Proposal for a Council Regulation (EC) establishing a special framework of assistance for traditional ACP suppliers of bananas
Date: 1998-02-17
Institutions: European Commission
Subjects: financial aid, fourth Lomé Convention, production aid, technical cooperation, tropical fruit

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  17.02.1998 
COM(1998) 5  final 

98/0014(SYN) 

V 

Proposal for a 

COUNCIL REGULATION (EC) 

establishing a special framework of assistance 

for traditional ACP suppliers of bananas 

(presented by the Commission) 

EXPLANATORY MEMORANDUM 

1.  The  Lome  Convention  requires  the  EU  to  provide  preferential  access  to  all  AC? 
bananas.  The  EU  is  also  required  to  provide  additional  benefits  to  traditional  ACP 
bananas  in that, in respect  of its banana exports to the Community market, no ACP  State 
shall  be  placed,  as regards  access  to  its traditional  markets  and  its  advantages  on  those 
markets, in a less favourable  situation than in the past or the present. 

2.  The common organisation  of the market  in bananas  established  by  Regulation  (EEC) 
404/93  set  the  framework  for  continuing,  on  the  Community  market,  the  advantages 
enjoyed  in  the  past  by  traditional  ACP  suppliers,  in  accordance  with  the  Community's 
commitments  set  out  above.  This  was,  in  particular,  achieved  by  allocating  a  reserved 
share  of  the  market  to  individual  traditional  ACP  suppliers  and  by  applying  a  special 
import  licence  scheme  which  led  to  a  cross  subsidisation  between  dollar  and  ACP 
bananas.  This  licence scheme not  only  provided  operators  with  an  incentive to contiiuic 
to  import  traditional  ACP  bananas  but  also  bridged  the  difference  in  production  costs 
between  dollar and ACP bananas, increasing the competitiveness  of the latter. 

3.  The  amendments  proposed  by  the  Commission  to  the  common  organisation  of  the 
market in bananas, on (date), will substantially  alter the market conditions  for  traditional 
ACP  suppliers  and jeopardise  the  continuing  viability  of  ACP  supplies  if  no  specific 
action  is taken.  In  particular,  since  it  has  been  proposed  that  the  special  import  licence 
system  be  dismantled,  the  gap  in  competitiveness  between  Latin  American  bananas  on 
the one hand and ACP bananas on the other will eventually reappear and traditional  ACP 
banana  suppliers  will  be  unable  to  maintain  their  presence  on  the  EU  market  if  no 
additional  effort  is undertaken to fill this gap. 

4.  With  a  view  to  assisting  traditional  ACP  suppliers  of  bananas  to  adapt  to  the  new 
conditions  on  the  market  and  in  particular  to  increase  the  competitiveness  of  this 
production  while  at  the  same time  encouraging  more  environment-friendly  methods  of 
production  and  marketing,  it  is  proposed  to  establish  a special  framework  of  technical 
and financial  assistance for the benefit of such suppliers. 

5.  In  accordance  with  the  objectives  pursued,  the  level  of  the  technical  and  financial 
assistance  made  available  should  vary  according  to  the  competitiveness  gap  observed 
while taking  into account the importance of banana production  for  the economies  of the 
countries concemed.  Moreover, in order to ensure the appropriateness of such assistance. 
it should be limited in time - a period of  10 years is considered appropriate in this respect 
-  and degressive.  The level  of technical  and  financial  assistance being directly  related  to 
the  level  of  competitiveness  observed,  such  degressivity  should  be  the  normal 
consequence  of  the  Community  support.  Indeed,  increased  competitiveness  and  thus 
degressivity  should  under  normal  circumstances  occur  after  an  initial  period  of  time, 
allowing the programmes  financed  to produce their effect.  However,  in.order to provide 
an  additional  incentive  to  traditional  ACP  suppliers  and  to  provide  for  a  sniooth  anc! 
gradual  phasing  oui  of  technical  and  financial  assistance,  a reduction  coefficient  should 
bc  applied  after 
increase  i:i 
competitiveness  can be observed. 

this  period  of  time,  in  cases  where  no  sufficient 

A<L 

6.  In view  of  the  commitments  arising  from  the  Lome Convention,  and  in  particular  its 
Protocol  5, the Commission  assumes that the funds  required  for  financing  this  technical 
assistance will come from  the Community budget.  Together with its ACP partners it will 
examine whether, by analogy with other aid instruments (Stabex, Sysmin, etc),  schemes 
of this nature could be covered by the future ACP-EC partnership agreement. 

