Primary Industries - Bananas
Banana cultivation is concentrated in the Southern districts of Stann Creek and Toledo. The total area of cultivation is 7,162 acres.
Source: Central Bank Annual Report 2014
With an output surge in the first four months of the year being followed by declining yields due to drought and then flooding in the subsequent months, total banana production fell by 3.8% to 5.4mn boxes. A major farm (which accounted for 12.9% of production) was closed in October, slashing total acreage under cultivation by 19.0% to 6,844.7 acres, of which 6,281.8 acres were under production and 514.9 acres had plantilla, which are trees that are too immature to harvest. In other developments, the Banana Growers Association (BGA) and Fyffes completed the third year of their exclusive marketing contract, which had commenced on 1 January 2013.
|Year||Production (metric tons)||Revenue (US$m)|
Source: Banana Growers Association
The expectation for the banana industry is forecasted to have a good turnout for 2015. The forecasted increase in production is attributed to yields and productions from the cultivation of new farm land.
Belize’s major export market for bananas is the European Union under the Cotonou Partnership Agreement which is now replaced with the Economic Partnership Agreement (EPA) with the European Union. Under the EPA, Belize currently exports its bananas on a duty free quota free basis.
A major contention over the years was a long-standing World Trade Organization (WTO) dispute over bananas. Belize, as a member of the African, Caribbean and Pacific (ACP) Group exports its bananas under preferential (duty free) rates to the European Union (EU). However, Latin American exporters of bananas also compete on the world market and export bananas to the EU but unlike the ACP countries, are not allowed to export under similar preferential terms. Latin American Countries consider this discriminatory and thus in contravention of the WTO’s core principle of Most Favored Nation Treatment. (View Chronology of GATT/WTO Dispute) for more information. In essence, the Latin Americans want the tariff that the EU levies on their bananas to be reduced with a view to elimination. ACP exporters, on the other hand, contend that the Latin American exporters have a comparable advantage in production of bananas since big firms such as Chiquita have economies of scale and thus, are better equipped to produce bananas more efficiently unlike poor developing banana exporters such as Belize.
After much negotiation, an Agreement on Trade on Bananas was recently reached on 15th December 2009 between the Latin American exporters and the EU. (View Agreement) Essentially, the Agreement stipulates that the EU should not reintroduce measures that discriminate among bananas distributors based on the ownership or control of the distributor or the source of the bananas, and to maintain a non-discriminatory, tariff-only regime for the importation of bananas. The agreement provides for staged EU tariff cuts starting on 15th December 2009 from 148€/metric tonne(mt) to 114€/mt by 1st January 2017. In effect, the new Agreement will bring the EU into compliance with its obligations under the WTO Agreement.
Impact on Belize
Even though Belize does not pay any duties on its Bananas to the EU, it will have to compete among larger exporters of bananas such as the Latin Americans that produce on a larger scale at cost-efficient methods. With access to the EU market for Latin Americans (since the tariff charge on bananas will be reduced significantly), the Latin Americans will have improved market access conditions to the EU. In effect, this will allow for more bananas on the market to the EU which will eventually have a negative effect on prices on bananas.
Mr. Sam Mathias, representative at the BGA, commented, “this [the agreement] had been coming for sometime so it is no real big shock.” There is a slight comfort in the fact that there are mitigation funds assigned to ACP suppliers to absorb the shocks that will be eminent from the Agreement. Mathias emphasized, “the utilization of these funds should be possible at the start of the tariff reduction period, that is now and it is incumbent on Government of Belize to ensure that these funds reach the Belize Banana Industry.”