REPORT FROM THE COMMISSION on the operation in 1995 of the export earnings stabilization system under the fourth Lomé Convention
Date: 1996-07-16
Institutions: European Commission
Subjects: ACP countries, Stabex, balance sheet, export revenue, fourth Lomé Convention

<««»pff!lplf« 

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  16.07.1996 
COM(96) 337  final 

REPORT  FROM  THE COMMISSION 

on the operation  in  1995 of the 
export  earnings  stabilization  system  under 
the  fourth  Lomé  Convention 

I. 

INTRODUCTION 

1. 

Article  31(3)  of  the  Internal  Agreement  on  the  financing  and  administration  of 
Community  aid  states: 

"Each year  the  Commission  shall  draw  up  a  comprehensive  report for  the  Member 
States  on  the  operation  of  the system  of  stabilization  of  export  earnings  and  the  use 
made  by  the ACP  States  of the funds  transferred. " 

2. 

This  report  covers  the  activities  of the  ACP-EC  institutions  and  the  administration  of 
the system  in  1995, paying  special  attention to the allocation  of transfers  for  1994, the 
fifth  year  of  application  of  Stabex  under  the  fourth  Lomé  Convention. 

As had been predicted  a year ago the financial  situation of the system has continued  to 
improve,  to  such  an  extent  that  transfers  for  1994  were  almost  totally  covered  (see 
point  9 below). 

Later on there will be a special publication on Stabex under the first  Financial  Protocol 
to the fourth  Lomé Convention  (application  years  1990-94), with the  aim  of  making  a 
wide public  increasingly  aware of the impact of the use  of  funds  in the recipient  ACP 
States. 

II. 

ACTIVITIES  OF  THE ACP-EC  INSTITUTIONS 

3. 

The  operation  of  Stabex was  discussed  at the  20th  session  of  the ACP-EC  Council  of 
Ministers (Port Louis, 3 to 5 November  1995) and at the 42nd meeting of the  ACP-EC 
Committee  of  Ambassadors  (Brussels,  16 October). 

4. 

Discussions  focused  on: 

(a)  a request from  Sudan to obtain Stabex transfers which were blocked because of the 

suspension  of  cooperation  with  Sudan; 

(b)  a  request  from  Tonga  to  include  pumpkins  in  the  list  of  products  covered  by 
Stabex.  The Council  decided against this.  Tonga was, however,  given  assurances 
that  the  Commission  would  support  efforts  to  diversify  its  production. 

5. 

In  the  course  of  the  year  covered  by  this  report,  the  Agreement  amending  the  fourth 
ACP-EC Convention was signed in Mauritius on 4 November  1995.  The main changes 
with  regard  to  Stabex  are: 

(a) 

increased  protection  for  least-developed,  landlocked  or  island  States  if  there  is  a 
shortfall  in resources  (Article  194(5)); 

(b)  more explicit formulation  of the consultation procedure should there be  significant 
changes  in marketed  production  or exports  in the  application  year  by  comparison 
with  the  reference  year  (Article 203); 

(c)  new  wording  designed  to ensure consistency  between the  use of  Stabex  resources 
and  resources  for  adjustment  purposes,  where  there  is  an  adjustment  programme 
in  place  (Article  209(4)). 

-  2 

III.  TRANSFERS  FOR  THE  1994 APPLICATION  YEAR 

6. 

Calculation  of the transfer  bases 

For the  1994 application  year, the Commission  found  26 ACP  States to be  eligible  for 
30 transfers  under  Stabex.  The 30 country/product  groups recording  losses of  earnings 
eligible  for  compensation  are  listed  in  Table  1 of  this report  (see page  19). 

7. 

After  application  of  the  reduction  provided  for  in  Article  197(3)  and  (4)  of  the 
Convention,  the transfer  bases totalled  ECU  164 million. 

Under  Article  204  of  the  Convention,  the  transfer  basis  calculated  using 
the 
Community's  import  statistics  is  reduced  to  the  level  of  the  transfer  basis  calculated 
using the statistics relating to the exports of the ACP State concerned to-all destinations, 
where  the  latter  amount  is  less than  the  former. 

Reductions  under  Article  203 

Trends in marketed output, total exports, and exports to the Community of the products 
in question meant that consultations between the Commission and representatives of the 
ACP  States  under  Article  203  of  the  Convention  were  necessary  in  many  instances. 
The  consultations  resulted  in the  following  reductions  being  made: 

3  -

(a)  Reductions  applied  as a result  of  significant  changes  in trends in marketed  output 

of  the  product  in  question. 

