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"Betting on Agroecology is the Best Strategy for African Bananas in the Face of Dollar Banana Competition" (CIRAD)

4.10.2019

Having long enjoyed a relative calm in the European market, the African banana will end up in 2020 facing a major challenge. That of facing exports from countries such as Ecuador, Costa Rica and Colombia will be more difficult. While this upcoming commercial change does not necessarily bode well for the African value chain, players can nevertheless play the sustainability card through agro-ecological practices to make their mark, said Denis Loeillet, Head of the Market Observatory at the Center for International Cooperation in Agronomic Research for Development (CIRAD). The latter comes back with the Ecofin Agency on the stakes of this strategy and on the commercial opportunities it offers to the African banana sector.

The Ecofin Agency informed that by 2020, the European Union (EU) will end its stabilization mechanism which allowed to tax banana imports from non-African, Caribbean and Pacific (ACP) third countries as Costa Rica, Ecuador and Colombia.

Denis Loeillet explained that the stabilization mechanism triggers additional tariffs on the dollar banana when the origins individually exceed an indicative volume threshold, unlike ACP bananas which are suspended from customs duties in the EU. If quantities exceed this limit, the European Commission (EC) will report incident to see if this disrupts the price market.

Loeillet added that since 2009, when it was applied, the mechanism aimed, in theory, to track the volumes exported by non-ACP countries throughout the year and to verify that everything is going well. But the fact is that this surveillance system never worked for several reasons. Indeed, when these levels were set, the thresholds were already overvalued for Ecuador, Costa Rica, Colombia, etc. In addition to this, the banana exports have been deliberately allowed to grow by 4 to 5% per year. So after 10 years, the result is that the great origins have never reached this threshold, making de facto the useless mechanism. Limit values have been exceeded only for small non-ACP origins. Here again, since they concerned minimum quantities, the European Commission concluded that this did not really disturb the market. In reality, the system was stillborn.

It was a political gesture. It was created to calm down ACP banana producers and to calm European actors when moving from a quantitative restriction system to a tariff-only form of management. They were told, "Do not worry, we pay attention to you." But the fact is that in their very philosophy, the agreements were signed with an idea of deregulation accentuated over the years, for the benefit of the dollar bananas.

Since January 1, 2019, we have no more statistics on a daily basis. In concrete terms, this means that we have to wait for Eurostat (EU Statistics Directorate), that is to say, at best, two months after the actual importation. In the end, there is no crucial interest in having such a system.

African producer organizations put forward during the Abidjan Appeal not so much the stabilization mechanism. It is rather the need to stop the gradual reduction of customs duties to 75 euros per tonne, ie 1.4 euros / carton. This is the cornerstone. We must stop lowering tariffs to strengthen the competitiveness of non-ACP areas.

"The hope of subsistence is the suspension of customs duties at 75 euros per ton."

Organizations then ask for a real day-to-day market monitoring system to make market management decisions, not political decisions.

That is, a real instrument for making decisions in case of imbalance.

For example, 2018 was a horrible year for prices and we could have made decisions. According to the CIRAD-FruiTrop Barometer, the average European import price has risen to 11.9 euros for the cardboard against 14 euros in 2016. So we lost 2.1 euros on the cardboard in the space of 3 years, due to global overproduction.

"According to the CIRAD-FruiTrop Barometer, the average European import price rose to 11.9 euros for the cardboard against 14 euros in 2016. So we lost 2.1 euros on the cardboard in the space of 3 years, because of global overproduction. "

In addition to these measures, the fruit producers request the renewal of the aid. After that, we can talk about a mechanism to improve competitiveness and development aid specific to the banana sector.

I am really of the idea that the best opportunity for ACP banana producers is "to start looking at more environmental ways of production and take that the train now, because everyone will do it anyway, in the next ten years or so."

So, I'm not saying that these techniques are practiced on 100% of African banana plantations. But all producers have one, two or three techniques going on. I think they have to take the train now, because everyone will do it anyway, in the next ten years or so. Agro-ecological practices lead to a different product and therefore, there is a window of opportunity for Africa.

After that, there is one last barrier according to Lolliet: value the product obtained from European distributors and consumers. It's a whole different subject. If it goes through the traditional Cavendish banana circuits, you have a higher cost of production and less value. So there is a double job to do. Work not only on systems or signs of quality or origin and also get to value the product from distributors who attach importance to bananas from the growing systems that respect the social and the environment.

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