Council Regulation (EC) No 

/98 of 

1998 

establishing a special framework  of assistance 
for traditional ACP suppliers of bananas 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  130w thereof, 

Having regard to the proposal  from the Commission1, 

Acting in accordance with the procedure laid down in Article  189c of the Treaty2, 

Whereas the fourth  ACP-EEC  Convention  provides that, in respect  of its banana exports 
to  the  Community  markets,  no  ACP  State  shall  be  placed,  as  regards  access  to  its 
traditional  markets  and  its  advantages  on  those  markets,  in  a  less  favourable  situation 
than in the past or at present; 

Whereas  the  common  organisation  of  the  market  in  bananas  established  by  Regulation 
(EEC) No 404/93, as last amended by  Regulation  (EC) No 3290/94-\  set  the  framework 
for  continuing,  on  the  Community  market,  the  advantages  enjoyed  in  the  past  by 
traditional ACP suppliers; 

Whereas,  in  particular,  the trade  regime with  third  countries  established  by  Title  IV of 
that  Regulation  was  designed  to  allow  bananas  produced  by  the  ACP  States  which  are 
traditional  suppliers  to  the  Community  to  be  disposed  of  on  the  Community  market 
providing  an  adequate  income  for  the  producers,  in  accordance  with  the  Community's 
commitment set out above; 

Whereas this trade regime has been amended by Regulation (EC) No 

/98; 

Whereas  these  modifications  have  substantially  altered  the  market  conditions  for 
traditional ACP suppliers; 

Whereas  particular  efforts  will  thus  be needed  by  traditional  ACP  suppliers  to  adapt  to 
these new market  conditions  in  order to maintain  a presence  on  the Community  market 
and to allow for the continuing viability of traditional ACP supplies; 

Whereas  technical  and  financial  assistance,  additional  to that  provided  for  in  the  fourth 
ACP-EC Convention, should therefore  be granted to traditional  ACP suppliers  to  enable 

them  to  adapt  to  new  market  conditions  and  in  particular  to  improve  competitiveness, 
whereas at the same time environment-friendly  production  and marketing metods should 
be encouraged, 

Whereas, as this  assistance should relate to the special  efforts  required  as a  consequence 
of the new  market  conditions,  objective  criteria  should  be flxed  to determine the  extent 
of such assistance, 

Whereas,  in  order  to  ensure  the  appropriateness  of  such  assistance  with  regard  to  the 
objectives  pursued,  this  assistance  should  be  temporary  and  gradually  and  smoothly 
phased out; 

Whereas,  to  facilitate  implementation  of  these  provisions,  a  procedure  involving  close 
cooperation between the Member States and the Commission should be established, 

HAS ADOPTED THIS  REGULATION 

Article 1 

A  special  framework  for  technical  and  financial  assistance  is  hereby  established  to 
assist  traditional  ACP  suppliers  of  bananas  to  adapt  to  the  new  market  conditions 
following  the  amendments  introduced  to  the  common  organisation  of  the  market  in 
bananas by Regulation  (EC) No 

/98. 

2.  This  special  framework  shall  be  implemented  for  a  period  not  exceeding  ten  years 

starting on  1  January  1999. 

For the purposes of this Regulation: 

Article 2 

"traditional  ACP suppliers" means the ACP States listed in the Annex 

-  "bananas" means fresh  or dried bananas covered by CN code 0803 00 19. 

I.  Traditional ACP suppliers shall be eligible for technical and financial  assistance 

Article 3 

-4 

2.  Technical  and financial  assistance shall be granted to contribute to the  implementation 
of  programmes  in  the  banana  sector  aiming  at  improving  competitiveness,  in 
particular through: 

- 

- 

increasing productivity, without causing damage to the environment, 

improving quality, 

-  adapting  production,  distribution  or  marketing  methods  to  meet  the  quality 

standards provided for in Article 2 of Regulation (EEC) No 404/93, 

-  establishing  producers'  organizations  which  have  as  their  objective 

the 
improvement  of  the  marketing  and  competitiveness  of  their  products  and  the 
development  of  systems  for  certifying  environment-friendly  production 
methods, 

-  developing  a production  and/or marketing  strategy  to meet  the requirements  of 
the  market  in  the  Community  in  the  light  of  the  common  organisation  of  the 
market in bananas, 

-  assisting  with  training,  market  intelligence,  the  development  of  environment-
friendly  production  methods,  improving  the  distribution  infrastructure  and 
improving commercial and financial  services to banana producers. 

Article 4 

The  Commission  shall  decide  on  the  eligibility  of  the  programmes  referred  to  in 
lt  shall 
Article  3  after  consultation  with  the  traditional  ACP  suppliers  concemed. 
also  take  into  account  the  consistency  of  the  envisaged  programme  with  the  general 
development  objectives  of  the  ACP  State  concerned  and  its  impact  on  regional 
cooperation with other banana producers, in particular the Community producers. 

