Explanatory Memorandum to SEC(2010)331 - Including Factual Information Accompanying the Biennial Report on the Special Framework of Assistance for traditional ACP suppliers of bananas from the Commission to the European parliament and the Council - Main contents
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| dossier | SEC(2010)331 - Including Factual Information Accompanying the Biennial Report on the Special Framework of Assistance for traditional ACP ... |
|---|---|
| source | SEC(2010)331  |
| date | 17-03-2010 |
Contents
Brussels, 17.3.2010
SEC(2010)331 final
COMMISSION STAFF WORKING DOCUMENT
Including Factual Information
Accompanying the
Biennial Report on the Special Framework of Assistance for traditional ACP suppliers of bananas
from the Commission to the European parliament and the Council
{COM(2010) 103}
Table of contents
4: Banana – European Union Imports 1993 to 2008
3. Implementation per beneficiary country
The implementation of the SFA programme is most delayed in Cape Verde where only €1 million out of an allocation of €4.1 million has been committed i.e. contracted for works, supplies, service and grant contracts. The execution of the contracts as represented by payments on these contracts, amounting to €776 000, is satisfactory. A substantial part of the SFA funds for Cape Verde will remain undisbursed as the validity of the individual projects financed has expired. The Commission is actively assisting the Government to speed up the implementation of the remaining programmes and expects full utilisation of the SFA funds allocated from 2005 to 2008.
The SFA funds for Somalia are all allocated for diversification and are all disbursed through grant contracts via NGOs still operating in Somalia. Agricultural development through small-scale irrigation along the Djouba and Chebele rivers is the main activity supported by the SFA programmes. Using grant contracts, normally one contract per allocation year, accounts for the relatively low uncontracted (reste a contracter RAC1) and not disbursed (reste a liquider RAL2) rates for Somalia.
The relatively fast implementation of the SFA programmes in Jamaica, as expressed in their low RAC and RAL rates, is partially caused by the use of SFA funds to replant the banana plantations after the hurricanes in 2005, 2007 and 2008.
Programme implementation in Cote d'Ivoire has been partially disrupted and therefore delayed by the political unrest and problematic security situation; especially for the SFA funds allocated in 2002, 2005, 2006 and 2007 (the Financing Agreement for 2008 is not yet signed). Payments are particularly affected, leading to an above average RAL rate.
5. Recommendations and actions taken by SFA Beneficiary Countries
| Country | Strategic 2006 Recommendations and Actions Taken |
| Belize | Recommendations: 1) identify a specific strategy for addressing diversification and rural development; 2) scale economies such as the consolidation of key logistical activities such as joint procurement of inputs, should be adopted by growers; 3) assistance should be provided on the social side – to workers - not just to competitiveness issues; 4) implementation of SFA programmes should be accelerated; 5) assistance should be balanced between competitiveness and diversification. Actions taken: specific strategies are now in place for addressing rural development priorities and some balance is being achieved between competitiveness and diversification. However, growers are still ambivalent about scale economy strategies although recent studies (e.g. on production cost reduction strategies) have confirmed and quantified the potential benefits of such actions.3 |
| Cameroon | Recommendations: 1) Increase productivity; 2) privatise CDC; 3) address cash flow issues relating to ATF (SFA) payments to producer organisations; and 4) design more flexible investment types in ATFs Actions taken: Increasing productivity has become a strong focus of 2006 and 2007 ATFs. The CDC has not been privatised. There have been no material changes (as recommended) in ATF modalities |
| Cote d'Ivoire | Recommendations: 1) carry out feasibility study on CFA region as a new export market; 2) accelerate traceability, pre-cooling and certification initiatives; and 3) develop a multi-annual and unified ATF funding system. Actions taken: study carried out on potential markets in the CFA region identified Senegal, Mauritania, Niger, Mali, and Burkina Faso and key factors to be addressed: quality standards, packaging, and long distance transport. Traceability, pre-cooling and certification initiatives completed. System of ATF funding not changed. |
| Dominica | Recommendations: 1) develop a long term diversification strategy given the low competitiveness levels of Dominica bananas; and 2) improve the rate of processing and disbursement of SFA funds. Actions taken: SFA assistance now being provided to tourism, private sector development and specific subsectors through the Dominica Export Agency (DEXIA). The SFA disbursement rate has been improving since 2005 with the help of technical expertise to the National Authorising Officer (NAO). |
| Jamaica | Recommendations: 1) Caribbean countries to exchange lessons leaned from their SFA programmes; 2) Jamaica to identify new or alternative markets for bananas e.g. for local and regional consumption; 3) focus on the fight against poverty in rural small-farmer areas; 4) support income-generating micro projects under the Rural Development Programme; 5) continue to use the (effective) credit and revolving fund system; 6) improve SFA processing and rate of funds disbursement. Actions taken: No progress on Caribbean country collaboration. Local market now considered to be the only viable outlet for Jamaica bananas. Support continues for micro projects and the revolving fund. Little progress on improving SFA efficiency. |
| Saint Lucia | Recommendations: 1) develop an integrated long term diversification strategy and 2) improve the rate of processing/disbursement of funds. Actions taken: SFA assistance now being provided in a more focussed way on identifying and supporting viable sectors and business ventures with strong growth potential (e.g. the Sequa project and the Agrotourism SFA 2007). SFA disbursement rate improved substantially since 2007, especially with recent help of DFID-funded technical assistance to the NAO between January and December 2008. |
| Saint Vincent | Recommendations: 1) develop an integrated long term diversification strategy; and 2) improve the rate of processing and disbursement of SFA funds. Actions taken: SFA assistance continued to be channelled to a diverse range of activities (public sector support, business gateway, social investment fund, training, institutional support and studies etc) but with limited cohesiveness between them. Still, the disbursement rate improved substantially in both 2007 and 2008. |
| Suriname | Recommendations: 1) Caribbean countries to collaborate on SFA implementation via exchange of lessons leaned from their SFA programmes; 2) use logical frameworks as the basis from reporting/monitoring implementation; 3) increase productivity and production and 4) privatise the industry Actions taken: None on the collaboration recommendation. Logical frameworks still not being used to improve project management. Privatising activities in progress. |
6. IMPACT OF THE SFA PROGRAMMES PER BENEFICIARY COUNTRY
Impact on ACP Banana exports to the EU
The SFA-supported competitiveness programmes have made valuable contributions to improving the competitiveness of Belize, Cameroon, Cote d’Ivoire and Suriname. While eight countries were initially committed to competiveness, those with the stronger prospects for survival in an environment of progressive liberalisation of the EU Banana Regime have survived.
