Some months ago, the Managing Director of the Jamaica Banana Producers Group, the largest exporter of bananas from Jamaica to the United Kingdom, declared that if the periodic severe weather that Jamaica has been having over the years continued, the company would have to seriously consider stopping the cultivation, in that country, of bananas for export. Last week, after the severe storms that have affected the Greater Antilles in recent weeks, the company’s Chairman announced that it would cease production of bananas for export from Jamaica to the UK.
This is an historic decision, if as indeed all the signs are, the company does implement it. Jamaica Banana Producers has been for generations, in one form or another, the biggest exporter of bananas from Jamaica and indeed the English-speaking Caribbean. This company, which currently commands almost a third of the UK banana market, and nearly ninety per cent of Jamaican exports, has seen a persistent decline in its production, and therefore a persistent decline in the overall exports of Jamaica to the UK. From a production level, in good times years ago of 150,000 tons, to an average of 30,000 tons today, the trade has played a decreasing role in Jamaica’s exports generally over the years.
From all accounts, however, the decision taken by the company does not entirely come as a surprise. As with other Caricom banana producers, especially the Windward Islands in the eastern Caribbean, the liberalization of the banana trade following WTO rules, and the persistent attacks on current tariff levels protecting ACP exports by the United States and Latin American governments, have forced a continuing appeasement to these countries on the part of the UK and the European Union, as was evidenced once again during the final phase of the EU-EPA negotiations. In addition, challenges to traditional Caricom production have come from the Dominican Republic, a member of the Cariforum, and whose persistent push for participation in the UK market could no longer be resisted by traditional exporters.
What this has done is to induce Jamaica Banana Producers, over recent years, to geographically diversify the sources of its production and to purchase estates in Costa Rica and latterly Honduras, and to bolster both the quantum and the consistency of its exports to the United Kingdom. The company has now announced, that contemporaneously with reducing its production in Jamaica, it intends to increase production in those countries, and to purchase more land there. So it is surely not unlikely that if that course is vigorously pursued, its production from its Central American base will far outstrip its Jamaica production.
This geographical diversification is part of a wider institutional and production diversification on the part of the company. It has become a significant producer of derivatives from the banana, like banana chips, with one of its major production entities being located in Wales in the UK. Last year it was reported that the company employed about 600 persons in Wales, compared with something like 1000 in Jamaica itself.
What in fact the company has done is to take advantage of generous incentives and financial assistance from the European Union, available to companies once they established in the lesser developed regions of the union, and therefore to give itself a foundation directly in the European market itself. The last Chairman of the company, former UWI Professor of Management Studies at the UWI, Mona, Dr Marshall Hall, has recently expounded on the company’s strategy in a lecture to the Annual Conference of the Caribbean Development Bank. This is, in effect, one of turning a domestic company into a multinational – with, in our view, the name Jamaica being more historic than descriptive of its present and future activities. The strategy seems to be that, if the market is becoming increasingly impenetrable, the best thing to do is to produce within the market itself, sourcing your raw materials from the most cost-effective location. As the Jamaica Gleaner recently reported, “The precarious nature of the business in Jamaica, plus the increasingly successful challenges by Latin American producers at the World Trade Organisation to Jamaican preferences in the European Union influenced JP’s decision to end export production in Jamaica… Rolf Simmonds, JP’s commercial director, said that the withdrawal of banana exports from Jamaica would not undermine the viability of the group’s UK-based logistics business, JP Fruit Distributors Limited, acquired last year from Dole Food Company.”
It does not seem over-speculative to ask, however, about the effect of this decision on the status of Caricom producers in the ACP-EU preferential system. Banana producers in the Windward Islands might well find themselves entitled to ask whether, if Jamaica’s banana production is increasingly centred in lower-cost and favourable-weather locations in Central America, the government of that country will continue to maintain, or will perhaps even lose, its enthusiasm for fighting to maintain some degree of preferentialism for Windward Islands and Belize banana exports. Will Jamaica begin to see itself as a Latin American rather than an ACP producer, and leave its former partners on the sidelines, and no longer oppose the efforts of the Latins and the US in the WTO? And will it be joined, indeed, by Belize which is a relatively low-cost producer with substantial acreages at its disposal? Is that the likely fate of the ACP system as far as Caricom producers are concerned?
In the 1960s, after the UK’s announcement of its intention to join the European Community, the then Jamaica Labour Party Minister of Trade, Robert Lightbourne, recognised as a sophisticated negotiator, asked the British government to give the Caribbean countries “bankable assurances” about the future prospects for their banana exports. In large measure the Lomé Convention took care of that request.
Today, the current Jamaica Labour Party Prime Minister, Bruce Golding, taking cognizance of the de facto end of Lomé/Cotonou as a protective system, appears to be taking the strong line to his Caribbean colleagues that they should no longer place their faith in preferentialism, which he now seems to equate with what he calls “mendicancy.” He will no doubt be buoyed by the decisive decision on diversification which Jamaica Banana Producers has taken in this regard, though the loss of employment of workers is not insignificant in the context of a still dragging Jamaican economy.
Caricom governments should study carefully these recent Jamaican initiatives. Recently, the Managing Director of the Windward Islands Banana Exporting Company (WIBDECO), responsible for managing the exports of Windward Islands dwindling banana exports to the UK, has announced that the company is also seeking to engage in diversification of its activities in that country. Undoubtedly that will mean a search for lower cost sources of bananas than now exist for the company. In recent times also, the Windward Islands have had recourse to assistance in terms of quantums for export from the Dominican Republic, of whose growing search for a place in the UK market since the mid 1980s they were once deathly afraid.
Perhaps the time has come, in the context of realism about current trends, for both Caricom governments and companies to have a consultation on the future of the industry, its future likely impact on employment and growth in the region, and the medium-term significance of our persistent fight for protection in the European market, in the light of continuing resistance from powerful others.
