Caribbean Banana Growers
Lord Faulkner of Worcester:
As the noble Lord has explained, these are matters of huge significance. Indeed, the continuation of a banana business in some small Caribbean countries is literally a matter of life and death for them. I am a vice-chair of the parliamentary all-party British-Caribbean group. During my business career before I entered your Lordships' House, I was for more than 25 years an adviser to the Fyffes Group, the company that has imported Caribbean bananas to Britain for more than a century.
The Caribbean country that I got to know best was Jamaica, which at its peak in the 1930s was exporting more than a quarter of a million tonnes of bananas to the United Kingdom. By the late 1990s that had fallen to less than 90,000 tonnes and was down to 40,000 tonnes in 2002. But despite that, according to the Caribbean Banana Exporters Association, banana production, transportation and distribution still account for between 5 and 10 per cent of total employment in Jamaica and it is still second only to sugar in economic significance in the country's agriculture.
As we have heard from the noble Lord, Lord Newby, there are other Caribbean countries in the Commonwealth—particularly three of the four Windward Islands—that are almost wholly dependent on bananas for their economic existence, where they are grown on small family farms in remote and often difficult-to-farm areas. As the International Labour Organization has commented,
"no other economic activity in the Eastern Caribbean has similar multiplier-effects on employment levels".
So it goes well beyond the number of farmers who are just growing the fruit.
What we must appreciate is that the development of the Caribbean banana business throughout the 20th century, interrupted only in war-time, was a remarkable success story, which reflected credit on everyone involved in it: that is, the farmers who strove to improve quality and reliability; the packers, distributors and shippers; the companies—Fyffes, Geest, Jamaica Producers and others; and the governments of the United Kingdom and the Caribbean countries, which did everything in their power to ensure that this business flourished. Credit is also due, most importantly, to the British consumer who loves the Caribbean banana, which has so much more taste, is of much better quality and is of a much more convenient size than the huge rather tasteless object that comes to us from Latin America.
The key to all that has been protection through tariff quotas, giving the Commonwealth Caribbean countries and other members of the ACP the first crack at the European market through the Lomé agreement. That system worked reasonably well, even since the advent of the single market in Europe in 1993. It was not an easy deal to do. No other EU member had the same sort of post-colonial links that we had with banana-exporting countries, although the United Kingdom was able to find some common cause with France, which was a banana grower in its own right because of Martinique and Guadeloupe—as the noble Lord, Lord Newby, said—its overseas department territories in the Caribbean, and it also had former colonies in West Africa.
Five EU states operated no limits on the quantity of bananas they imported, and Germany managed to maintain an extraordinary arrangement whereby it imported bananas from anywhere it liked duty free. Despite these differences, the deal struck during the time of the British presidency of the EU—here John Gummer, the agriculture Minister at the time, deserves a great deal of credit for taking it through—has maintained some stability.
Levels of employment in the banana growing countries have continued to fall, but at least the business has survived. It has maintained supply to the point that in Britain the banana is now our favourite fruit. We Britons eat 10 kilograms a year. This morning, as I was having my breakfast banana, which weighed 15 grams, I calculated that the average consumption must be between 65 and 70 bananas per head. I probably eat rather more in a year, but those statistics make it by far the most popular fruit in this country. If the banana was promoted better, with a particular emphasis placed on more fair trade bananas of the sort that come from the Windward Islands in the way Switzerland does, I think that we would be able to sell even more.
Despite all those good things, as the noble Lord, Lord Newby, has told us, the 1993 agreement went wrong because of the challenge through the WTO. I have to say that I find the approach of the United States Administration to this matter absolutely extraordinary. There is scarcely a single banana grown commercially in the United States, aside from a few in Hawaii, but because the Latin American banana growing business is dominated by US multinationals, an action was taken under Section 301 of the US Trade Act at the instigation of Chiquita, which has 40,000 workers, nearly all of whom are in Honduras and Guadeloupe.
It is widely believed that the United States trade representative got involved as a payback for political favours, because it is well known that the boss of Chiquita, Mr Carl Lindner, had made huge political donations to both the Republican and Democrat parties. The US backed up its action with trade sanctions and, as we have heard, the World Trade Organisation upheld the US complaint and found against most of the measures taken by the EU to fulfil the commitment to the ACP countries under Lomé. Fortunately, a temporary agreement was reached in 2001 which retained the tariff quota system, but that expires at the end of this year and, as the noble Lord has explained, the EU now has to move to a single tariff or a tariff-only system.