Article 5 

Within  the  global  amount  available  for  a  given  year,  the  Commission  shall  fix  the 
maximum  amount  available to each  traditional  ACP supplier  for  the  financing  of  the 
level  of 
programmes  referred 
competitiveness  and  the  importance  of  banana  production  for  the  economy  o(  the 
country  concerned. 

in  Article  3(2),  taking 

into  account 

the 

to 

In  order  to  ensure  the  appropriateness  of  the  technical  and  financial  assistance  with 
regard  to  the  objectives  pursued,  a  reduction  coefficient  of  up  to  15  %  shall  be 
applied,  where  appropriate,  from  the  year  2004,  to  the  level  of  assistance  made 
available  to  an  individual  ACP  traditional  supplier  in  the  previous  year,  where  no 
sufflcient  increase in competitiveness can be observed. 

- s 

Article 6 

The financial  support provided under this  Regulation  shall  be  in  addition  to any  funds 
available for traditional ACP suppliers pursuant to the provisions of the fourth ACP-EC 
Convention. 

Article 7 

1.  Detailed  rules  for  the  application  of  this  Regulation  shall  be  laid  down  by  the 

Commission. 

2.  The Commission shall be assisted by a committee composed of the representatives  of 

the Member States and chaired by a representative of the Commission. 

3.  The  representative  of  the  Commission  shall  submit to  the  committee  a draft  of  the 
measures  to be taken.  The committee  shall  deliver  its  opinion  on the draft  within a 
time limit which the chairman may lay down according to the urgency of the matter. 
The  opinion  shall  be  delivered  by  the  majority  laid  down  in  Article  148(2)  of  the 
Treaty  in the case of decisions  which the Council  is required to adopt  on a proposal 
from the Commission.  The votes of the representatives  of the  Member States within 
the committee shall  be weighted in the manner set out in that Article.  The chairman 
shall not vote. 

4.  The Commission  shall  adopt the measures  envisaged  if  they  are  in accordance vvith 

the opinion of the committee. 

5.  If the measures envisaged are not in accordance with the opinion of the committee, or 
if no opinion is delivered, the Commission shall, without delay, submit to the Council 
a proposal relating to the measures to be taken.  The Council  shall  act by a qualified 
majority. 

6.  If,  on the  expiry  of  a period  of  three  months from the  date  of  the  proposal,  the 
Council has not acted, the proposed measures shall be adopted by the Commission 

Article 8 

This Regulation shall  enter into force  on the third day following  its publication  in the 
Official  Journal  of  the  European Communities.  It shall  be  binding  in  its  entirety  and 
directly applicable in all Member States 

Done at Brussels, 

For the Council 

The President 

6-

List provided for  in Article 2 (1) 

Traditional  A CP  suppliers 

ofbananas 

A N N EX 

Belize 

Cameroon 

Cape Verde 

Cote d'lvoire 

Dominica 

Grenada 

Jamaica 

Madagascar 

Saint Lucia 

Saint Vincent and the Grenadines 

Somalia 

Suriname 

7-

FINANCIAL  STATEMENT 

1. Budget Heading:  B7 - 871:  Compensation for ACP banana producers 

2. Title: Special framework  of assistance for traditional ACP suppliers of bananas 

3. Legal Basis: Article  130w of the Treaty, 
Proposal  for  a  Council  Regulation  establishing  a  special  framework  of  assistance  for 
traditional ACP suppliers of bananas (COM..) 

4.1.  Aims  To provide  a  framework  of  financial  and technical  assistance  to  traditional 
ACP  banana  suppliers  in  order  to  assist  their  adaptation  to  the  new  market  conditions 
following the amendments to be introduced to the common organisation of the market  for 
bananas. 

4.2. Duration  lOyears from  1  January  1999. 

5. Classification of the expenditure 

5.1. Non Compulsory expenditure (DNO) 

5.2. Dissociated appropriation (CD) 

5.3. not applicable 

6. Type of expenditure 

-  100%subsidy 

- no reimbursement 

- the action does not imply a modification  of the receipts 

7. Financial impact 

7.1  The  application  of  the  previous  market  management  system  bridged  the  gap  in 
competitiveness  which  exists between  ACP bananas  and those.from  the  dollar  zone, by 
the operation of an import licensing system which transferred a quota rent from  the dollar 
banana marketing chain  to the banana ACP  marketing  chain.  Using  the  latest  available 
market  intelligence,  this  gap  in  competitiveness  equates  to  a total  of  45  MECU  for  the 
current marketing year calculated on the basis of the value of a import  licence  ($3-4/box 
of bananas, approximately  150 ecu/t)  and an  estimate  of the number of  licences sold by 
ACP  importers  (300 000 licences). The  findings  of  the  WTO  Panel  have now  prevented 
the  Commission  proposing  a  similar  market  based  system.  But,  in  order  to  give  the 
traditional  ACP  banana  producers  the  means  to  adapt  to  the  new  market  conditions 
caused  by  the  modifications  being  introduced  to  the  common  market  organisation  for 
bananas,  an  equivalent  aniount  should  be  made  available  for  these  new  market 
challenges.  The  results  of  the previous  aid  ^raiKeu  :o iradilional  ACP  banana  producers 
ur.der Council  Regulation  2686/94 (see para (>.° and t*?e annc:•-.} :x  xcntrated  on the most 

easily  achievable  improvements  within  the  sector.  Further  increases  in  the  level  of 
competitivity of ACP production  will thus require greater effort,  and more long-term and 
more  complex  projects.  The  global  amount  to  be  made  available  will  be  allocated 
between the twelve ACP traditional banana producing countries on the basis of their level 
of  competitiveness  and the  importance  of  banana  production  to  the  economy  of the 
country  concemed.  In order  to ensure  the appropriateness  of the  assistance,  a reduction 
co-efficient  of up to 15% shall be applied, where appropriate, from  the year 2004, to the 
level  of  assistance  made  to  an  individual  supplier  where  no  sufficient  increase  in 
competitiveness is observed. 