Country 

Product 

ECU 

Reduction 

As  %  transfer 
base 

Burkina  Faso 

Chad 

Senegal 

Guinea-Bissau 

Sierra  Leone 

Sierra  Leone 

Togo 

Zimbabwe 

Lesotho 

Grenada 

• 

Grenada 

Grenada 

Tanzania 

Cameroon 

Cotton 

Cotton 

Groundnut 
products 

Palm  nuts 
/kernels 

Coffee 

Cocoa 

Cocoa 

Coffee 

Wool 

Cocoa  beans 

Bananas 

Nutmeg 

Coffee 

2 110.787 

2 495.858 

724.913 

271.947 

203.489 

1 533.000 

105.203 

350.436 

104.066 

41.133 

722.861 

422.851 

173.461 

Cocoa  products 

5 354.003 

Equatorial  Guinea 

Cocoa 

Solomon  Islands 

Copra  products 

Tuvalu 

Copra 

Western  Samoa 

Copra products 

688.471 

318.776 

7.864 

900.705 

-13.1 

-27.6 

-11.7 

-40.6 

-51.1 

-56.4 

-22.6 

-6.4 

24.3 

-31.9 

-39.8 

-30.4 

-5.8 

-30.5 

-30.3 

-20.0 

-63.6 

-43.6 

(b) 

Reductions  applied as a result of a decline in exports to all destinations  as a proportion 
of  marketed  output 

Country 

Sudan 

Cape  Verde 

Zimbabwe 

PNG 

Tonga 

Product 

Cotton 

Bananas 

Coffee 

Cocoa  products 

Vanilla 

Reduction 

ECU 

As  %  transfer 
base 

5  073.260 

201.011 

2  416.500 

1  640.754 

33.305 

-42.0 

-19.9 

-44.1 

-18.4 

-31.6 

(c) 

Reductions  applied  as  a result  of  a decline  in exports  to the  Community  as a  share  of 
exports  to  all  destinations: 

Country 

Cape  Verde 

Grenada 

Product 

Bananas 

Nutmeg 

Reduction 

ECU 

As  %  transfer 
base 

89.497 

164.404 

-11.1 

-11.8 

-  5 -

9. 

Calculating  the  transfers 

The total amount of eligible transfers,  following  consultations under Article  203 of the 
Convention  where  appropriate,  therefore  totalled  ECU  138 089 469. 

The  system's  available  resources  amounted  to  ECU  201  215  231,  broken  down  as 
follows: 

-  the instalment for  1994, less the 25% drawn automatically the previous year and less 
the  12.5%  drawn  exceptionally  from  the  1994  instalment  fo* the  1991  application 
year  (ECU  187.5 million); 

-  the estimated amount of interest accumulated at 30 June  1995 pursuant to Article  192 

(ECU  13 715 231). 

Because these  resources exceeded  the total  amount  of transfers,  100%-coverage of  the 
ACP  States'  eligible  losses  under  the  system  was  possible  for  the  first  time  since  the 
entry  into  force  of  the  fourth  Lomé  Convention.  In previous  years  the  sharp  drop  in 
coffee  and  cocoa  prices  had  undermined  the  financial  equilibrium  of  Stabex  and  the 
coverage  rates  had  been  only  about  40%  for  application  years  1990-92  and  60%  for 
1993. 

On 24  July  1995 the  Commission decided  (C(95)1879) on the  Stabex  transfers  for  the 
1994  application  year,  as  listed  in  Table  1 on page  19. 

The  balance  available  under  the  1994  application  year,  made  up  of  the  difference 
between resources and the total amount of transfers, namely ECU 63  125 762, to which 
will  be added the  interest earned by the  Stabex  account  at the end of  1995, will  be the 
subject  of  a proposal  for  a Commission decision  in  1996.  This proposal  for  a decision 
will be based on the provisions of Article  195 of the Convention,  which describes how 
any  balance  remaining  at the end  of the period  covered  by  the  first  Financial  Protocol 
should  be  shared  out  and  paid  to the ACP  States. 

10. 

Results  by  recipient  country  and  product 

Table  2  on  page  20  gives  the  results  by  recipient  country.  The  results  are  radically 
different  from  those  of  the  previous  four  application  years.  Two  banana-exporting 
countries  in the Caribbean whose plantations were devastated,  in one case by a cyclone 
and  in  the  other  by  drought,  are the  main  beneficiaries  of  the  system. 

6  -

11. 

The results by product  (see Table 3, page 21) are also radically  different  since the two 
products  which  took  the  lion's  share  of  transfers  are  bananas  (42.6%),  followed  by 
cotton (21.4%) whereas coffee  and cocoa fell back to third and fourth place with  16.4% 
and  8.8%  respectively.  The  amounts  transferred  have  in  many  cases  provided  a 
substantial  boost  to  the  total  export  earnings  of  the  countries  concerned,  as  the 
following  examples  show: 

ACP  State 

Product 

Transfer  as  %  1994  earnings 
all  products  (estimate) 

Burkina  Faso 
Cape  Verde 
Dominica 
St  Lucia 
St  Vincent 
Western  Samoa 

cotton 
bananas 
bananas 
bananas 
bananas 
copra 

9.3 
20.0 
24.0 
31.6 
60.0 
39.7 

12.  However,  a  more  precise  measure  of  the  impact  that  the  additional  revenue  provided 
by  Stabex  makes  on  the  sector  showing  a  loss  of  earnings  can  be  obtained  by 
comparing  the  amounts  transferred  to  the  earnings  from  the  products  for  which  the 
transfer  is  requested. 

