The European Union is the world’s largest banana importer, but only four percent of its bananas currently come from Africa. Central and Latin American countries dominate the global banana trade. Recently, though, those involved in Africa’s banana industry – such as farmers and international agricultural organizations – began initiating plans specifically for East African growers to sell more of the fruit to European buyers. A leading trade lawyer has, however, cast doubts on the wisdom of such strategies.
“Basically what a farmer wants is to sell more bananas, get higher prices for these bananas, and also he wants to reduce his costs and increase his productivity. In Africa specifically, there are huge blocks to overcome each of those,” explains Thomas Dubois, a scientist with the Consultative Group on International Agricultural Research.
“Farmers cannot sell more bananas because they don’t have access to markets. This is mainly a result of lack of transparency in terms of prices and also the fact that they don’t have access to credit. So they stay small. They can’t grow,” he explains.
He says once an African farmer sells his banana bunch to a middleman, this person sells it to another middleman, “who sells it to another middleman and so on and so on, until it finally reaches the market. So there are a lot of people taking the premium from the farmer who produces the bananas.”
As a result of this situation, concerned parties are looking at new ways for banana producers in Africa to make more money, and one of these methods involves exports to Europe – the biggest banana market in the world.
"Realistic" about African opportunities
Bernard O’Connor is a veteran lawyer based in Brussels, a city he describes as the “political and regulatory capital” of Europe.
“My main area of activity is administrative and trade law. In that context I have done a lot of work on agricultural products – both moving into and out of the European Community,” the author of a number of legal texts tells VOA. “I concentrate on bananas because, for many years I have been the lawyer for an American company called Dole.”
Dole Food Company is the largest banana firm in the world, growing and/or selling the fruit in about 100 countries.
At a recent conference in Mombasa held to investigate possibilities to expand African banana production, O’Connor addressed participants on the feasibility of African farmers exporting bananas to Europe.
He says what particularly “stimulated enthusiasm” from his audience – which consisted of farmers themselves, government officials and international agricultural researchers – was his explanation of “some of the difficulties in marketing and selling bananas in the European Community, and the level of competition there is between bananas from different sources.”
O’Connor says he was “rather realistic” about the chances of specifically East Africa “competing in realistic terms on the short term” in the European market.
Explaining his view, the lawyer continues, “I saw a number of presentations (at the conference) - even from well known consultancy firms - suggesting that it would be possible within the short term to build up a competitive export business in bananas from Africa. I did not see it (that way) and I still do not see that that is possible if East Africa wants to compete on the regular banana market.”
African farms "too small"
O’Connor’s convinced that East Africa has an “awful long way to go” before the region can develop a viable export business to Europe.
“East Africa is just so far further back in the development of an industry. It doesn’t even have the size of farms that you might need; it certainly doesn’t have the logistics in place,” he comments.
O’Connor says most African banana farms are “simply too small” to compete with the massive production and corresponding lower costs seen in places like Latin America.
“There is no way that a small producer can compete with a large producer. If you are farming one hectare, and your competitor is farming a thousand hectares, clearly the cost of production for one banana is a lot less on the bigger farm than it is on the smaller farm,” he reasons.
But O’Connor adds that lack of size is not the only issue confronting Africa’s attempts to export fruit to Europe. He says there are also “logistics” to be considered.
“To ship bananas to the European Community will take a number of weeks. And the Latin Americans have developed a virtual conveyor belt of ships which go backwards and forwards across the Atlantic bringing fresh bananas to the European Community in a very efficient way.”
He stresses though that with regard to African banana exports, a distinction must be made between the challenges facing the continent’s eastern and western regions.
“East Africa has a problem in that it does not have the plantation-type farms which reduce the cost of production, and it does not have the logistical infrastructure in terms of shipping, which would allow it to have efficiencies in transport. And on both those two things, it will find it very difficult to compete with Latin America,” O’Connor says.
But he’s convinced that West African banana producers have a “much greater possibility of making it, because they already have the traditions, they already have the sizes, they already have a lot of the logistics in place. And so (in West Africa) it is a question of fine tuning an existing system to make it more efficient and to make it more competitive with the Latin Americans.”
O’Connor maintains that, despite certain “political difficulties” and “soil productivity problems,” West Africa has the economies and the size to be able to maintain its position in the market.
Poor infrastructure
Some African farmers have previously claimed that it’s in the interests of certain economic blocs and large banana enterprises to prevent them from expanding and exporting more produce, in order to minimize potential competition to them.
But O’ Connor dismisses these allegations.
“In my experience of traveling around East Africa, the biggest culprit might just well be (lack of) government investment in infrastructure. I don’t see that sort of investment in roads, in ports, in logistics, that you would need and which is often provided by government that would allow entrepreneurial farmers to work with and to develop an export industry.”
Yet despite these challenges, the trade lawyer says it “seems very obvious” to him that
East Africa does have a future in banana production – albeit in the growing and export of “niche” produce.
“…. If East Africa (does) want to compete (on the European banana market), maybe there (is) a business to be developed in terms of niche markets – fair trade bananas or organic bananas, or…. finger (small) bananas,” O’Connor says, before reiterating, “but if they want to go on to the (mainstream) banana commodity market, I do not see that there is much chance of developing any sort of business in the short term.”
Ultimately the top trade lawyer advises against Africa basing the development of its banana industry on an export market. He advises African authorities and farmers to “rather concentrate on home” for the time being.
“There is a large consumption of bananas in Africa; there is a large market. And I think that by developing that market, African farmers and African entrepreneurs will develop the skills that are needed so that possibly in the future they could develop exports.”
