Financial Times (London)
April 3, 2001
By Canute James

Amid increasing concern over the future oftheir preferential access to the European market, banana exporters in the Windward Islands have seen their problems compounded by a fall in income from sales to the European Union.

The four eastern Caribbean islands -- Dominica, Grenada, St Lucia and St Vincent -- lifted exports last year to 140,500 tonnes, but earnings fell below those of 1999. Grenada, St Lucia and St Vincent all recorded increases in production last year, while Dominica's exports fell slightly.

However, last year's exports earned the islands Dollars 59.4m, against Dollars 65.4m in 1999. The decline was caused by the weakening euro and problems of fruit quality, which continue to afflict the industry in the region.

The Windward Islands Banana Development and Exporting Company (Wibdeco), which runs the industry in the islands, says market conditions last year were depressed, with all banana trading companies recording significant losses.

Wibdeco says the main factors were uncertainty about the structure of a new European banana import regime and a fraudulent licence trade uncovered early last year.

In addition, Windward Islands banana farmers were hit by drought in the first part of the year, forcing them to increase irrigation, the Caribbean Development Bank says in a report on the region's economy.

To counter the decline and improve earnings, the industry is being restructured to provide more incentives for farmers producing fruit of high quality and to lift export volumes, which have fallen by a half over the past 10 years.

The effort to produce consistently high quality fruit from a more efficient industry is part of the Windward Islands' plan to deal with what the industry's administrators consider to be inevitable changes to the group's preferential market.

The US and the EU are involved in a trade war over the preferential market for the region's fruit, and there is a growing acceptance in the four islands that the market will eventually be deregulated.

They expect this to lead to a loss of market share to pro ducers of cheaper fruit, mainly from Latin America.

As part of the restructuring, Wibdeco is implementing a formula that will reward farmers that produce fruit to the standard and requirements of the market, says Bernard Cornibert, Wibdeco chief executive.

Rewarding all farmers irrespective of the quality of fruit produced is a disincentive to those who strive to meet international standards, he adds.

The industry faces a difficult future and it has to be fundamentally transformed.

"We have to find a way to achieve that and Wibdeco is quite prepared to work with the good banana companies to ensure that banana growers who produce top quality fruit are properly rewarded," Mr Cornibert says.

Wibdeco has taken control of the marketing of Windward Islands bananas in Europe. One benefit, says Mr Cornibert, is that farmers will be compensated for producing good quality fruit.

The planned changes, however, are unlikely to make Windward Islands' bananas competitive in price to fruit from Latin America. The cost of producing bananas in the islands is about three times that of Latin American producers.

This is the result of the natural handicaps of steep terrain, the small size of the islands and their farms, poor soil and climatic hazards such as hurricanes.

Latin American fruit, in contrast, is mainly grown on large, flat, fertile plantations, while industry spokesmen say Caribbean workers are paid more than Latin American workers.

In addition, it is more expensive to ship bananas from the Caribbean than from Latin America, because of the number of port calls that ships have to make.

The Windward Islands Farmers Association (Winfa), a federation of small producers' organisations, is trying to counter this by negotiating its first "fair trade contract" for exports to the UK.

Under this arrangement, banana farmers who implement environmentally friendly practices get better prices than they would for fruit sold on traditional markets.

"It is clear from the responses that we have got that there is potential for expansion of the fair trade market," says Renwick Rose, the association's co-ordinator.