ACP  State 

Product 

Transfer  as  %  1994  earnings 
from  product  in  question  (estimate) 

Burkina  Faso 
Sierra  Leone 
Haiti 
Dominica 
St  Lucia 
St  Vincent 
Western  Samoa 

cotton 
cocoa 
coffee 
bananas 
bananas 
bananas 
copra 

30.2 
64.1 
47.2 
53.1 
61.5 
207.4 
76.6 

These  proportions can be high, especially  when  exports  of the product  in  question  are 
fairly  low  and  fluctuate  substantially  frorn  year  to  year.  When  low  market  prices 
combine  with temporary  difficulties  in the  sector,  losses of revenue can be  severe  and 
give  rise  to  relatively  large  transfers.  Even  when  export  revenue  from  a  particular 
product  is high,  the  transfers  make  a  significant  contribution. 

7 -

IV.  USE  OF  TRANSFERS 

13. 

Frameworks  of  mutual  obligations 

Article  210  of  Lomé  IV reads  as  follows: 

"When  agreement  is  reached  on  the  use  of  resources,  the  ACP  State  and  the 
Commission  shall  sign  a  protocol  setting  up  a  framework  of  mutual  obligations 
stipulating  how the funds  are to be used at the various stages of the operations  agreed 
on. " 

Below  are  details  of  the  frameworks  of  mutual  obligations  (FMOs)  signed,  or  in 
preparation  for  signing,  since the publication  of the report  on the  operation  of  Stabex 
in  1994  (COM(95)501  final). 

13.1  COMOROS 

Application  years  : 
Products  : 

Payment  dates  : 

1991, 1992 and  1993 
essential  oils 
essential  oils 
cloves 
essential  oils 
cloves 
3 February  1993  (1991) 
2  March  1995  (1992) 
2  March  1995  (1993) 

1991 
1992 
1992 
1993 
1993 

Framework  signed  :  18 October  1995 

Summary: 

ECU 
ECU 
ECU 
ECU 
ECU 

190 226 
61  859 
818  833 
493  726 
317  372 

The cause of the losses sustained was the crisis in the essential oils and clove sectors. 

On the  basis of  Comoros'  export  strategy,  it has been agreed  that the  funds 'will  be 
used  in  a  manner  consistent  with  the  aim  of  developing  traditional  exports  at  the 
same  time  as providing  broad-based  support  mainly  in the  form  of  maintenance  of 
roads  and tracks  in the production  areas  and  export  promotion.  There  are plans  to 
get export sectors, principally vanilla, up and running again effectively  and promptly 
but  above  all  to  lay  the  foundations  for  future  competitive  production  of  quality 
vanilla  and  Ylang-Ylang  essence. 

_ 

13.2  COTE  D'IVOIRE 

Application  year  : 
Products: 

1993 
cocoa products 
coffee  products 
4 November  1994 

Payment  date  : 
Framework  signed  :  4 July  1995 

ECU  8 678  825 
ECU 23  171  128 

Summary: 

The  objectives  are: 

including  communications,  social, 
to  promote  infrastructure  development 
infrastructure,  village  water  engineering,  rural  electrification  and  village 
housing, 
to  continue  efforts  to  restructure  economic  activities  in  the  context  of  state 
withdrawal  and a greater role for private operators, in particular-to complete the 
liberalization  of  domestic  marketing  operations, 
to  help  boost  the  agronomic,  organizational  and  financial  capacities  of 
cooperative  groups  and  make them  more  professional. 

In  return,  the  government  has  undertaken: 

to finalize  restructuring  and reduce domestic  debt servicing  in accordance  with 
the  undertakings  given  in the macroeconomic  policy  framework  document  for 
1994/96; 
to continue the restructuring policies for the coffee,  cocoa and cotton  sectors in 
accordance with the undertakings entered into with donors under previous FMOs 
and  the  CASA  (agricultural  sector  adjustment  credit  facility)  currently  under 
discussion; 
to take  steps to  improve the effectiveness  of the road  maintenance  fund  (FER) 
and  the  rural  planning  fund  (FRAR). 

