Regulatory vigilance and responsible commercial practices: the conditions for a fair price on the European banana market

In an open letter published on 10 March, AFRUIBANA (Association of African Producers of Banana and Other Fruits) raised the alarm over the consequences of the Russo-Ukrainian conflict on the European banana market: where do things stand today?

The war in Ukraine has accelerated a worrying trend that was already present on the European banana market, which had been under considerable pressure — itself a consequence of significant cost increases in recent months. The conflict has effectively brought to an almost complete halt the supply of Latin American bananas to the Russian, Belarusian, and Ukrainian markets, which together account for 1.8 million tonnes of bananas per year, equivalent to 28% of the annual consumption of the UK and EU-27 banana markets. Ecuador’s Ministry of Agriculture and Livestock has recognised the significant risk posed by this situation and announced that it would scrutinise closely the conduct of exporters whose licences are linked to supplying those markets. At this stage, the European market has held steady, but all experts are calling for close vigilance.

How can we ensure that market stability is sustained in this context?

To that end, it is essential to have a framework guaranteeing responsible commercial practices, both on the part of producers and exporters and on the part of buyers. Several Ecuadorian banana producers have indeed announced that they would take self-regulatory measures by allocating a portion of the volumes in question to food banks or using them for soil amendment. However, not all operators have followed this commendable approach. Sources have notably confirmed that certain volumes, originally destined for Ukraine, were diverted and sold in Romania and south-eastern Europe at excessively low prices. Such practices amount to dumping and undermine the efforts of committed suppliers who supply their customers safely and reliably, providing quality fruit at competitive prices. To address this, appropriate market monitoring and control measures must be applied by the competent national and European authorities in order to ensure market stability, in the well-understood interest of consumers and all operators.

European, Ecuadorian, Colombian, and Guatemalan producers issued a joint declaration on 29 March calling for banana prices to be raised to an equitable level: what is AFRUIBANA’s position with regard to that declaration?

We are entirely in agreement with that declaration, whose initiative we welcome and which we formally endorsed on 1 April. It reflects the growing and, above all, shared concern of all banana producers worldwide regarding prices, which are definitively too low given, among other considerations, the challenges of the ecological transition.

What solutions do you recommend in the face of this unprecedented situation?

AFRUIBANA has been advocating and working for several years on the deployment of sustainable solutions for the European banana market. Our approach is not simply to resolve a temporary problem or defend the interests solely of our geographic origins, but to create, for all actors in the European banana market’s value chain — from producer to consumer — the conditions for a sustainable, resilient, and equitable banana trade.

Our foremost aspiration is the achievement of a fair price. To that end, we advocate for the creation of a framework — which could take the form of a public label (similar to that for organic farming) — drawing on the best practices of fair trade, making it possible to guarantee and finance the adoption or observance of current and future European or third-party regulations, particularly those of a social and environmental nature (such as the European Green Deal and its Farm to Fork strategy, the carbon border adjustment, the living wage under the “Anker method”, corporate due diligence, and so forth) through a fair price, which could be a minimum FOT (“Free On Truck”, i.e. upon arrival at the European port) price, similar to the minimum export price that exists in Ecuador. This floor price would be set in consultation with all stakeholders, both private and public.

Beyond this, and particularly for major transformative investments such as varietal diversification or research and development around diseases such as TR4 or Black Sigatoka, it would be appropriate to define and implement a “sustainable banana initiative”, inspired by the successes of the “sustainable cocoa initiative” at EU and member-state level, and adapted to address the particular challenges and issues of the banana world.

Finally, especially in the current context of renewed attention to the challenges of food security and the reinforcement of supply-chain resilience, it appears necessary to consolidate the existing market surveillance system for imports of fresh and perishable fruit, making this system agile and proactive rather than inertial and reactive, and establishing it on a permanent basis in the form of an observatory in which all actors would be represented and which could also incorporate early warning indicators.

In this way, from producer to consumer, Europe would benefit from the efficiency and competitiveness of its open market, whilst creating a framework to ensure the ecological transition and guarantee its food security through resilient supply chains.

Would such a surveillance system make it possible to take concrete measures?

In the face of current and future geopolitical shocks, and in the event of lasting and repeated disruptions to market stability caused by irresponsible commercial practices, it will doubtless be necessary, in the interests of all stakeholders, to call upon the European Commission to implement safeguard measures. Whilst it appears that there have been reservations in the past about using such instruments, the Commission — as it has made clear through its new international trade policy published last year — appears determined to be less naïve and more realistic in defending the single market, and the current situation unfortunately offers a timely opportunity to witness the concrete effects of this shift in doctrine. This seems to us all the more important given that today’s African producers, who are significant exporters to the European market with close to a 10% market share, do not have access to commercial remedies enshrined in agreements (other than appeals to the WTO), and must go through the channel of bilateral state relations when it comes to sounding the alarm over market destabilisation.

What could be the consequences of a destabilisation of the African banana sector?

Were the African banana sector to be destabilised as a result of irresponsible practices, the destruction of employment pools that are essential for young workers in West and Central Africa would inevitably lead to rural exodus and potential migration towards more prosperous regions such as Europe. Conversely, if responsible buying and selling practices are assured and enforced, we will have a chance to achieve fair prices for all, ensuring the profitability of businesses and thus the means for producers to invest in the ecological transition. That is why we will continue our advocacy for a just and sustainable banana value chain, as we had the recent opportunity to do at the 2022 edition of Fruit Logistica. Every actor in our chain, from producer to final buyer and consumer, has a responsibility to “play their part” and contribute to the positive evolution of our sector.

« Address by Joseph Owona Kono, President of AFRUIBANA »

Interview published in Commodafrica, 9 May 2022.