas, and the lack of any serious trading partner other than the EU.” The banana is one very few export products in these countries.

The EU is the largest market for bananas in the world. It buys one in three bananas exported. It introduced the quota system in 1993 to protect banana production in Spain, France, Portugal and Greece.