13.3  DOMINICA 

Application  years  : 
Product: 

Payment  date: 

Framework  signed: 

1992 and  1993 
bananas  1992 
bananas  1993 
26.07.1994  (1992) 
09.09.1994  (1993) 
21.07.1995 

ECU  1 225  825 
ECU  3  368  793 

_ 

- 9-

Summary: 

STABEX  resources  will  contribute  to  supporting  the  implementation  by  the 
Government  of  Dominica  of  a  Farm  Productivity  And  Banana  Fruit  Enhancement 
Programme.  The  objectives  conceived  within  the  country's  medium  to  long-term 
strategy  for  improved  competitiveness  of  a consolidated  banana  industry  as  well  as 
diversification  of  the  agricultural  sector,  comprise: 

a  contribution  to  production  recovery  from  the  damages  inflicted  by  tropical 
storm  Debbie  (Sept.  94); 
productivity  and  quality  improvement  in the banana  industry; 
restoration  of  income  earning  capacity  of  farm  households  which  are  directly 
dependent  on agriculture, through  subsidies and credit schemes, improved  road 
access,  improved  soil  management  practices, etc,; 
implementation  of  projects/activities  identified  for  diversification. 

The  Government  of Dominica is committed to the general  objectives  of the  strategy 
for  the  restructuring  of  the  banana  industry  and  will  take  steps  to  ensure  that  the 
rehabilitation  process  will  effectively  contribute  to  the  longer  term  goals,  i.e.  in 
particular  agricultural  diversification. 

13.4  ETHIOPIA 

Application  years  : 
Products: 

Payment  date: 

Framework  signed: 

Summary: 

1992 

1993 

1992  and  1993 
coffee 
hides  & skins 
coffee 
hides  &  skins 
25.05.1994  (1992) 
01.12.1994(1993) 
22.03.1996 

ECU 35  697  326 
ECU  5 200  571 
ECU 27  643  660 
ECU  4  949  289 

Following  an  updating  of  their  statistical  data  which  revealed  that  the  performance 
of  the  Ethiopian  exports  had  been  better  than  expected,  the  entitlements  in  relation 
to the application  year  1993 had to be reduced by ECU  8 325  627 for  coffee  and by 
ECU  2  568  730  for  hides  and  skins. 

The  main  causes  of  the  losses  sustained  in  1992  and  1993  were 
the  persistent 
deterioration  of  world  market  prices  for  coffee,  shortage  of  spare  parts  for  the 
washing  stations  as  well  as  smuggling  of  coffee  to  neighbouring  countries.  The 
continuous  decline  of  world  market  prices,  smuggling  of  livestock  to  neighbouring 
countries  and  the  deterioration  in  the  quality  of  raw  hides  and  skins  have  been 
identified  as the  main  causes  for  the  fall  in  export  earnings  from  hides  and  skins. 

-  10 

The  overall  objective  of  the  utilisation  of  the  1992  and  1993  transfers  will  be  to 
support the economic reform process and development  strategy being pursued by the 
Ethiopian  Government. 

In  particular  funds  will  be provided  for  the  following  purposes: 
liberalization  measures  by the  supply  of  foreign  exchange; 
the  agricultural  sector  by the provision  of  fertilizers  and  funds  for  agricultural 
and  agricultural  related  studies; 
the  diversification  of  the  export  base  through  focused  and  targeted  support  in 
selected  areas. 

13.5  GRENADA 

Application  year  : 
Products: 

Date  of  payment: 
Framework  signed: 

Summary: 

1993 
Cocoa 
Bananas 
Nutmeg  & mace 
03.10.1994 
20.12.1995 

213  084 
ECU 
ECU 
589  553 
ECU  1 445  902 

Grenada's  economic  performance  is dependent  to  a  large  extent  on the  agricultural 
sector  which  contributes  significantly  to  export  earnings,  employment  and  rural 
income.  Hence,  a  number  of  measures  will  be  taken  to  aid  farmers  in  achieving  a 
viable  activity  through 

price  support  schemes, 
subsidies on farm  inputs including the provision of planting  material  as well  as 
pest  and  disease  control, 
acceleration  of the  diversification  of  agricultural  crops,  and 
rehabilitation  of  farm  and  feeder  roads. 

In addition, the Government  is committed to ensuring that agriculture contributes an 
increasing  percentage  of 
tourism  sector,  while 
diversification  programmes  will  help  to  reduce  the  existing  level  of  food  imports. 

the'  inputs  required 

in  the 

-  11 -

13.6  GUINEA  BISSAU 

Application  year  : 
Products  : 

Payment  dates  : 
Framework  signed: 

Summary: 

1992 
cotton 
palm  products 
shrimps 
23  September  1994 
1 August  1995 

ECU 
ECU 
ECU 

72  131 
181  653 
140  795 

The  main  causes  of  the  losses  sustained  in  1992 were: 

for cotton: the drop in world prices and the unsatisfactory  operation of the rural 
development  programme  in  the  East,  located  in  the  prime  cotton  production 
area; 
for  palm  products:  the  drop  in  export  prices  because  of  poor  quality  and  lack 
of  mills  and  adequate  storage  facilities; 
for  shrimps:  fluctuating  world  prices  and  the  closure  of  some  of  the  export 
firms. 

