Fyffes calm over dispute As news broke this week in Geneva that the World Trade Organisation had decided that a panel would now rule on the amended EU banana regime, Fyffes UK chairman John Ellis was confident that ultimately little change would result. Fyffes is one of the Community's largest suppliers with an 18% share of the market and draws its fruit more or less equally from both Central American sources and the protected Caribbean. Ellis said: "I do not believe there will be any dramatic outcome from the dispute. Fyffes does not anticipate any adverse implications for itself or its suppliers. At no time has there been disagreement over the element that suppliers from the Windwards, Suriname, Belize and others should not have tariff protection." In the latest round of claims and counterclaims a three man panel has 90 days to reach a conclusion but even then this judgment can go to appeal. It would stretch the proceedings beyond March which is past the time that the US has threatened to implement trade sanctions on a wide range of mainly non food commodities.
New deal? The elimination of import quotas and some liberalisation of the EU banana regime through a general import tariff has been proposed by the European Commission unless member states can reach agreement by July 15. Commissioner Paul Lamy has said there must be a tougher concerted stance in transatlantic discussions to establish a new system following challenges through the WTO. Once again, following the most recent WTO panel meeting, banana import licences were declared illegal. The disagreement, which has lasted for several years, has been fuelled by the intervention of the US because many of its multinational companies grow fruit in Central America. The new EU tariff-only approach would remove any WTO objections, although many community members including the UK are opposed.
Pause in growth only a blip says promotion group In the centenary marking the first commercial imports from Jamaica, the Banana Promotion Group is confident that UK consumption, which plateaued in 2001 for the first time in 17 years, is nothing more than a blip. Representing the eight major importers and ripeners, it has spent £7.5m over this period popularising the fruit, and seen sales rise 150% to 725,000t last year. The UK position in the European league in terms of annual per capita consumption has risen from 7th to 3rd place. Source of fruit is broadly split 50-50 between Caribbean sources and dollar bananas. Director Dr Laurence Swan said last year's results had been caused "by the consolidation of supply within the UK industry, the reduction in tonnage of illegal imports, and a particularly successful and lengthy soft fruit season". But launching the 2002 campaign, which will again focus on convenience, health and instant energy under the slogan 100 years of feel good fuel', he was confident the market would again expand by anything up to 5% because multiples were allocating more shelf space. The BPG feels the multiples should ensure displays were not left half full, and the healthy eating message was strengthened in store.
Favorita predicts multiples will buy fruit direct and even invest in ripening facilities Ecuador courts Europe's changing banana regime As the EU banana regime frees up, a prediction that multiples will buy fruit direct and even invest in their own ripening facilities has been made by the Favorita Fruit Company, Ecuador's largest grower/exporter. A company delegation headed by Favorita president Dr Segundo Wong met distributors this week as the first step in raising its profile to expand European sales. Wong chose the UK as a venue because he believes UK supermarkets are the most sophisticated. Apart from their already insisting on full traceability, he believes that by 2006 their buying programmes will favour producers who have adopted environmentally and socially supportive systems. At present, FFC does not have a licence to import into EU. Rafael Wong, vice president and responsible for FFC producing subsidiary Reybancorp Agricolas, said: "Favorita expects to strategically partner with socially and environmentally aware organisations that own licences in order to thrive in the new EU banana import regime. "They must view Favorita's integrated production and trading system as a critical component in generating value." The bulk of its 35 million boxes grown either on its own expanding production of 7,100 hectares or bought from other Ecuadorian producers is currently sold in the Middle and Far East and Eastern Europe. It has invested over $1m in certified, cleaner safer procedures and was the first company to be awarded certification on its 30 farms under the Better Banana programme supported by the Rainforest Alliance. "We ship around 300,000 cartons weekly to Europe, selling to companies such as Chiquita, Fyffes and Del Monte," he said. "We think there is the potential to double this."
Co-op develops Ghana Fairtrade supply This week Fairtrade banana grower Alex Yeboah-Afari saw what happens to his Oké branded fruit after it leaves Ghana. Linked to the Fairtrade fortnight (March 4-17), he visited Fyffes' ripening depot at Wakefield. On every bunch of the Cavendish variety there are at least two or three stickers. He met Colin Tunstall, Manchester based banana buyer for Co-op stores at its headquarters. The Co-op is the UK's leading Fairtrade retailer which began selling the fruit two years ago, and is currently pricing Ghanaian fruit at £1.59/kg. They are also on sale in selected Asda stores. Jan Castle, sales and marketing manager of importer AgroFair UK, said that on average 2,000 boxes of Fairtrade bananas arrive each week from the Volta River Estates. "They have 4,000 boxes available so, if the market increased, that's another 2,000 boxes we could sell here. We also import fruit from Costa Rica, Ecuador, Colombia and The Dominican Republic."
Windwards get into prepacks Over half of the Windwards Isles' bananas are now being sold in branded prepacks, according to Mike Slegg, sales and marketing director of Geest Bananas. Much of the supply to British multiples is now being graded and packed in the plantations. Slegg said the introduction of the brand at retail level was designed to offer a premium product which tasted better than larger central American fruit. Ironically, while the banana market has been suffering from oversupply for the past three months with wholesale market prices as low at £9 per carton, Slegg said the Windwards actually had a shortage because of the new strategy. He said extra arrivals from other sources had been caused by an anticipated licence shortage in the fourth quarter which did not materialise resulting in a surplus.
