Top Trade Lawyer doubts feasibility of East African Banana Exports to Europe - PART 3 of 5 | Voice of America - English
The European Union is the world?s largest banana importer, but only four percent of its bananas currently come from Africa. Central and Latin American countries dominate the global banana trade. Recently, though, those involved in Africa?s banana industry ? such as farmers and international agricultural organizations ? began initiating plans specifically for East African growers to sell more of the fruit to European buyers. A leading trade lawyer has, however, cast doubts on the wisdom of such strategies.
?Basically what a farmer wants is to sell more bananas, get higher pricesfor these bananas, and also he wants to reduce his costs and increase his productivity.In Africa specifically, there are huge blocks to overcome each of those,?explains Thomas Dubois, a scientist with the Consultative Group onInternational Agricultural Research. ?Farmers cannot sell more bananas because they don?t have access tomarkets. This is mainly a result of lack of transparency in terms of prices andalso the fact that they don?t have access to credit. So they stay small. Theycan?t grow,? he explains. He says once an African farmer sells his banana bunch to a middleman,this person sells it to another middleman, ?who sells it to another middlemanand so on and so on, until it finally reaches the market. So there are a lot ofpeople taking the premium from the farmer who produces the bananas.? As a result of this situation, concerned parties are looking at new waysfor banana producers in Africa to make more money, and one of these methodsinvolves exports to Europe ? the biggest banana market in the world. Bernard O?Connor is a veteran lawyer based in Brussels, a city hedescribes as the ?political and regulatory capital? of Europe. ?My main area of activity is administrative and trade law. In thatcontext I have done a lot of work on agricultural products ? both moving intoand out of the European Community,? the author of a number of legal texts tellsVOA. ?I concentrate on bananas because, for many years I have been the lawyerfor an American company called Dole.? Dole Food Company is the largest banana firm in the world, growing and/orselling the fruit in about 100 countries. At a recent conference in Mombasa held to investigate possibilities toexpand African banana production, O?Connor addressed participants on thefeasibility of African farmers exporting bananas to Europe. He says what particularly ?stimulated enthusiasm? from his audience ?which consisted of farmers themselves, government officials and internationalagricultural researchers ? was his explanation of ?some of the difficulties inmarketing and selling bananas in the European Community, and the level ofcompetition there is between bananas from different sources.? O?Connor says he was ?rather realistic? about the chances of specificallyEast Africa ?competing in realistic terms on the short term? in the Europeanmarket. Explaining his view, the lawyer continues, ?I saw a number of presentations (at the conference)- even from well known consultancy firms - suggesting that it would be possiblewithin the short term to build up a competitive export business in bananas fromAfrica. I did not see it (that way) and I still do not see that that ispossible if East Africa wants to compete on the regular banana market.? O?Connor?s convinced that East Africa has an ?awfullong way to go? before the region can develop a viable export business toEurope. ?East Africa is just so far further back in thedevelopment of an industry. It doesn?t even have the size of farms that youmight need; it certainly doesn?t have the logistics in place,? he comments. O?Connor says most African banana farms are ?simplytoo small? to compete with the massive production and corresponding lower costsseen in places like Latin America. ?There is no way that a smallproducer can compete with a large producer. If you are farming one hectare, andyour competitor is farming a thousand hectares, clearly the cost of productionfor one banana is a lot less on the bigger farm than it is on the smaller farm,?he reasons. But O?Connor adds thatlack of size is not the only issue confronting Africa?s attempts to exportfruit to Europe. He says there are also ?logistics? to be considered. ?To ship bananas to theEuropean Community will take a number of weeks. And the Latin Americans havedeveloped a virtual conveyor belt of ships which go backwards and forwardsacross the Atlantic bringing fresh bananas to the European Community in a veryefficient way.? He stresses though thatwith regard to African banana exports, a distinction must be made between thechallenges facing the continent?s eastern and western regions. ?East Africa has a problemin that it does not have the plantation-type farms which reduce the cost ofproduction, and it does not have the logistical infrastructure in terms ofshipping, which would allow it to have efficiencies in transport. And on boththose two things, it will find it very difficult to compete with Latin America,?O?Connor says. But he?s convinced thatWest African banana producers have a ?muchgreater possibility of making it, because they already have the traditions,they already have the sizes, they already have a lot of the logistics in place.And so (in West Africa) it is a question of fine tuning an existing system tomake it more efficient and to make it more competitive with the LatinAmericans.? O?Connor maintains that, despite certain ?political difficulties? and?soil productivity problems,? West Africa has the economies and the size to beable to maintain its position in the market. Some African farmers have previously claimed that it?s in the interestsof certain economic blocs and large banana enterprises to prevent them from expandingand exporting more produce, in order to minimize potential competition to them. But O? Connor dismisses these allegations. ?In my experience of traveling around East Africa, the biggest culpritmight just well be (lack of) government investment in infrastructure. I don?tsee that sort of investment in roads, in ports, in logistics, that you wouldneed and which is often provided by government that would allow entrepreneurialfarmers to work with and to develop an export industry.? Yet despite these challenges, the trade lawyer says it ?seems veryobvious? to him that East Africa does have afuture in banana production ? albeit in the growing and export of ?niche? produce. .If East Africa (does) want to compete (on the European banana market),maybe there (is) a business to be developed in terms of niche markets ? fairtrade bananas or organic bananas, or?. finger (small) bananas,? O?Connor says,before reiterating, ?but if they want to go on to the (mainstream) bananacommodity market, I do not see that there is much chance of developing any sortof business in the short term.? Ultimately the top trade lawyer advises againstAfrica basing the development of its banana industry on an export market. Headvises African authorities and farmers to ?rather concentrate on home? for thetime being. ?There is a large consumption of bananas in Africa; there is a largemarket. And I think that by developing that market, African farmers and Africanentrepreneurs will develop the skills that are needed so that possibly in thefuture they could develop exports.?