The  main  objectives  of  the  FMO  are: 

renewal  of  palm  tree  stock  with  a view to  improving  product  quality; 
modernizing  and  renovating  the  artisanal  fishing  port  of  Bandim  by  installing 
an  access ramp  to  make  unloading  the  fish  easier; 
diversification  by  producing  tropical  fruits  such  as mangoes  and  pineapples. 

13.7  HAITI 

Application  years  : 
Products: 

1990,  1991,  1992  and  1993 
cocoa 
coffee 
essential  oils 
coffee 
essential  oils 
coffee 
cocoa 
cocoa 
coffee 

1990 
1990 
1990 
1991 
1991 
1992 
1992 
1993 
1993 

ECU  1 411  489 
ECU  9  842  250 
ECU 
396  643 
ECU  5 062  241 
ECU 
307  347 
ECU  3  896  097 
75  758 
ECU 
ECU 
80  947 
ECU  4  471  097 

12 

Summary: 

The  main  objective  is  to  increase  agricultural  export  capacity  and  improve  the 
incomes and living conditions of the rural population.  In the short term priority will 
be  given  to  rehabilitating  rural  production  infrastructure  which  has  sharply 
deteriorated.  At  the  same  time,  the  government  will  be  assisted  in  defining  a 
medium-term  strategy  to develop  the  agricultural  sector  more  quickly  and  increase 
its  productivity.  This  strategy  will  inevitably  involve  diversification  into  growth 
markets  and  efforts  to  develop  industrial  processing  of  output. 

Specific  objectives: 

Formulation  of  a  sectoral  policy  for  agriculture  and  strategies  to  develop  the 
main  traditional  sectors and to  diversify. 
Improvement of inland communications, particularly access to production areas, 
and  better  marketing  of products. 
Improvement  of  living  conditions,  the  environment  and  social  and  economic 
infrastructure  in rural  areas. 

The  government  of  Haiti  has  undertaken: 

to  pursue  the  programme  of  economic  reforms  and  structural  adjustment  with 
the  support  of the main donors; 
to promote the development of private initiative in rural development,  including 
producer  associations  and  small-scale  credit/savings  funds; 
to  pursue  administrative  decentralization  and  devolution  of  the  powers  of  the 
supervisory  Ministries  concerned; 
to  define  and  begin  implementing  a  land  ownership  protection  policy. 

13.8  KENYA 

Application  year: 
Product: 
Payment  date: 
Framework  signed: 

1991 
coffee 
27.08.1992 
28.09.1995 

Summary: 

ECU 16 413  425 

The  drop  in  export  earnings  may  be  attributed  to  the  following  factors:  low 
international coffee  prices, escalating costs of agricultural  inputs, lower  productivity 
and  quality,  deteriorating  infrastructure  and  lower  funding  for  research. 

Funds  shall  be  used  primarily  to  support  the  Government's  strategy  for  the 
rehabilitation of the coffee  sector by mitigating some of the structural  causes in order 
to improve its efficiency.  Measures will address in particular the improvement  of the 
economic  infrastructure,  the  credit  and  input  requirements  of  farmers  and  the 
improvement  of  productivity  and  quality. 

13 

13.9  MALAWI 

Application  years: 
Products: 

1990 and  1991 
1990 
tea 
1991 
tea 
coffee 
1991 
02.08.1995 
Payment  date: 
Framework  signed:1  20.07.1995 

Summary: 

ECU  1 705  852 
ECU  2  288  885 
220  364 
ECU 

Malawi  being  the  major  tea  producer  in  Southern  Africa,  closely  followed  by 
Zimbabwe  and  Tanzania,  STABEX  funds  are  destined  to  improve  the  performance 
and  competitiveness  of  the  tea  industry.  The  project  to  be  carried  out  by  the  Tea 
Research  Foundation  comprises three  components: 

the  development  of a residential training centre and  training  programme  which 
addresses  the  changing  needs  of the  industry; 
the  further  development  of the  automation  of tea processing  controls,  and 
a  study  for  a major  review  of  work  organization  and  management  practices. 

Government  measures  intended  to  strengthen  the  industry  concern 

the  recent  monetary  liberalization  (access  to  foreign  exchange  accounts  for 
private  estates)  which  will  improve  availability  of  inputs; 
the review  of  the pricing  mechanism,  in  line  with  the  Price  Stabilisation  Fund 
Agreement,  and 
the  privatization  of  the  Smallholder  Tea  Authority  (STA)  before  1996. 

13.10  UGANDA 

Application  year: 
Products: 

Payment  date: 
Framework  signed: 

1992 
coffee 
hides  and  skins 
21.07.1995 
23.11.1995 

Summary: 

ECU 22  748  132 
ECU  1 590  474 

Losses  were  mainly  caused  by  declining  world  market  prices  for  coffee  and  by  a 
poor  bean  quality  due  to  the  drought  experienced  in  most  of  the  country.  The  low 
quality  of Ugandan  skins and declining prices caused  also losses in earnings  derived 
from  the  hides  and  skins  sector. 

