Bananas, or bananas - what other options?

Carl Greenidge, a well-known Caribbean economist, is currently Deputy Secretary General of the General Secretariat of the ACP Group of States. He has worked in the Caribbean, Africa and the UK. As one of the longest serving Ministers of Finance in the Commonwealth, he was the architect of the Structural Adjustment Programme in Guyana, which rescued the country from a long period of economic decline. ACP countries benefit in many different ways from the provisions of the various 'Chapters' of the Lom\E9 Convention. One chapter that has been in the news of late has been the Trade Chapter, and in particular, that part of it which benefits Caribbean Member states exporting bananas to the EC. Other ACP countries, and indeed some EC member states, may wonder why a small group of Caribbean nations should place so much emphasis on one crop: bananas. Bananas are the most widely traded fruit worldwide but their importance is felt inordinately by Just a few countries (see Spore 41). Of these, certain countries have been forced by climate, topography and history to become almost totally dependent on this one crop. The Windward Islands (Dominica, Grenada, St Lucia and St Vincent) are the extreme case where steep volcanic terrain, high rainfall, fragmented landholdings and a protected market in the former colonial power, the UK, has led to a dependence not just on one crop but on one market for that crop, the EC. Any changes in access to that market would have far-reaching, even cataclysmic, economic and political repercussions. Latin American producers have been vociferous in their recent demands for free access to the EC market and have invoked the free trade policies implicit in GATT. The limitation of access agreed in June this year was a sore disappointment to producers of so-called 'dollar bananas'. They have claimed, among other things, that lack of EC access will result in widespread job losses in their countries, with all the social and political consequences of large-scale unemployment. If their banana production and exports are put into context it can be seen that they are being over-pessimistic. Latin America has been increasing banana production and already has close to 60% of the EC banana market. It also enjoys access to the United States since all the major companies are US-owned and based. The Caribbean has no such access to the US and has to share the remaining 40% of the EC market with fruit from African ACP members (mainly Cameroon and C\F4te d'lvoire), and from EC producers (including the Canary Islands, Madeira, Guadeloupe and Martinique). Moreover, bananas are far less important in terms of Latin American countries' exports and employment. Colombia, for example, which was one of the most vocal at the EC banana talks, has a relatively highly industrialized economy and banana exports contribute only about 1% of Colombia's export earnings. Admittedly that figure is higher for the other four major Latin American producing countries but even Honduras, the most banana-dependent of the dollar banana producers, has a more diversified economy and less dependence on bananas for exports and employment than Dominica, St Lucia or St Vincent. And, even though countries such as Costa Rica, Ecuador and Panama are deemed to be developing countries, they cannot be compared with the island economies of the Caribbean. A further point is that most dollar bananas are grown on large estates with wage labour, whereas Caribbean bananas are the major product of owner-occupied farms averaging about one hectare. It is arguable that in the long term the small scale, low input system of the Caribbean is more sustainable and ecologically desirable than the intensive systems that are already noted for their run-off of soil and agrochemicals which are polluting waterways and destroying marine life, including coral reefs. Looking into the future, however, it must be asked what options there are for the Caribbean banana producers to diversify and to industrialize. Certainly every effort must be made to reduce dependence on banana exports and, in the spirit and framework of the Lom\E9 Convention, we are willing to work both to create a better market for bananas, based on their unique taste and image as a healthy food, and to assist with diversification. A good beginning has been made with agro-processing to add value and utilize by-products; with tourism; and in developing niche market crops and light industries; many of which offer options for more off-land employment. Diversification is not an easy or rapid route to economic independence: most market niches are already filled and (it is a sad fact of life) diversification tends to be easier for those who are least specialized and hardest for the one-product producer. That is why, for the foreseeable future, the banana producers of the Caribbean will continue to depend on their traditional market access to the EC. Any changes must be made very gradually and countries with long-standing historical links with the Caribbean must be prepared to mitigate the economic and political effects that might follow. The absence of income support and assistance for the restructuring of ACP banana industries is already causing severe hardship for the traditional ACP supplying states, particularly in the more vulnerable Caribbean islands. The recent disturbances in St Lucia are a case in point. Their roots lie in the lower prices which farmers are now receiving. It is imperative that the Community and its Member States recognize the urgent need for this assistance and approve, without further delay, the Commission's proposal in this regard. The views expressed are those of the author and do not necessarily reflect those of CTA.Carl Greenidge, a well-known Caribbean economist, is currently Deputy Secretary General of the General Secretariat of the ACP Group of States. He has worked in the Caribbean, Africa and the UK. As one of the longest serving Ministers of Finance in..