It is clear that the new risks for traditional ACP banana supplies will be caused as a result 
of a decision  by the EU within  the trade sphere and flowing  out of the common  market 
organisation  for bananas  of the Common  Agricultural  Policy.  It is difficult  to justify 
therefore  the use of  financial  resources,  earmarked  for  development  action  under the 
Lome  Convention,  for  funding  measures  made  necessary  by  modifications  to  the 
common  market  organisation  for bananas  that  result  from  Community  commitments to 
the  World  Trade  Organisation  nevertheless,  future  financing  from  the EDF is nol  lo be 
excluded  within  the framework  of the  new partnership  agreement  with  ACP countrics 
presently  under  preparation.  This  proposal  does  hot  follow  the rationale  of  long-term 
programme  aid  leading  to  major  structural  and  economic  reforms  and therefore  any 
funds  available  under  this  special  framework  must be additional  to those  funds  already 
allocated  for development  projects  through the EDF for diversification  and restructuring 
of the  agriculture  sector  and the economies  of the  12 traditional  banana  producing ACP 
states.  Moreover,  especially  for  some  of  the  smaller  banana  producing  islands,  the 
allocations within their national  indicative programmes, financed  out of the  Development 
Fund, are on a much smaller scale than the amounts  envisaged  as being  necessary  under 
this proposal. 

7.2 

Allocation 

1999  2000  2001  2002  2003  2004  2005  2006  2007  2008  Total 

Total(mecu)  45 

45 

45 

45 

45 

38.2  32.5  27.6  23.5  20 

366.8 

7.3. Not applicable 

7.4 Schedule of payments 
year 

1999  2000  2001  2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 Total 

commit  45 
meats 
payments 

45 

45 

45 

45 

38.2  32.5  27.6  23.5  20 

360.8 

1999 

13.5 

27 

4.5 

2000 

2001 

Others 

13.5 

27 

4.5 

13.5 

27 

4.5 

45 

45 

45 

Total 

13.5 

40.5 

4"5 

45 

45 

42.9  37.1  31.6  26.9  22.9  14.4  2 

366.8 

Grand total  366.8 MECU 

Explanation  of the payment method: the aid engaged  for  each financial year will be paid 
out over three years (30% in year  1; 60% in year 2; and  10% in year 3) 

8. Anti-fraud  measures 

There  will  be  control  by  the  Commission,  audits  by  certified  accountants  and  overall 
control by the Court of Auditors 

9. Cost effectiveness  of the measures 

9.1.  The  effectiveness  of these measures will  be judged  by not  only  the maintenance of 
the ACP traditional suppliers'  current share of the EU banana market  under the  modified 
market conditions but also an improvement of the competitiveness  of the traditional  ACP 
bananas vis a vis dollar bananas from  Latin America. 

The  proposal  aims  to  increase  the  competitiveness  of  ACP  production  by  funding 
projects  which  are  designed  to  increase  productivity  whilst  respecting  the  environment. 
improve  quality,  develop  new  production  and marketing methods  and  strategies  for  the 
changed  market  conditions,  assist  in  training,  improve  transport,  and  distribution 
infrastructures. 

The major beneiiciaries of this scheme will be the ACP traditional banana producers. 

9.2 
The  EU's  Lome commitments on  bananas 

The Lome Convention requires the EU to provide preferential  access to all ACP bananas. 
The EU is also required to provide additional  benefits to traditional  ACP bananas  in that, 
in respect  of  its banana exports to the Community  market,  no ACP  state shall  be placed 
as regards access to its traditional  markets and its advantages  on those markets,  in  a less 
favourable  situation  than  in  the  past  or the  present.  It was  through  the  common  maiket 
organisation  that  the  EU  had  sought  to  implement  its  obligations  to  ACP  banana 
producers as required by the Lome Convention. 