Relating  to  an  amount  of  ECU 2 050  000 only. 

-  14-

The  transfer  will  be  used  to  support  the  coffee  sector  as the  main  looser  in  export 
earnings:  improvement  of  coffee  quality  through  assistance  in  research,  extension 
activities  and  distribution  of  improved  planting  material.  A  credit  facility  shall  be 
made available  to  finance  infrastructure  rehabilitation  measures  in the  tea  sector,  to 
develop private processing  capacities and to invest  in fuel  wood  capacities.  Support 
is also  given to  export  diversification  measures.An allocation  is earmarked  for  debt 
repayment  of  the  countries'  debts in the  agricultural  sector. 

13.11  St  VINCENT  and  the  GRENADINES 

Application  year: 
Product: 
Date  of  payment: 
Framework  signed: 

1993 
bananas 
08.02.1995 
15.06.1995 

Summary: 

ECU  5 452  277 

The  overall  objective  for  the  utilisation  of  the  transfer  is  based  on  supporting  the 
Government's  Banana  Production  Improvement  Programme,  i.e.: 
revitalise  and  sustain  banana  production  and  marketing, 
comprehensive  restructuring  of the banana industry  at national  and  subregional 
levels,  as well  as of  shipping  and  marketing  arrangements,  in  a manner  aimed 
at  reducing  costs  and  improving  efficiency. 

Specific  projects  comprise: 

banana  farm  rehabilitation, 
soil  and  water  resources  management, 
quality  improvement, 
farmer  training, 
environment  impact  study  including  pilot  organic  farm, 
institutional  strengthening  and  communication  support. 

This  programme  fits  in  the  overall  strategy  aimed  at  achieving  competitiveness  for 
the  Windward  Islands'  banana  industry. 

The Government  of St. Vincent committed itself to the general objectives  of the said 
strategy: 

supporting  the  restructuring  of the  industry, 
negotiating  new  contracts  for  the  marketing  of  bananas, 
concentrating  assistance  on the  most  productive  farmers,  and  ~ 
achieve,  in  the  end,  agricultural  diversification. 

15 

13.12  SIERRA  LEONE 

Application  year: 
Product: 

Payment  date: 
Framework  signed: 

1992 
coffee 
cocoa 
18 July  1995 
28 June  1995 

Summary: 

ECU  1 694  465 
636  598 
ECU 

Because  of  the  continuing  lack  of  security  and  fighting  in  the  coffee  and  cocoa-
producing areas and the risks involved  in rehabilitating  and resettling  farmers  before 
the  establishment  of  lasting  peace  arrangements,  transfers  have  been  used  to 
contribute  to  a debt  reduction  programme  in  cooperation  with  other  donors  (World 
Bank,  Switzerland,  United  Kingdom  etc).  This use is exceptional  and  is a result  of 
the country's  specific  circumstances.  It remains understood  that as soon  as  security 
conditions  allow,  measures  will  be taken  to  resume  coffee  and  cocoa  production. 

In  return  the  government  has  undertaken  to  pursue  its  medium-term  adjustment 
programme  and to abide by the external  debt  management  strategy  established  with 
the  World  Bank. 

13.13  TONGA 

s 

Application  years: 
Product: 

Payment  date  : 
Framework  signed: 

Summary: 

1990,  1991,  1992  and  1993 
copra products 
copra products 
copra products 
copra products 
bananas 
bananas 
vanilla 
1 December  1994  (1990 to  1993) 
26  September  1995 

1990 
1991 
1992 
1993 
1990 
1991 
1992 

ECU 
ECU 
ECU 
ECU 
ECU 
ECU 
ECU 

471594 
727  108 
101  756 
110  264 
518  072 
476  475 
10  019 

The  transfers  will  not  be  used  exclusively  in  the  sectors  which  generated  them 
because  experience  has  shown  that  over-dependence  on  only  a  few  products  can 
cause economic  instability  if for  any reason there is a shortage  of these products  on 
the  market. 

16 

Utilization  will  therefore  be  in keeping  with  Government  policy.  This  is aimed  at 
keeping  traditional  sectors alive as far  as possible  but  at the  same  time  diversifying 
its economic base by promoting new crops which will generate stable export earnings 
in the  future. 

In  this  context: 

about 20% of the funds  will be used in the sectors which generated the  transfers 
for  replanting  coconut  palms,  seeking  new  varieties,  research  in  the  banana 
sector  and  the  development  of  vanilla; 
with regard to diversification,  the remaining  80% will be used for  research  into 
markets and  export conditions  (20%), the  development  of  new products  (30%) 
and  methods  of  improving  post-harvest  treatment  of  the  product  (30%). 

