Myers was inspired to undertake his study of the banana industry after intermittent involvement, over the course of more than 30 years, with the long-running and on-going saga of the Caribbean banana trade.
In the early 1970s and again in the early 1980s, Myers was a senior official with the now defunct Ministry of Agriculture, Fisheries & Food (MAFF), then the lead department on banana trade issues. In the past decade, his involvement has been more continuous and direct, working with the Caribbean Banana Exporters’ Association (CBEA).
The perspective of the book is therefore Caribbean, according to the author. The dispute between the US and EU over the EU banana regime, and its effect on dollar and Caribbean banana trade, is of course the major focal point. “The aim is to describe as objectively as possible, with the benefit of that experience, the origins and causes of the dispute, the reasons for its outcome, which has proved so damaging to the Caribbean, and possible ways forward,” said Myers.
Myers’ work, published by Zed Books, has received lavish praise from a number of prominent commentators and its foreword, written by Ralph Gonsalves, prime minister of St Vincent and the Grenadines, outlines the challenges ahead. “The Windward Islands have already suffered serious economic and financial loss as a result of the banana wars and the settlement that was intended to end them,” he said. “So have Jamaica and Surinam. But the danger is far from over ... the first shots are being fired in a battle that will, to a large extent, determine whether the Caribbean banana trade will survive, thrive or die.”
Myers told the Journal: “My key objective in writing the book was to put these things on record - at the end of my long association with the banana industry. It has been published at a very pertinent time, just as the negotiations over the final outcome begin to heat up. Is it conceivable that we will get a tariff arrangement that can reconcile conflicting commercial interests without destroying the Caribbean trade? I would like to think so. It is indeed an obligation on the Community to achieve this.”
These extracts by no means tell the entire story of a compelling read, to get that Journal readers will have to purchase it using the details at the foot of this page.
In the first extract from Banana Wars, Myers explores the dilemma facing the Caribbean banana industry and the moral responsibility of the EU and particularly the UK to protect it...
Throughout the last century, and particularly since the Second World War, the UK has played a crucial role in nurturing and safeguarding the banana industries of these former colonies. This policy has led to the paradox that a country which normally favours trade liberalisation has insisted on a highly protectionist regime for bananas in order to protect vulnerable Caribbean growers.
This was not a policy based on narrow national economic interest. It is true that, for a period following the Second World War the development of sterling sources of supply was a mutually beneficial measure in response to Britain’s shortage of dollars. But these measures continued long after the currency crisis had passed. The outstanding example, much envied by Caribbean banana growers, was the Commonwealth Sugar Agreement that guaranteed a market for specified volumes at negotiated prices. Indeed, the UK even restricted output of UK sugar beet in order to safe-guard the market for commonwealth sugar, albeit to the benefit also of the British companies that refined it. The government of the day likewise fought a tough battle in the Community to ensure preferential access for Caribbean rum as well as Commonwealth sugar and bananas.
In recent decades the British national interest would have been best served by free trade in bananas, a product that Britain consumes but cannot produce. Indeed, Britain’s stand on bananas has entailed penalties not only for British consumers but also, at times, for British manufacturers whose exports have suffered discrimination as a retaliatory measure by countries adversely affected by it. This has been accepted as the price of meeting historical and moral obligations to current or former colonial territories - a welcome contrast to the economic exploitation of colonies of previous centuries, notably through the old Navigation Acts.
For bananas this new approach began in the Caribbean at the very beginning of the twentieth century. The early chapters of this book describe the development of the Commonwealth Caribbean industry and the intermittent but crucial role that the imperial government played in this, leading to increasing, tacit acceptance of some moral responsibility for its welfare long after the exporting countries had achieved independence. This responsibility increased, rather than diminished, with the UK accession to the European Economic Community (as it then was) in 1973. The UK was thus impelled into a leading role in creating and supporting the fateful single-market regime adopted in 1993, which sparked off the dispute.
The battle was essentially concluded in 2001 with an agreement finally hammered out bilaterally between the two great trading blocs, the EU and the USA, that effectively signalled the end of the Community’s efforts to safeguard African, Caribbean and Pacific (ACP) industries. There still remain crucial decisions to be taken before the end of 2005, on the degree of tariff preference to be accorded to the Africans and Caribbean as from 2006 and on any other measures to be taken to help the most vulnerable. Those decisions will determine whether the struggling Caribbean banana industry has any future beyond 2005.
But there is another dimension that will equally influence their fate and that of other growers in developing countries - the supermarkets that now dominate the retail markets. Their competition with each other for market share has led to ever-increasing downward pressure on prices to producers. It is this pressure, which makes unqualified trade liberalisation such a threat to the living standards even of the lowest-cost producers.”