Regulation  2686/94  establishing  a  special  system  of  assistance  for  traditional  ACP 
banana  suppliers 

Following  the  introduction  of  the  common  market  organisation  for  bananas  on  1 July 
1993,  it  was  accepted  that  special  effort  would  be  required  by  traditional  ACP  banana 
producers, in order  for  them to move into a position  where they  could compete within a 
single market and to cushion them from  a drop in income as a result of a more  liberalised 
market.  To  this  end,  the  Council  adopted  a  Regulation  (EC  No  2686/94)  establishing  a 
special system of assistance to traditional  ACP suppliers of bananas providing  for  income 
support and technical  assistance. This system was limited in duration  from  1  July  1993 to 
28  February  1996  (ultimately  extended  to  31  December  1996  by  Regulation  EC  No 
2320/96).  Although  Council  Regulation  2686/94  was  agreed  in  October  1994  (some  16 

10 

months  after  the  introduction  of  the  single  market),  many  projects  have  been  slow  to 
come on stream. There have been a number of reasons for this including the fact that this 
was  a  completely  new  type  of  programme  which  was  unfamiliar  to  all  those  involved, 
new  projects  had  to  be  designed  drawing  on  a  number  of  interested  players  -  DGVIII 
officials,  Delegations,  ACP  Governments,  ACP  marketing  organisations,  ACP  Banana 
Growers Associations  etc, tenders needed to be launched,  contracts  needed to be  agreed 
and coherence was necessary  between  these projects  and the overall  development  policy 
of each ACP state concerned. 

The following  table indicates where the  funds  have been  allocated  (for  more details  see 
the annex): 

ACP State 

1994 

IS 

T.A 

1995 

IS 

T.A 

1996 

IS 

T.A 

Belize 
Cameroon 
Cape Verde 
Cote d'lvorie 
Windward Islands 
Jamaica 
Suriname 
Total 

2.96 

7.28 
1.74 
1.99 

13.97 

2.22 
6.25 
0.54 
6.34 
7.72 
3.05 
3.7 
29.82 

1.49 

1.05 
4.5 
0.3 
16.68  4.5 

5.77 

23.94  10.3 

(all figs in MECU, I.S = income support, TA= techncial  assistance) 

A project  undertaking  an  assessment  of  Regulation  2686/94  has  recently  been  launched 
which  will  include  an  audit  of the engaged  funds.  This  assessment  will  however  not  be 
available  for  several  months  but  for  a "snap shot"  of  the  present  situation,  of  the  more 
important traditional ACP banana suppliers, is detailed in the attached annex. Even at this 
stage,  it  is  clear that  those projects  already  completed  are having  a  veiy  posititve  effect 
on the level  of competititiveness  of traditional  ACP banana production  and  are pointing 
to which areas of the sector require further  investment in new projects. 

The proposed amendments to the common market organisation for bananas 

The amendments now being proposed by the Commission to the common  organisation  of 
the market  in bananas  as a result  of the WTO Panel  proceedings, will  substantially  alter, 
once  again,  the  market  conditions  for  traditional  ACP  suppliers  and  jeopardise  their 
the  gap  in 
continuing  viability, 
competitiveness  between  Latin  American  and ACP bananas  will  reappear  and  traditional 
ACP banana  suppliers  will  be  unable to maintain  their  presence  on  the  EU market  if no 
additional  effort  is undertaken  to fill this gap. 

is  taken.  In  particular, 

if  no  specific  action 

In  order  to  ensure  that  these  new  measures  will  be  compatible  with  both  the  EU's 
development  policy  and  the  EU's  WTO  obligations,  it  would  not  be  appropriate  to pay 
direct  compensatory  aid  to  individual  ACP banana  producers.  These  new  measures  will 
however assist traditional  ACP suppliers of bananas in adaptirig to the new conditions on 

11 

the market and in particular  to increase the competitiveness  of this production.  The level 
of  the  technical  and  financial  assistance  made  available  will  be  directly  related  to  the 
competitivity  gap  observed  while  taking  into  account  the  importance  of  the  banana 
production  for the economies of the country  concerned.  Moreover,  in order to ensure the 
appropriateness  of  such  assistance,  it  will  be  limited  in  time  -  a  period  of  10  years  is 
considered appropriate in this respect - and degressive. 

The  main  risk  factors  that  need  to  be  taken  into  account,  which  may  result  in  the 
objectives  not  being  fulfilled  are  the  structural  problems  in  the  banana  industries,  the 
general economic position and the natural constraints in some of the ACP regions such as 
hurricanes (see the country details in the attached annex) 

9.3  The  success  of  these  measures  will  be  evaluated  on  the  basis  of  the  increased 
competitiveness of traditional ACP banana production.  This will be assessed by the level 
of production  per unit of land (which  is influenced  by the average farm  size)  production 
by unit labour costs and ultimately unit production  costs (farm  gates prices, FOB and CIF 
prices),  and the overall level and value of exports. 

The measures  will  be evaluated  on  a yearly  basis  and  an  assessment  will  be required  to 
see by how much each ACP state has improved its competitiveness. 