13.4  VANUATU 

Application  years: 
Products: 

Payment  date  : 

Framework  signed: 

Summary: 

1992 
1993 
1994 

1992,  1993 and  1994 
copra 
copra 
copra 
16 June  1995  (1992,  1993) 
2  May  1996  (1994) 
22  April  1996 

ECU 
ECU 
ECU 

267  337 
265  281 
60  045 

The  government  of Vanuatu is aware that the importance of copra in  its economy  is 
waning.  It  none  the  less  believes  that  stable  and  profitable  prices  for  the  grower, 
hence  subsidized  where  necessary,  are a solution  for  stabilizing  copra production  in 
the  long  term.  This means  ensuring  that  some of the many  copra  producers  do  not 
abandon  the  product  in  the  wake  of  very  low  prices  before  the  diversification 
process,  as borne  out  by  statistics,  has really  offered  alternatives. 

The government  measures which were begun by the previous FMO will therefore  be 
continued,  as  will  operations  to  open  up  production  areas  in  the  interior  of  the 
country. 

The  current  FMO  wilF thus  supplement  improvements  to  rural  road  infrastructure, 
certain  components  of  which  need  to  be  stepped  up. 

17 -

13.15  ZIMBABWE 

Application  year: 
Products: 

Date  of  payment: 
Framework  signed: 

1992 
coffee 
cotton 
14.12.1994 
26.06.1995 

Summary: 

ECU  2 493  812 
ECU 12 786  706 

On  a  general  level  -  bearing  in  mind  that  Zimbabwe  is  presently  undergoing  a 
process  of  structural  adjustment  - the  transfers  will  be used  to  correct  some  of  the 
structural  causes which  generated  difficulties  for  the improvement  of the  operation 
of  the  sectors  concerned. 

More  specifically,  the transfers  are  destined 

to  assist  the  coffee  sector  by reducing  the  amount  of  loans  granted  because  of 
the  drought  and  thus  allow  the  sector  to  increase  productive  investment  and 
viability.  At the  same time, this will have  a ripple effect  on the banking  sector 
and  improve  living  standards  in the  rural  areas; 
to  contribute,  in  the  cotton  sector,  to  the  establishment  of  Zimbabwe  Cotton 
Company's  financial  viability  and  assist  the  sale  of  part  of  the  Government's 
shareholding  in this venture to  small-holders  over  the  next  two  years. 

14. 

Evaluations  of  the  use  of  resources 

Since  the  publication  of  the  1994  report  (COM(95)501  final),  evaluations  on  the 
implementation  of  FMOs  have  continued  (Grenada,  Tanzania,  Zambia,  Ethiopia). 
Others  are  in  the  pipeline  (Lesotho,  Senegal,  Mauritania,  Benin,  Kenya,  Zimbabwe). 
At the  same time the overall  evaluation  of  Stabex  will  be drawn  up during  the  second 
half  of  1996. 

-  i: 

TABLE 1 : AGGREGATE RESULTS FOR 1994 APPLICATION YEAR (amounts  in ECU) 

Country 
code 

Country 

Product 

Loss of 
earnings 

"Franchise" 

Transfer  basis 
after 
"franchise" 

Consultations 
(Art.  203) 

Transfer  basis 
after  Art.  203 
reductions 

Reduction 
Art.  194.2 

Reduction 
Art.  194.4 

Amount of 
transfers 

Sudan 
Mauretania 
Burkina  Faso 
Chad 
Cape Verde 
Senegal 
Guinea-Bissau 
Sierra  Leone 

Togo 
Cameroon 
Equatorial  Guinea 
Tanzania 
Zimbabwe 

Malawi 
Lesotho 
Haïti 
Dominica 
Saint Lucia 
Saint Vincent  and the  Grenadines 
Grenada 

Papua New Guinea 
Solomon  Islands 
Tuvalu 
Vanuatu 
Tonga 

224 
228 
236 
244 
247 
248 
257 
264 

280 
302 
310 
352 
382 

386 
395 
452 
460 
465 
467 
473 

801 
806 
807 
816 
817 

R 1Q 

Cotton 
Squid, octopus  and  cuttlefish 
Cotton 
Cotton 
Fresh  bananas 
Groundnut  products 
Palm  nuts and  kernels 
Coffee 
Cocoa 
Cocoa 
Cocoa  products 
Cocoa 
Coffee 
Coffee 
Cotton 
Tea 
Wool 
Coffee 
Fresh  bananas 
Fresh  bananas 
Fresh  bananas 
Cocoa 
Fresh  bananas 
Nutmeg  &  mace 
Cocoa  products 
Copra  products 
Copra 
Copra 
Vanilla 
Copra  products 

12.333.250 
1.014.030 
16.795.863 
9.431.750 
1.006.565 
8.828.557 
669.655 
397.750 
2.777.500 
465.501 
23.093.480 
2.338.575 
3.719.153 
5.904.250 
2.681.607 
4.438.000 
428.257 
6.663.379 
9.512.500 
22.944.750 
26.176.500 
128.902 
1.813.500  ' 
1.390.500 
9.860.750 
1.594.677 
12.375 
60.045 
105.496 
2.090.424 

