Bananas, Hamlet and the Windward IsIands
By Martin Dihm
What do the Windward Islands' banana industry and Hamlet have in
common? Both are intrigued by the same question: 'To be or not to be.' But
unlike Hamlet, whose fete was decided rather quickly and tragically, the future
of Windward Canibbean banana production is still open. And what is more,
Windward producers have a distinct advantage over Hamlet. They can hire
consultants to analyse their problem and come up with fresh solutions. That is
what has happened. But before turning to the solutions, what have the problems
The four Windward Islands; Dominica, St Lucia, St Vincent and
Grenada, have long enjoyed preferential market access to the UK. This first
permitted the creation of the industry and then secured its survival, even with
production costs that are much higher than those of other producers.
A traumatic moment came when the European Community had to
decide on a common market regime for bananas. Coming into effect in mid 1993 the
regime maintained the principle of preferential access for traditional ACP
producers. Nevertheless, it introduced a move towards greater market
liberalisation. Fierce attacks on the regime by certain of the EU's trading
partners have raised doubts about its viability. The system is due, in any case,
to expire in 2002 when even further liberalisation seems likely.
All this could cause great difficulties for the Windward Islands
which still depend substantially on banana exports to the EU. A decline in
prices since mid-1993 and the appearance of new competitors in the previously
protected UK market have further underlined the need for the Windwards to
compete in a more liberal arena. The Islands commissioned a study, funded by the
UK and the EC, into the competitiveness of their industry and on ways of
improving its position. It was not the first study of this type, but earlier
ones had had no real impact on the industry which had always been sufficiently
protected to avoid swallowing the bitter pill of adjustment. This time, it was
clear from the outset that action would have to be taken if the industry were to
master the new situation.
The study provided a wealth of interesting insights and
recommendations. The first big surprise - at least for outsiders - was the
discovery that the industry was wasting considerable amounts each year through
certain deficiencies in governance, management and production methods. The
second theme of the study was the poor banana quality resulting from an
inappropriate pricing system. In effect, price differences paid to farmers were
not sufficient to reward extra attention to quality aspects.
The study's recommendations pertaining to management, production
and quality were all agreed in a meeting on 29 September 1995, which brought
together the Prime Ministers, the EC and other donors. Prime Minister Mitchell
of St Vincent labelled this chance for the industry to get its business right as
'the last train to San Fernando'.
What has happened since then? After some hesitation, the
industry has indeed begun to 'take up arms against its sea of troubles' (to
return to the Hamlet analogy). The EC, for its part, has taken the part of
Horatio, the faithful friend. Its role is a delicate one though - for the EC has
a lot of money available. Take, for example, the ECU 25m allocated to St Vincent
in the 1994 STABEX exercise (roughly five times that country's national
indicative programme). How are such funds to be injected reasonably into the
islands without undermining their own strength and sense of purpose in pursuing
the right strategy.
To answer this, one has to look at the actual requirements.
Streamlining the banana industry is less a question of big infrastructure
projects than of providing expertise to guide the necessary structural changes.
It also means fewer people will be employed in the sector. Aid should,
therefore, focus on technical assistance, promoting diversification, and social
The challenge, of course, remains considerable and the outcome
will not be known for some time. But it is clear that the Windwards have taken
bold steps in the right direction and that further steps are on the agenda.
There is also little doubt that the islands small, sweet bananas can only be
competitive in their market segment if they are produced and marketed
professionally, and with dedication.
So what could Hamlet have learnt from this experience? In short
- get sound analysis and fresh advice from outside - and then boldly implement.
And stick close to your good old friend,