Phase-out for quotas? The European Commission is planning to phase out European Union banana import quotas over a five year period. In draft proposals to be published later this month, it is likely to suggest that the quota system should be replaced with a single tariff applying to bananas coming from all sources. The Brussels executive hopes that its new plan will persuade the USA to drop its current E193m retaliatory trade embargo against EU products. The draft will say that existing import quotas should be retained for up to five years to protect less advantaged banana growers in the African, Caribbean and Pacific region, before their replacement. Commission officials believe that this two stage approach would be acceptable internally because it would give producers in the EU's former colonial territories time to adjust. US trade officials indicate that the US Administration could agree, as long as the initial stage of the regime meets WTO rules. The Commission is proposing to allocate licences on a first come, first served' basis instead of the current highly regulated handing out of import rights. What will not meet US approval is the Commission's intention only to finalise the reform including the ultimate tariff level in tandem with the upcoming WTO trade negotiations. Since the so-called millennium talks are unlikely to get to anything like an agreement in under three years, this will not satisfy Washington's desire for immediate improvement in the import regime.
First fruit will come from Grenada by the middle of next year Sainsbury in long-term Windwards organic deal Sainsbury has committed to a long-term marketing arrangement with Windward Isles organic banana growers which will initially see around 2,500 boxes a week shipped from Dominica, St Lucia and Grenada from the middle of next year. Weekly shipments of conventionally grown bananas are in the region of 100,000 boxes. Last week Dr Geoff Spriegel, technical director, Bob Hilborn, head of primary agriculture, and Mike Atwood, general manager, fresh produce, visited the islands to see the progress made in a conversion programme initiated by Wibdeco two years ago. "The first fruit will be coming by the middle of next year from Grenada, which we have designated our organic island'," said Attwood. While prices paid for these bananas have yet to be established, Attwood stressed there was a clear cut understanding that Sainsbury would be marketing the fruit. He also believed this would bring opportunities to strengthen the Windwards brand by stressing that bananas were grown by dedicated farmers on small plots rather than in large plantations. The retail group's assurance has been critical in winning support from local banks who were keen to assist, but needed to make sure that growers had a guaranteed market before they financed the organic programme. In the long term Windwards sources believe that it will be possible to convert as much as 10% of the islands' production as part of a strategy to focus on the development of specialist high margin premium products. The Windwards has already achieved this role for prepacked small bananas and Fairtrade bananas in the UK. Wibdeco is now involved in simplifying the management structure in the industry and improving farming practices to increase average yield and reduce production costs.
Massive hurricane damage evident Supplies to UK weather storm Massive hurricane damage in Honduras, Guatemala and Nicaragua is expected to affect the international banana market for several months. But current indications are that there will not be a great deal of impact on overall UK supplies, according to trade sources. Most of the fruit grown in these regions is sent to the USA. The UK draws some 43% of its needs from these dollar areas which are restricted by licence. They also include Costa Rica, Ecuador, Panama and Colombia which will help make up the shortfall from the stricken areas. "There will be enough fruit to fill EU quotas," said a spokesman for Fyffes. "Any currently shortages caused will be temporary." Volumes from the Caribbean, the other alternative, are in good supply and this week market prices actually weakened. Nevertheless the damage has major implications for two of the major international producer. Chiquita, which has an estimated 12% share of UK trade, has reported widespread damage assessed at least $US50m to its 17,000 acres of plantations in Honduras. It is still too early to determine the effect of damage in Guatemala where it has around 15 percent of production. Dole believes as much as 25% of its 40,000 acres across three affected areas have been hit at a cost of up to $US70m. New rules governing the import of bananas under the European Union's quota regime have been announced by Brussels. The new licence system increases the tariff quota reserved for "newcomers" to 8% of the total available from the 3.5% under the existing regime and allocates quotas to "all substantial suppliers" to the EU.
Traceability and reduced handled mean higher quality JS partners with Windward Isles Exclusive David Shapley Sainsbury is to sign a long-term partnership agreement with the Windward Isles banana industry and work to develop tropical fruits as well as organics. The agreement is set to be formally signed by November. A feasability study backed by Geest Bananas and Wibdeco, the joint marketing company, is under way. During the last two years Sainsbury has been concentrating on winning the confidence of the best of the island's 20,000 small growers to harvest a higher standard of banana. These growers are now signing up to a traceability agreement which has led to greater control with fruit packed in the field in special trays, meaning higher quality and the viability of developing other crops to high specifications. Ben Hills, category manager for tropical and citrus fruit, said a strengthened relationship with greater exchange of marketing information meant volumes could be expanded. Sainsbury is also fully supportive of the islands' banana brand stickers which will be extended to other lines. "Research has shown consumers want the smaller bananas grown here because they taste better," he said. Bob Hilborn, head of primary agriculture, said growing UK demand for tropical fruit such as mangoes, papaya and starfruit would help the islands' drive to develop new crops. "A specialist totally organic based island within the Windwards could ultimately become a reality."
Costa Rica aims for a stronger identity Costa Rican banana growers through their national association Corbana are poised to introduce labelling which will give the fruit a strong identity in EU markets. President Victor Herrera said the UK was one of three markets chosen alongside Belgium and Germany. Costa Rica is the world's second largest exporter after Ecuador, shipping fruit valued at $670m supporting 40,000 jobs. Initially, discussions will take place with importer/ ripeners including multinationals like Del Monte, Dole and Fyffes, as well as supermarket buyers. Herrara believes Costa Rica can create a valuable point of difference with the public through its environmental and employment record which he claimed was far higher than many other banana producing countries. The objective will be to label banana hands with Costa Rica's own generic brand, and promote them directly to the consumer in a second stage of the campaign which could be operational by the end of the year. The move comes before the EU regime changes to a tariff only system from January 2006. In the meantime, licences based on past trade figures are allocated to importers.