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close this bookThe Courier N° 158 - July - August 1996 - Dossier: Communication and the Media - Country Report: Cape Verde (EC Courier, 1996, 96 p.)
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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 been?

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 'cushioning'.

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, Horatio!