The issue now, and the one which will determine whether there is to be any Caribbean banana export business in the future, is the level of that tariff. If it is set too low, it will simply disappear. The FAO has conducted an independent study and reckons that the tariff will need to be around 300 euros to leave import volumes unchanged, so the Commission's current proposal of 230 euros is clearly not enough.
We hear vague talk about "diversification" as a way out of poverty for destitute farmers, but it really does not help very much. Indeed, the attack made by the United States on the economies of poor countries in the Caribbean is particularly short-sighted as one of the consequences of wiping out the banana growing industries on those islands will be to increase the attractiveness of alternative, less desirable crops.
In March 1998, Oxfam published a paper entitled, A Future for Caribbean Bananas. On the threat to the preference arrangements for Caribbean growers it stated that:
"The significant achievements of the islands' governments in pursuing democracy and good governance would be severely threatened, as those in power struggled to cope with rising deprivation and social unrest. Low prices, together with the uncertainty over the future of the banana industry, have led to a loss of confidence among farmers. Some are already leaving the land, and unemployment is rising. There is a very real danger that farmers could resort to what, for many, would be their only economic alternative: illegal drugs.
"A plot with a few dozen marijuana plants on a smallholding will fetch up to 30 times more per kilo than a farmer's banana crop. It is reckoned that St Vincent can now count marijuana as its principal export crop. The cultivation is also . . . on the increase in Grenada and Dominica".
The article goes on to say that there is also a good living to be made from cocaine transhipment from Central America to the United States. So let us be quite clear what so-called "diversification" is likely to mean in a number of those countries.
I conclude with the words of the Minister of Foreign Affairs of St Vincent and the Grenadines, Mr Allen Alpian:
"Money and greed have been elevated to the status of a religion and care and concern are now regarded as a vice. Our future is now on a life support system. However, I am confident that our resourcefulness and faith will see us through".
I believe that it is our duty and that of our Government and the EU to support that resourcefulness and faith, and we must not let them down.
My Lords, I congratulate the noble Lord, Lord Newby, on raising this matter today. I very much hoped that he would go into some of the complexities of the tariff system because that would spare me the need to try to understand it and explain it to your Lordships. He has done that admirably, so my comments on the details of tariff references will be a little limited.
As the noble Lord has explained, these are matters of huge significance. Indeed, the continuation of a banana business in some small Caribbean countries is literally a matter of life and death for them. I am a vice-chair of the parliamentary all-party British-Caribbean group. During my business career before I entered your Lordships' House, I was for more than 25 years an adviser to the Fyffes Group, the company that has imported Caribbean bananas to Britain for more than a century.
The Caribbean country that I got to know best was Jamaica, which at its peak in the 1930s was exporting more than a quarter of a million tonnes of bananas to the United Kingdom. By the late 1990s that had fallen to less than 90,000 tonnes and was down to 40,000 tonnes in 2002. But despite that, according to the Caribbean Banana Exporters Association, banana production, transportation and distribution still account for between 5 and 10 per cent of total employment in Jamaica and it is still second only to sugar in economic significance in the country's agriculture.
As we have heard from the noble Lord, Lord Newby, there are other Caribbean countries in the Commonwealth—particularly three of the four Windward Islands—that are almost wholly dependent on bananas for their economic existence, where they are grown on small family farms in remote and often difficult-to-farm areas. As the International Labour Organization has commented,
"no other economic activity in the Eastern Caribbean has similar multiplier-effects on employment levels".
So it goes well beyond the number of farmers who are just growing the fruit.
What we must appreciate is that the development of the Caribbean banana business throughout the 20th century, interrupted only in war-time, was a remarkable success story, which reflected credit on everyone involved in it: that is, the farmers who strove to improve quality and reliability; the packers, distributors and shippers; the companies—Fyffes, Geest, Jamaica Producers and others; and the governments of the United Kingdom and the Caribbean countries, which did everything in their power to ensure that this business flourished. Credit is also due, most importantly, to the British consumer who loves the Caribbean banana, which has so much more taste, is of much better quality and is of a much more convenient size than the huge rather tasteless object that comes to us from Latin America.
