The expansion of the European Union (EU) from 15 to 25 countries in May 2004 could signal the promise of lucrative new markets for banana producers, according to the UN Food and Agriculture Organisation (FAO).
“One of the most coveted emerging markets for banana producers is that of the ten new countries that will join the Single European Market in May,” said Paul Pilkauskas, FAO senior commodity specialist.
In the coming weeks, the EU will decide how the transitional tariff-quota system will be applied to banana imports between 2004 and 2006. Beginning in January 2006 a tariff-only system will be established. According to FAO, these decisions will have a significant impact on producer countries, because currently one third of the world banana trade is destined for the European Union.
“This will affect all banana producers, whether in the Canaries, in Latin America or in the ACP [African, Caribbean and Pacific] countries. Currently only the ACP countries are allowed to enter the single European market free of any tariff or charge,” Pilkauskas said.
Currently, the sector faces a number of challenges, including overproduction and the shape of the new market that will be created by the new Europe of the 25 countries.
Bananas are the fifth most important commodity for world food security, according to the FAO. Worldwide, more than 88 million metric tons of bananas are produced every year. A substantial part of this production is consumed locally, especially in tropical countries, where bananas are a staple food.
The banana sector is strongly export oriented, with some 13 million tonnes crossing the seas and oceans each year. Oversupply relative to demand is a continuing issue, and the future of the sector is less than clear in the evolving world agriculture trade system.
“Last year saw a fall in prices,” said Pilkauskas, “But, at the same time, demand is growing in the Commonwealth of Independent States and the ten new EU member countries. China is also a promising market.”