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Banana wars: Is Africa losing the battle against South America?

In depth
This article is part of the dossier: Africa’s growing Agribusiness

By Estelle Maussion
Posted on Tuesday, 27 April 2021 15:29

Banana plantation in Côte d'Ivoire © Olivier for JA

The pan-African association Afruibana is sounding the alarm as South American bananas become increasingly popular on the European market, severely impacting producers in Côte d'Ivoire, Cameroon and Ghana.

On the European market, African banana suppliers are going head-to-head against their South American competitors, in a battle reminiscent of David and Goliath. Except the outcome of this confrontation is likely to be the opposite of the biblical story, as the big supplier – South America represented by Ecuador, Colombia and Costa Rica – will most certainly triumph over the small one, which is Africa and its three main producers: Côte d’Ivoire, Cameroon and Ghana.

Representing 6.7 million tonnes in 2020, of which only 630,000 tonnes was produced in the EU, 75% of Europe’s market is supplied with South American “dollar” bananas while ACP (African, Caribbean and Pacific) products make up only 15% of it.

Faced with this situation, Afruibana, a pan-African association of fruit producers and exporters created in 2017 and chaired by Cameroon’s Joseph Owona Kono, is once again sounding the alarm.

Building a win-win trade

Afruibana launched an appeal in Abidjan in 2019 calling for regulations to be put in place in the transport of African exports towards Europe.

More recently, it presented a white paper on the African sector during a videoconference on 21 April which brought together, in addition to its president and vice-president, Jean-Marie Kakou-Gervais, three MEPs, Marie-Pierre Vedrenne, Pierrette Herzberger-Fofana and Carlos Zorrinho, among others.

The aim is to strengthen the partnership between Africa and Europe in order to establish a win-win banana trade within the framework of the post-Cotonou agreement, on which the ACP countries and the EU had reached a political consensus at the end of 2020, and the implementation of the African Continental Free Trade Area (AfCFTA), which came into force at the beginning of 2021.

“We need to develop a plan together that will support the sector and ensure its sustainability, notably by investing in quality assurance, training and decarbonisation,” says Kono. He added that European producers, including France via the West Indies, Portugal, Spain and Greece, are as much affected as their African counterparts by South American competition.

“Faced with a real surge of products, we also need a minimum of regulation,” adds Kono, who is also executive secretary of the Cameroon Banana Association (Assobacam).

Falling prices

However, it appears to be a difficult battle to wage. In the 1990s, bananas provoked a trade war between Europe and South American producers, the latter (supported by the US) asking the World Trade Organisation (WTO) to abolish the customs duties imposed on “dollar” bananas – from which ACP bananas were exempt.

After a lengthy process, the dispute was resolved and an agreement was signed in 2009 that gradually reduced tariffs on dollar bananas and, de facto, reduced protection for ACP bananas. The tariff, which fell from €176 per tonnes in 2009 to €114 in 2019, fell to €75 between 2020 and 2021.

As a result, Ecuadorian, Colombian and Costa Rican producers have quickly dominated the European market. “Between 2014 and 2020, more than 1 million tonnes of the ‘dollar’ type were produced, while the other varieties stagnated or fell,” says Denis Loeillet, an agro-economist and banana specialist at the Centre de Coopération Internationale en Recherche Agronomique pour le Développement (Cirad).

Between 2019 and 2020 alone, South American volumes increased by almost 6%, while those of ACP countries fell by almost 5%.

In addition, prices have continued to fall – from €14.10 in 2014 to €11.70 in 2020 for a carton of bananas and from €0.76 to €0.63 over the same period for a kilo of imported bananas – due to an abundance of supply compared to demand, which reduces producers’ incomes.

80,000 jobs at stake

“The most competitive producers, including Ecuador, which exports to 100 countries and delivered 1.6 million tonnes in 2020 to Europe, say their margins are shrinking. Imagine the situation of African producers, who are less competitive, export only 600,000 tonnes to Europe and are very dependent on this market alone,” says Loeillet.

Côte d’Ivoire, which is Africa’s leading exporter to Europe, sold 300,000 tonnes in 2020, followed by Cameroon with 180,000 tonnes and Ghana with 77,000 tonnes. According to Afruibana, the continent accounts for 9% of the European dessert banana market. Furthermore, in the three countries, the sector represents 80,000 direct and indirect jobs.

As the battle over tariffs seems to have already been lost, continental players have no choice but to seek to differentiate themselves from the competition by investing in quality, ecological and responsible production.

This positioning, which meets the expectations of European consumers and the EU’s increasingly strong “green” commitments, also implies that distributors are making an effort to create suitable and profitable sales channels.

“African producers are already investing in quality upgrading, thanks in particular to new, more virtuous production systems, which will make it possible to aim for zero insecticide production in a few years’ time,” says Loeillet, adding that, in order to make a breakthrough, this movement will also have to rely on the development of national and regional markets.

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