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Will our politicians learn from the banana nightmare?

Posted by CaribShout on December 21, 2009 at 7:39pm

Spare a thought this Christmas for our banana farmers in Micoud, Babonneau and Dennery, the island’s main banana producing communities. The longest international trade dispute is over: the European Union (EU) is no longer prepared to fight for the preservation of any special treatment for banana imports from African, Caribbean and Pacific (ACP) countries. The EU has lost every banana trade dispute to Latin American producers at the WTO and is truly worn out. The European Commission, the executive arm of the European Union, has already settled on a compensation package of two hundred million Euros for farmers in ACP banana exporting countries, of which St Lucia is a part—their final gesture of goodwill and assistance. To use a former prime minister’s words “Our friends in Europe,” a reference to the United Kingdom, are weakened by a dilution of influence in a growing European Union, now made up of twenty-seven countries. Dollar bananas from Ecuador, Colombia, Costa Rica and Panama the world’s largest banana producers will be subject to progressively lower EU import-tariffs following a trade compromise between the EU and Latin America. Under the arrangement the EU will make an initial cut in tariffs on Latin fruit of twenty-eight Euros per tonne to one hundred and forty eight Euros per tonne. The intention is to eventually reduce the import tariff on Latin fruit to one hundred and fourteen Euros per tonne by 2016. In return, the Latin American producers will drop WTO- suits for unfair EU banana trade practices that favoured ACP countries. The impact of lower tariffs on so-called dollar bananas will depress the price of the fruit on the European market and by extension the UK, our primary market. Lower banana prices will mean less money in the pockets of St Lucian farmers, which will push marginal banana farmers out of business. With banana prices set in pound sterling, a fall in that currency against the US dollar, to which the EC dollar is tied, will mean even less money in the hands of banana farmers. Already, initial estimates indicate that banana prices will drop by at least 14 percent in the Euro-Zone. According to a United Nations Conference on Trade and Development report, the Windward Islands have the highest dependency rate among banana exporting countries, St Lucia being the highest. This means that lower prices and its attendant negative impact on the banana industry in the Windward Islands will be felt most in St Lucia. The Members of Parliament representing the banana belt in the country now have their work cut out for them. Over 250 banana- earning households will be poorer over the coming years if some poverty alleviating measures are not put in place at the earliest opportunity. This looming scenario will have implications for areas beyond banana communities as farming households move to urban areas in search of work. Any assistance to farming areas must be aimed at keeping families together so as to avoid the weakening of the social fabric of rural banana communities. The situation calls for early consultation with officials at the St Lucia Social Development Fund, the replacement agency for the Poverty Reduction Fund. Next year, increasing poverty in banana communities will be the biggest single social challenge for this government. There is also the threat, as farmers drop off from the industry, that the level of national banana production will fall below what is economically viable. If that happens, it will no longer be worthwhile for shipping lines to come to St Lucia to receive bananas for onward shipment to the UK, collateral damage to our sea freight access to the UK and Europe. We can no longer afford to politicize the banana issue because the livelihood of a very vulnerable group is at stake. This government is as helpless as were previous governments in changing the fortunes of banana farmers. It would be a mistake to believe that our Fair-Trade brand of bananas will be an insurance protection against the gale-force winds from a more liberalized global trading environment. Fair-Trade bananas will come under severe pressure to justify its relatively high social premium price in a market where the competing dollar banana is significantly cheaper. The year 2010 will provide our banana farmers with a rude awakening of the powerlessness of our governments in the face of liberalized global commerce. There will be, of course, no sympathy from the opposition Labour Party that was accused back in 2006 of bringing about the decline of the banana industry. The accusation found resonance with hurting banana farmers seeking explanations for their financial woes. Moreover, it may have accounted for the Labour Party’s election losses in Babonneau, Micoud and Dennery. Whether the livelihoods of banana farmers remain a political football will depend on how much our politicians have matured and truly care about the plight of the more vulnerable in our midst. Let us hope for sprouting green shoots of political maturity in the face of what was once referred to as green gold and is now a moribund industry.
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