To  conclude,  the  funds  provided  under  Regulation  2686/94  (approximately  74  MECU 
over  three  years)  have  started  to  yield  important  gains  in  productivity,  efficiency  and 
therefore  competitivity.  Further  such  gains  will  be  much  harder  to  achieve,  not  least 
because the "easiest" projects  both  in terms of design,  organisation, simplicity  and speed 
of  results  have  been  completed  first.  This  further  request  for  funding  not  only  relates 
therefore  to  the  need  to  adapt  to  a  further  change  in  market  conditions  but  also  an 
awareness  that  any  projects  to  be  undertaken  in  this  sector  will  have  more  longer  term 
objectives and subsequent  effects. 

10. Administrative resources 

The  co-ordination  of  the  work  on  this  proposal  will  be  handled  by  the  post  holder  in 
DGVIII, A4.  The desk  officers  and delegation  staff  who  are still  implementing  projects 
under  Regulation  2686/94  will  soon  be  completing  this  work  and  will  have  the  spare 
capacity to take on the extra tasks associated with the execution of this proposal. 

Consequently, no extra posts will be required for this work. 

12 

Annex 

An assessment of the current state of play in the most important traditional ACP 
banana producing countries following the actions undertaken through Council 
Regulation 2686/94 

1. BELIZE 

The two programmes  funded  by 2686/94 (totalling  3.27  MECU  for  technical  assistance) 
in  Belize  were  established  too recently  for  there  to have been  an  official  assessment  of 
the success  of the projects  and of their impact on the industry  or the other  beneficiaries. 
The main components were. 

- Road maintenance, packing stations, transport equipment, port storage facilities,  airstrip 
extensions, flood protection; 
- Farm housing infrastructure  improvement, training, and technical assistance. 

AU these  elements  will  make  their  contribution  to  a greater  efficiency  and  longer  temi 
sustainability  of  the  banana  industry,  but  for  the  moment  there  is  no  quantifiable  data 
available to assess the impact. The Banana Growers Association  of  Belize have indicated 
their determination to continue to lower production  costs and to enhance productivity  per 
acre  (by  eliminating  low quality  land).  Yields per acre have already  improved  from  290 
boxes  (5.3  tons)  per  acre  in  1992 to  650  boxes  per  acre  now,  and  their  objective  is  to 
reach  a yield of  1,000  boxes per acre which  is comparable with  that found  in  plantations 
in Central America.  The total quantity of banana production  should however not increase 
by the same rates, on the contrary: the aim is an economically viable production. 

Further  assistance  is therefore  required,  in particular  aid to finance projects  with  longer 
term benefits  for the overall sustainability of the industry. 

2.  CAMEROON 

1.  Cameroon  received a total of  15.2 MECU through 2686/94 as follows : 

Income support: 

Financial  and Technical 
Assistance: 

1994  : 
1996: 

1995: 
1996: 

2,957,884 ECU 
1,491,794 ECU 

6,250,000 ECU 
4,500,000 ECU 

2.  The  funds  were  divided  on  a  pro  rata  (production)  basis  among  the  four  industrial 
plantations  with  some  2%  going  to  ASSOBACAM  (the  industry's  professional 
organisation  for industry wide studies/support). 

3.  To  date some  90 % of  the total  funds  available  have  been  committed  with  payments 
reaching  80 % in respect of 26 Protocols, as follows: 

13 

Incom 

e support: 

FTA: 

1994: 
1996 
1995 
1996 

Commitments 
99% 
88% 
89% 
80% 

Payments 
95% 
86% 
77% 
72% 

4. The Community's support (focused  on improving productivity and quality) is only part 
of  a programme  involving  efforts  by the  industry  itself  as well  as by  government.  The 
principal  actions  financed  by the Community have concerned : 

Variety and quality  improvement: 
Irrigation  schemes: 
Farm management techniques  : 

53 % 
15% 
9 % 

5.  Already  some  17  operations  have  been  completed  (9  in  respect  of  1993  Income 
Support, 3 in respect of FTA 95, 3 in respect of FTA 96 and 2 in respect of  1995 lncome 
Support). 

reduction 

in  costs.  The  most 

6.  The  main  plantations  have  adopted  a restructuring  programme  aimed  at  achieving  a 
substantial 
through  a 
rationalisation  of  maritime  transport  arrangements  which  will  lead  to  a  50  FCFA/kg 
reduction  on  an  item  which  represents,  on  its  own,  30  %  of  the  total  C1F price.  The 
principal  grouping  (60  %  of  production)  has  prepared  a  30  billion  FCFA  (50  million 
ECU) investment programme over the next three years which aims at achieving a halving 
of  costs  by  the year  2005.  On  its  side,  the govemment  is taking  steps  to  rationalise  the 
Port of Douala thereby eliminating serious  bottlenecks. 

impact  comes 

immediate 

7.  While it is too early to give an accurate picture (much of the impact will  only become 
apparent  in  the  medium  term)  it  is  clear  that  already  there  have  been  substantial 
improvements.  For  example, the  improved  irrigation  schemes  have  increased  yields  by 
up to  35 %,  improved  spraying  methods  have reduced  costs  by  2,5  FCFA/kg while  the 
variety  improvement  programme  (involving  the introduction  of a homogeneous  variety) 
has  increased  both  productivity  and  improved  quality.  Overall  it  is  estimated  that  the 
farm  gate  price  has  fallen  from  115 FCFA/kg  in  1992/931  to  95  FCFA/kg  in  1997/98 
while the FOB price has fallen  from 271 FCFA/kg to 237 FCFA/kg in the same period. 