The key to all that has been protection through tariff quotas, giving the Commonwealth Caribbean countries and other members of the ACP the first crack at the European market through the Lomé agreement. That system worked reasonably well, even since the advent of the single market in Europe in 1993. It was not an easy deal to do. No other EU member had the same sort of post-colonial links that we had with banana-exporting countries, although the United Kingdom was able to find some common cause with France, which was a banana grower in its own right because of Martinique and Guadeloupe—as the noble Lord, Lord Newby, said—its overseas department territories in the Caribbean, and it also had former colonies in West Africa.
Five EU states operated no limits on the quantity of bananas they imported, and Germany managed to maintain an extraordinary arrangement whereby it imported bananas from anywhere it liked duty free. Despite these differences, the deal struck during the time of the British presidency of the EU—here John Gummer, the agriculture Minister at the time, deserves a great deal of credit for taking it through—has maintained some stability.
Levels of employment in the banana growing countries have continued to fall, but at least the business has survived. It has maintained supply to the point that in Britain the banana is now our favourite fruit. We Britons eat 10 kilograms a year. This morning, as I was having my breakfast banana, which weighed 15 grams, I calculated that the average consumption must be between 65 and 70 bananas per head. I probably eat rather more in a year, but those statistics make it by far the most popular fruit in this country. If the banana was promoted better, with a particular emphasis placed on more fair trade bananas of the sort that come from the Windward Islands in the way Switzerland does, I think that we would be able to sell even more.
Despite all those good things, as the noble Lord, Lord Newby, has told us, the 1993 agreement went wrong because of the challenge through the WTO. I have to say that I find the approach of the United States Administration to this matter absolutely extraordinary. There is scarcely a single banana grown commercially in the United States, aside from a few in Hawaii, but because the Latin American banana growing business is dominated by US multinationals, an action was taken under Section 301 of the US Trade Act at the instigation of Chiquita, which has 40,000 workers, nearly all of whom are in Honduras and Guadeloupe.
It is widely believed that the United States trade representative got involved as a payback for political favours, because it is well known that the boss of Chiquita, Mr Carl Lindner, had made huge political donations to both the Republican and Democrat parties. The US backed up its action with trade sanctions and, as we have heard, the World Trade Organisation upheld the US complaint and found against most of the measures taken by the EU to fulfil the commitment to the ACP countries under Lomé. Fortunately, a temporary agreement was reached in 2001 which retained the tariff quota system, but that expires at the end of this year and, as the noble Lord has explained, the EU now has to move to a single tariff or a tariff-only system.
The issue now, and the one which will determine whether there is to be any Caribbean banana export business in the future, is the level of that tariff. If it is set too low, it will simply disappear. The FAO has conducted an independent study and reckons that the tariff will need to be around 300 euros to leave import volumes unchanged, so the Commission's current proposal of 230 euros is clearly not enough.
We hear vague talk about "diversification" as a way out of poverty for destitute farmers, but it really does not help very much. Indeed, the attack made by the United States on the economies of poor countries in the Caribbean is particularly short-sighted as one of the consequences of wiping out the banana growing industries on those islands will be to increase the attractiveness of alternative, less desirable crops.
In March 1998, Oxfam published a paper entitled, A Future for Caribbean Bananas. On the threat to the preference arrangements for Caribbean growers it stated that:
"The significant achievements of the islands' governments in pursuing democracy and good governance would be severely threatened, as those in power struggled to cope with rising deprivation and social unrest. Low prices, together with the uncertainty over the future of the banana industry, have led to a loss of confidence among farmers. Some are already leaving the land, and unemployment is rising. There is a very real danger that farmers could resort to what, for many, would be their only economic alternative: illegal drugs.
"A plot with a few dozen marijuana plants on a smallholding will fetch up to 30 times more per kilo than a farmer's banana crop. It is reckoned that St Vincent can now count marijuana as its principal export crop. The cultivation is also . . . on the increase in Grenada and Dominica".
The article goes on to say that there is also a good living to be made from cocaine transhipment from Central America to the United States. So let us be quite clear what so-called "diversification" is likely to mean in a number of those countries.
I conclude with the words of the Minister of Foreign Affairs of St Vincent and the Grenadines, Mr Allen Alpian:
"Money and greed have been elevated to the status of a religion and care and concern are now regarded as a vice. Our future is now on a life support system. However, I am confident that our resourcefulness and faith will see us through".
I believe that it is our duty and that of our Government and the EU to support that resourcefulness and faith, and we must not let them down.
© Lords Hansard 14 January 2005