271.292 
0 
768.627 
405.137 
0 
2.648.567 
0 
0 
63.745 
0 
5.539.371 
63.391 
743.831 
428.681 
536.321 
254.530 
0 
167.992 
353.115 
768.347 
451.635 
0 
0 
0 
948.454 
0 
0 
0 
0 
26.481 

12.061.958 
1.014.030 
16.027.236 
9.026.613 
1.006.565 
6.179.990 
669.655 
397.750 
2.713.755 
465.501 
17.554.109 
2.275.184 
2.975.322 
5.475.569 
2.145.286 
4.183.470 
428.257 
6.495.387 
9:159.385 
22.176.403 
25.724.865 
128.902 
1.813.500 
1.390.500 
8.912.296 
1.594.677 
12.375 
'60.045 
105.496 
2.063.943 

5.073.260 
0 
2.110.787 
2.495.858 
290.508 
724.913 
271.947 
203.489 
1.533.000 
105.203 
5.354.003 
688.471 
173.461 
2.766.936 
0 
0 
104.066 
0 
0 
0 
0 
41.133 
722.861 
587.255 
1.640.754 
318.776 
7.864 
0 
33.305 
900.705 

6.988.698 
1.014.030 
13.916.449 
6.530.755 
716.057 
5.455.077 
397.708 
194.261 
1.180.755 
360.298 
12.200.106 
1.586.713 
2.801.861 
2.708.633 
2.145.286 
4.183.470 
324.191 
6.495.387 
9.159.385 
22.176.403 
25.724.865 
87.769 
1.090.639 
803.245 
7.271.542 
1.275.901 
4.511 
60.045 
72.191 
1.163.238 

178.677.541 

14.439.517 

164.238.024 

26.148.555 

138.089.469 

0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 

0 

0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 

6.988.698 
1.014.030 
13.916.449 
6.530.755 
716.057 
5.455.077 
397.708 
194.261 
1.180.755 
360.298 
12.200.106 
1.586.713 
2.801.861 
2.708.633 
2.145.286 
4.183.470 
324.191 
6.495.387 
9.159.385 
22.176.403 
25.724.865 
87.769 
1.090.639 
803.245 
7.271.542 
1.275.901 
4.511 
60.045 
72.\91 
1.163.238 

0 

138.089.469 

TABLE 2 : AGGREGATE  RESULTS  BY PRODUCT 

Country 

Amount  in  ECU 

as %  of total 

1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 

Saint  Vincent  and  the  Grenadines 
Saint  Lucia 
Burkina  Faso 
Cameroon 
Dominica 
P N G. 
Sudan 
Chad 
Haiti 
Senegal 
Zimbabwe 
Malawi 
Tanzania 
Grenada 
Equatorial  Guinea 
Sierra  Leone 
Solomon  Islands 
Western  Samoa 
Mauretania 
Cape  Verde 
Guinea-Bissau 
Togo 
Lesotho 
Tonga 
Vanuatu 
Tuvalu 

25.724.865 
22.176.403 
13.916.449 
12.200.106 
9.159.385 
7.271.542 
6.988.698 
6.530.755 
6.495.387 
5.455.077 
4.853.919 
4.183.470 
2.801.861 
1.981.653 
1.586.713 
1.375.016 
1.275.901 
1.163.238 
1.014.030 
716.057 
397.708 
360.298 
324.191 
72.191 
60.045 
4.511 

18,629 
16,059 
10,078 
8,835 
6,633 
5,266 
5,061 
4,729 
4,704 
3,950 
3,515 
3,030 
2,029 
1,435 
1,149 
0,996 
0,924 
0,842 
0,734 
0,519 
0,288 
0,261 
0,235 
0,052 
0,043 
0003 

TOTAL 

138.089.469 

100.000 

-20 

TABLE 3 : AGGREGATE  RESULTS BY  PRODUCT 

Products 

Amount in ECU 

as % of total 

1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 

Bananas 
Cotton  and by-products 
Cocoa and  by-products 
Coffee  and by-products 
Groundnut  products 
Tee 
Copra and by-products 
Squid,  octopus and  cuttlefish 
Nutmeg and mace 
Palm nuts and kernels 
Wool 
Vanilla 

TOTAL 

58.867.349 
29.581.188 
22.687.183 
12.200.142 
5.455.077 
4.183.470 
2.503.695 
1.014.030 
803.245 
397.708 
324.191 
72.191 
138.089.469 

42,630 
21,422 
16,429 
8,835 
3,950 
3,030 
1,813 
0,734 
0,582 
0,288 
0,235 
0,052 

100,000 

21 -

ISSN 0254-1475 

COM(96) 337  final 

DOCUMENTS 

EN 

11 

Catalogue number  : CB-CO-96-338-EN-C 

ISBN 92-78-06095-X 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

&