8.  As  regards  quality  in  1992/93  only  60%  of  exports  were  classified  as  "Categone 
Extra" -the top quality - with 30% in "categorie  1" and  10% in "categorie 2".  In  1997/9S 
80% is classified  as "Categorie  Extra" with the remaining 20% in "Categorie  1" 

3. COTE DTVORIE 

1.  Cote  d'lvoire  has  received  a  total  amount  of  34.801.935  ECU  under  Regulation 
2686/94: 

Income support  1994 

- 

7.278.530  ECU 

rccalculatcd in post-1994 dcvalucd  FCFA 

14 

Technical assistance  1995 

6.340.000 ECU 

Technical assistance  1996 

4.500.000 ECU 

Income support  1996 

- 

16.683.405 ECU 

2. The on-going programmes concern: 

-  Electrificationofproductionsites 

- 

rebuilding of tracks and access roads; 

-  rebuilding of the fruit wharf; 

- 

Installation  of a vitroplant laboratory; 

-  Contribution  for purchase of plantation equipment; 

-  Financing of a guarantee fund  for transportation; 

-  Accompanying measures (technical  assistance, studies, mapping...). 

3.  Unfortunately  not all projects  have progressed  at the same speed  and in particular  the 
important  electrification  and fruit  wharf  reconstruction  projects  have  encountered  some 
technical  delays because of their complexity. 

4.  Given  these  constraints,  the  overall  effects  of  these  projects  are  not  yet  measurable. 
However,  early  results  indicate  that  the  objective  of  reducing  production  costs  by  30% 
will be achieved and that the associated improvements  relating to transport  liberalisation 
and handling  and  packaging  costs have  already  substantially  increased  competitfvity  by 
reducing such costs from  50% to about 30% of the CIF price of bananas. 

4.  JAMAICA 

In  Jamaica,  Regulation  2686/94  has  funded  two  income  support  programmes  (total  of 
ECU 7.77 million) and technical  & financial assistance of ECU 3.05 million. 

The  first  income  support  programme  (called  also phase  I)  started  in  June  1996 and  was 
completed  in  Sept.  1997.  It  was  focusing  on  agricultural  input  supplies,  sigatoka  (an 
endemic  disease  of  the  banana  plant)  control  and  water  management.  A  final  report  is 
currently being prepared  and an independent  evaluation  is foreseen  early this year (Terms 
of reference  are under preparation  with the NAO). However some preliminary  results  are 
already  available  in  that  agricultural  inputs  are  now  available  at  significantly  reduced 
prices, revolving  funds  are thus established  enabling  small  farmers  to have access  to  the 
funds  under  favourable  credit  conditions.  The  sigatoka  control  team  is  functioning  and 
recciving  ever  increasing  demand  (additional  teams  were  formed  under  phase  II 
program), and 400 acres have been idcntified  for the water management  component. 

Phase II has therefore  been designed as a follow-up to phase I, comprising more sigatoka 
control and water management activities, supply of fertilisers  and technical  assistance. 

15 

Phase III is too recent for an assessment; the agreement was only signed in March 97 and 
the transfer  of the funds  (another income support programme) took place in June  1997. 

Experts  agree that higher  levels  of productivity  and quality  can be  achieved  in  Jamaica, 
but only on a longer term basis, with continued efforts,  by in particular, improvements of 
sigatoka  control  on  small  farms  and  improvements  in  fruit  quality.  This  cannot  be 
achieved with a 3-year programme of some ECU  10.8 million. 

5. SURINAME 

Support totalling ECU 3.7 million has been available under Regulation 2686/94 of which 
ECU 200,000 was earmarked for  a feasibility  study.  These funds  were identified  as part 
of  a  comprehensive  modernisation  programme  of  one  of  SURLAND's  two  banana 
plantations,  Jarikaba  (1380  Ha  gross  area  of  which  1100  planted),  near  the  capital 
Paramaribo. Total cost of this modernisation  is ECU 9.963 million, shared by 3 partners: 
Government(GOS)/Surland  -  ECU  2.226  million  (labour,  equipment  and  pumps);  the 
private  company  Fyffes  -  ECU  4.237  million  (irrigation  scheme  for  1300  Ha);  the  EU 
funds  from  2686/94 - ECU 3.5 million, 

to 

the 

The  EU  intervention  has  2  main  components:  a  technical  assistance  programme  lo 
contribute 
lo  monitor 
implementation  of our project  which  comprises the supply  and  installation  of  cableways 
(on  1300  Ha)  and  packing  station  equipment;  and  the  development  of  a  50  Ha 
pilot/model plantation. 

improvement  of  productivity  and  quality,  and 

Implementation  has  suffered  extreme  delays  at  almost  all  stages  of  the  project  - social 
unrest,  prolonged  difficulties  at  the  level  of  the  Surland's  top  management,  problems 
with the supply  tender,  both  in terms of  overruns  and with regard  to respect  of  rules of 
EU  origin.  But,  the  contract  is  finally  due  for  signature  in  the  third  week  of  January 
1998. 