BANANA VOLUMES STAY HEALTHY
Around 950,000 pallets of bananas will come into the UK this year, of which more than 850,000 will be transported from their respective production areas by dedicated reefer vessels.
The balance comes in by container or is trucked back into the UK after unloading on the Continent. The latter used to be far bigger business than it is now, as the pricing structure in the UK places increasing pressure on the efficiency of the logistics process.
Amongst other factors, the strength of sterling against the euro and the prominent positioning of bananas in supermarket price wars in the UK have ensured ports maintain a healthy throughput of the fruit.
Trade estimates suggest that Portsmouth is the largest banana port in the UK, accounting for almost half of the volume through its three weekly services. Geest’s Windward Islands and Dominican Republic service, Fyffes’ Belize and Costa Rica vessels and Seatrade’s weekly vessel, which calls in Colombia, Costa Rica, Jamaica and the Dominican Republic before delivering bananas to the UK and the Continent, add up to considerable and consistent volumes reaching the UK through the Hampshire entry point.
Dover is the second largest. Brian Madderson of Dover stevedore George Hammond said the banana movement through the Kent port has held up very well, despite difficult trading and production conditions.
In fact, more bananas have been through Dover this year than last. He estimates that 300,000 pallets will move through the port this year, accounted for by two or three weekly vessels.
Del Monte’s Central American vessel, and the African Express Line, which takes in the west African sources of Cameroon, Ghana, Ivory Coast, and in the winter months Senegal, represent the major deliveries into Dover; both also call at continental ports.
Sheerness welcomes a weekly Chiquita service and recently, the multinational giant unveiled a new £2 million state-of-the-art ripening facility at the port. The LauCool services from Central America also use the port.
While the market’s growth in terms of value has been stunted somewhat by the retailers’ strategy, its volume growth still sits at between three and five per cent a year. The top four supermarket chains account for around 65 per cent of the overall volume, unsurprising as the ubiquitous, easy-to-eat banana is ideal for all store formats and performs consistently throughout the year.
Madderson says that the price war has had an inevitable effect on the ports. “Of course there is a knock-on effect right through the distribution chain and back to the growers,” he says. “In overall terms, the value per pallet has gone down as much as the price of bananas on the retail shelves.” • Shippers and stevedores will be awaiting with interest the final outcome of the tariff only market negotiations, which are due to have an impact from January 1 2006.
There is speculation in the marketplace that as the date nears, the stance of the multinationals may change somewhat. The staunch supporters of the proposed changes may soften their arguments, because they are now staring down the barrel of a gun that could spark an even bigger bloodbath, not just in the UK but across the Continent.
In a situation of free competition, the winners will almost certainly be those companies that can survive by offering the lowest cost option to their customers - which depends heavily on the efficiency of each organisation’s internal structure, from the growing environment through to final delivery.
News reported in the UK in the last 10 days suggests a further price-based movement in the supplier network. The rumour mill has it that Chiquita might be prepared to undercut Del Monte significantly in a bid to secure the 125,000 pallet-a-year Wal-Mart Asda business in the UK.
Although there is no solid indication at the time of writing that the Asda contract, which is out to tender, is going to switch hands, Chiquita’s stated desire to take a quarter of the UK banana market - it has 15 per cent - gives the rumour extra credence.
Reefer Trends, the on-line news service for the reefer industry, separately claims that the Fyffes’s contract with Morrisons/Safeway is also up for grabs.
This is again unconfirmed, but the contract runs out this month and has not been renewed to date. Fyffes told Newsline, a weekly news service, that its relationship with Morrisons is “healthy” and that Safeway sales are growing, but Chiquita’s bold statement of intent has arguably placed a shadow over every banana contract in the UK in the prevailing market environment.
There are a number of hypothetical questions that need answering. Del Monte, for instance, has committed resources into the UK banana market by opening new facilities and extending others in recent times. If it were to lose its Asda business, where would it choose to target next? If Fyffes is in danger of relinquishing its Morrisons/Safeway contract, where does it go next in the UK? And how precisely does Chiquita expect to increase its market share by 10 per cent?
The answers of course are not only in the hands of the companies themselves, but also in the strategic minds and movements of their customers. The other major companies in the UK market will have their own plans too, and undoubtedly have a large part to play in the medium-term redefinition of the UK supplier network.
The first attempt to increase prices in the banana category for two years or more was made by Asda in the last couple of weeks; although the change was largely hidden - some would say intelligently - to the customer by a change in count for its prepacked line. The change from nine fingers at 89p to six fingers at 67p though, represents roughly a 13 per cent increase in cost per finger.
Is this the first step in an alteration of long-term UK pricing strategy? Fingers will be crossed around the world, but no-one is likely to base their long-term policies around higher prices just yet.
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