Cake Mama Coca Or?:

Alternatives Facing The Caribbean

Banana Industry

By:

Cleopatra Christopher

Lizette Elie

Joseline Alexander

Introduction

Chapter Objectives

• To establish a timeline of events detailing the industry’s peak and fall making reference to David Rudder’s, “Death of Banana” song.

• To give insight as it relates to the scope of the reliance on the banana industry .

• To give a detailed summary of the challenges faced by Caribbean banana producers.

• To describe the potential losses for the region. (What is at risk?)

Objectives Cont’d

• To address the possible impacts of different scenarios for the banana industry on the socio-economies of Caribbean banana producing countries.

• To discuss ways Caribbean banana production could be more competitive.

• To identify the scope of alternatives away from the banana industry.

• To present and address policy proposals aimed at the rise of alternatives.

Caribbean Banana Industry• Spanning from the early 1970’s to late 1990’s, this

proved the time period in which the industry peaked and ultimately declined.

• It was an export-led industry post-colonization.

• And the supply to the European market contributed to the majority of earnings on exports.

• The major exporters with particular regard to the English speaking Caribbean were:

DominicaSt. LuciaGrenadaSt. Vincent and the Grenadines Jamaica

Windward islands and the scope of reliance

on the banana industry• The Windward islands relied heavily on the success

of the industry.(Dominica, Grenada, St. Vincent and the Grenadines and St. Lucia).

• Agriculture according to A. Lewis at that time supported more than the lands could sustain thus the reliance.

• In some islands such as in Dominica the banana industry provided 60 % of all agricultural employment as far as in 1991.

• Banana was also the only year round crop which could provide a regular weekly salary to farm workers at that time.

Challenges facing Caribbean Banana

Producers

Why is the Caribbean banana industry at risk?

1. The formation of the Single European Market.

2. The development of a new European banana regime in the “EC Regulation 404/93”.

3. The catalytic force of the Latin American banana producers especially Chiquita’s lobbying against the preferential treatment given to the (ACP) states. They felt slighted in the new banana regime.

Challenges faced cont’d

4. The ripple effect of the trans-Atlantic trade war between the US and the EU.

5. The WTO Ruling on the incompatibility of the European banana regime with those of the global trade liberalisation policies.

What is at risk for West Indian Economies?

• The main risk and fear was the complete collapse of the banana industry.

• The fall in GDPs of the respective Windward Islands in turn, an increase in balance of payments deficit as a result of falling exports.

• The stability of the Eastern Caribbean dollar was also at risk.

• The multiplier effect would be interrupted and cash flow in the economy threatened.

Risks cont’d

• Employment in the region was also at risk. The banana industry provided a significant number of jobs and allowed for gainful employment in many of the households.

• In essence the social, economic and political stability of the Windward islands rested on the success of the banana industry.

The likely impacts of differing scenarios for the

banana industry on the socio-economies of

Caribbean banana producers.

Scenario 1: Full and immediate liberalisation of EU’s banana market.

• The Caribbean wouldn’t be able to compete on a global scale.

• The region cannot produce in large enough quantities to supply the EU market.

• Socially poverty and unemployment will become more prevalent in the Caribbean.

Likely Socio-economic Impacts Cont’d

Scenario 2: Reduced preferential access to 2005.

• Post-Lome Convention, the ACP states would need to transition into operating on a competitive market.

• This gives producers in the Caribbean producers time to adapt.

1. Quotas on ACP bananas would be removed but tariff system still set up. OR

2. Both the tariff and quota removed.

Over what time period will the decline

occur?

• Given the scenarios a visual is vivid enough that we can say scenario 1 is rapid. From zero to ‘n’ per cent.

• The other likely scenario however occurs over a gradual time period, giving ACP states time to adapt to the liberalisation of trade in the banana market.

The potential for enhanced competitiveness of

Caribbean banana production

• At present and in the past the Windwards are uncompetitive on the global market especially against the Latin American producers.

• In the past especially after 1993, with the introduction of the EU banana regime, potential was created for the restructuring of the Caribbean banana economy.

They still can today, by improving the quality of bananas as well as increasing output, given the emergence of new technologies.

Potential for enhanced competitiveness

cont’d

• Development of a strong Caribbean institution for banana production and export.

• Following A. Lewis’ strategy currency of the region at present can be devalued, though making imports more expensive, it will encourage other countries to buy agricultural produce, in turn, cutting cost structure.

i.e. Cost of labour

WIBDECO along with EU are engaging in assistance to standardize yields.

Potential for enhanced

competitiveness cont’d

• A product differentiation strategy may be employed.

• Lastly, systems must be put in place to record key industry data.

The scope of alternatives

1. The diversification of the agricultural sector.

The planting of different crops outside the banana industry.

2. The movement into new markets.

Tourism being one of the new major economic drivers. Sun, sand and sea package.

Policy proposals with regards to

alternatives

1. Continued and enhanced efforts to restructure the banana industry to achieve the desired levels of productivity also including, inter alia:

• Investment

• Sharing of best practices within and between banana producing islands.

• Regional ripening facilities to permit of regional consumption of banana output including in the tourism industry.

Cont’d

• Augmented regional transport infrastructure

(including by sea) to facilitate trade in bananas

and other agricultural products

• Enhanced efforts to develop agro-industries to

add value, and product differentiation, to

banana output.

Cont’d

2. More targeted marketing of Caribbean bananas, particularly in the UK.

3. Support for fair trade and organic banana initiatives.

4. Similar enhanced programmes as to that of bananas proposed above including organic products, but this time for agricultural diversification programmes.

Cont’d

5. Elaboration of a regional industrial policy and action plan for the introduction of alternative economic activities including community-based sustainable tourism development

6. Human resource development programmes to facilitate the above complex of proposals, as well as retraining fro displaced banana workers and farmers.