The  new  cableways  and  packing  stations  will  indeed  play  a  key  role  in  quality 
improvement  and  complement  the productivity  drive  which  is  expected  to  be  achieved 
through  the irrigation  system which  is being  installed  by  Fyffes.  The old  cableway  was 
indeed identified  as the main source of deterioration of fruit  quality. 

6. THE WINDWARD  ISLANDS 

The  funds  allocated  to  the  Windward  Islands  under  Regulation  2686/94  totalled  ECU 
1.743.278  for  income support  and  ECU  7.720.000  for  technical  assistance.  These sums 
were  the  object  of  transfer  decisions  signed  in  December  1995  and  were  available  for 
disbursement  throughout  1996  (except  for  Dominica's  income  support  which  due  to 
unforeseen  problems  within  the Commission's  internal  procedures  was  only  transferred 
in May  1997). 

Income support 

The  funds  allocated  for  income support  were applied  to the financing of  comprehensive 
rehabilitation  programmes  (bllowing  the  hurricanes  and  tropical  storms  in.94/95  This 

16 

included  the  Farm  Productivity  and  Quality  Enhancement  programme  in  Dominica,  the 
Restoration of viability within the banana based agriculture sector project in St Lucia and 
the Banana industry development programme in St Vincent. 

Technical  Assistance 

The  ECU  7.720.000  technical  assistance  facility  available  to  the  Windward  Islands 
provides  for  the financing of  a long-term  (3 years)  multi-disciplinary  consultancy  team, 
to  assist  WIBDECO  and  the  Banana  Growers  Associations  to  implement  an  industry-
wide  restructuring  programme,  to  bring  about  the  necessary  changes  in  production, 
management, government  and marketing, to achieve a core and lean  industry  capable of 
competing  in  a  liberalised  market.  The  facility  also  provides  for  the  financing  of  the 
services  of regional  co-ordinator,  to assist the donors  in  the elaboration  of  an  assistance 
strategy and in the co-ordination  of the various financing instruments and programmes in 
support of the Windward  Island banana industry.  Both Technical  Assistants mobilised in 
January  1997 and are fulfilling  their goals. 

Quantifiable Results 

In  the  case  of  the  Windward  Islands,  the  key  objective  pursued  under  the  programmes 
benefiting  from  funds  under 2686/94, e.g.  to rehabilitate  production  after  the  1994/1995 
natural  disasters, have been achieved. 

As  a result  of  these  activities  the  Windward  Islands  exports  in  1996  showed  a modest 
increase  as  compared  to  exports  in  1994  and  1995  whereas  the  estimated  productive 
acreage  has  been  reduced  from  12.618  in  1994  to  6.000  in  1996.  However,  during  the 
first 9 months of  1997 exports  fell  to  volumes  38% lower than  forecast.  The  combined 
effect  of  the  unfavourable  signs  deriving  from  the  WTO  challenge  to  the  EIJ  banana 
regime and  the high  quality  standards  imposed  by the  industry  forced  less  efficient  and 
marginal  farmers to abandon production. 

A  very  positive  result  from  the  implementation  of  the  restructuring  programme  is  the 
steady  rise in the average quality  of Windward  Island  fruit.  During the first  8 months of 
1997  the  average  quality  scores  for  the  Windward  Islands  were  steadily  above  80%, 
reaching  85 % during  the last three months  of the period,  as compared  to an  average o\' 
76% for the first three months of  1996. 

Future Areas of Support for the Special Framework of Assistance 

The  securing  of  a  future  for  the  Windward  Island  banana  export  industry  requires  the 
continuation  of  substantial  investments  to  increase  productivity  and  quality.  lrrigation, 
drainage,  access  roads,  packaging  and  shipping  facilities  are  some  of  the  areas  at 
production  level requiring  substantial  investments.  Further  investments  may  be  required 
in  order  to  address  substantial  inefficiencies  at  the  management,  govemance  and 
marketing levels. Stabex funds  are being programmed to achieve the macroeconomic and 
sectoral  reforms  necessary  to promote economic diversification  and to reduce social  and 
economic dependency on banana exports. 

17 

ISSN 0254-1475 

COM(98)  5fmal 

DOCUMENTS 

EN 

03  11  oi 

Catalogue number  :  CB-CO-98-023-RN-C 

ISBN 92-78-30224-4 

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