All these four countries have been able to maintain or increase the quantities of bananas exported to the EU during the period 2006 to 2008. During this the quantity of ACP bananas imported into the EU increased from 891 246 to 918 506 tonnes, amounting to 18.5% of the total imports in 2006 (EU-25) and to 17.0% of the total imports in 2008 (EU-27). For Belize the banana export to the EU rose from 73 000 tonnes to 82 146 tonnes between 2006 and 2008. Banana exports from Cameroon increased from 253 000 to 279 530 tonnes in this period while those from Cote d'Ivoire remained stable with 222 000 tonnes in 2006 and 216 538 tonnes in 2008. Suriname maintained its growth in banana exports after the restart of its banana industry (following bankruptcy in 2002) in 2003 with 45,000 tonnes exported in 2006 and 65,812 tonnes in 2008. Chart 1 presents the export quantities from the ACP exporting countries to the EU since the creation of the Common Market for Bananas in 1993. This data are also mentioned in Annex 5.
The quantities of bananas exported by Jamaica were severely influenced by the damage caused by hurricanes both in 2007 and 2008. While replanting was undertaken in 2007 and exportation restarted, the sole exporting company in Jamaica announced that it would stop exporting bananas after hurricane Gustav in 2008. The damage caused in 2008 was extensive and replanting and further repairs to the existing plantations will be scaled to supply the local market.
The initial focus on competitiveness in the Windward Islands was not viable: support in that area failed to reduce the competitiveness gap and this (core) strategy was abandoned as a major SFA initiative after 2004. Most of the bananas still exported by the Eastern Caribbean countries benefit from 'Fair Trade' certification.
SFA Programme impact in Belize
In Belize, the nine growers running the sector’s 20 farms have benefitted from SFA investments in irrigation and drainage, replanting with meristem plants, sigatoka control and technical assistance. Exports of Belize bananas increased substantially from 1999 to 2004. The exported carton boxes and volumes increased by 41%, with 4 364 153 cartons exported in the last year. Costs of production were reduced by 28% between 2000 and 2004, though high oil prices in 2007-2008 resulted in unit cost increases. Relative FOB costs per ton are reported to be €262/tonne euro for Latin America and, on average, €560/tonne for ACP countries. Belize’s higher cost of labour and transportation, resulting in a per tonne cost of €452, confirms that it is one of the lower-cost ACP countries.
SFA Programme impact in Cameroon
The area under banana cultivation totals 7000 hectares. An increase has been announced. The means of production have improved due to producers' investments since the early 1990s, and then helped by EC financial and technical assistance. The updating of production facilities is thus practically complete. The average yield was 35 tonnes per ha. in 1994 and has now reached 40 tonnes/ha, varying from 30 to 48 tonnes/ha depending on the location and the investments made.
The banana industry in Cameroon generates 11 500 direct jobs and nearly 36 000 indirect jobs. Today, banana exports are shared between three companies. The plantations and packing stations have varying standards but many are inconformity with the various standards and certifications introduced since 2000, i.e. GlobalGap, ISO 14001 and Tesco Nature choice.
Cameroon is the leading ACP exporter to the EU, accounting for 30% of Europe's ACP banana supply.
SFA programme impact in Côte d'Ivoire
Cote d’Ivoire was able to upgrade its production and packaging systems with the help of EC funds, mainly for irrigation, drainage, renovation, plantation management, infrastructure, and pack houses. This led to significant yield increases of export fruit, from 40 to 44 t/ha on average over the period 2001 to 2007. Together with an increase in labour productivity, this led to reductions in unit costs of production of as much as 17 CFA (Communauté Financière Africaine) per kilo, bringing the country’s competitiveness closer to that of Latin American producers. Although many of the investments were co-funded by the large growers, there is no doubt that SFA support facilitated these competitiveness gains across the Ivoirian industry, despite the very difficult investment and business climate that prevailed from 2003 onwards.
SFA programme impact in the Eastern Caribbean States
The Eastern Caribbean States' agricultural diversification programmes were not successful in developing alternatives to bananas. This was due to market and logistical constraints, as well as issues of scale, cost and technology. However, under a collaborative agreement with FAO, recent SFAs can be expected to support development of commercial fruit and vegetable production for St Lucia’s domestic and tourist market, possibly including cruise ships, and the rapid expansion in capacity in St Vincent.
Wider economic diversification approach began to emerge from SFA 2001, seeking broad-based economic growth. By 2004, the Eastern Caribbean States had entirely changed the focus of SFA from agriculture to economic growth, which by then, was accounting for at least 67% of planned investments. Focal areas are the enabling environment for economic development through structural reforms in support of the Bretton Woods institutions’ programmes and specific interventions in skills development, tourism (particularly agro and eco-tourism), offshore financial institutions, enterprise development and ICT, all sectors with higher potential than agriculture. Some initiatives, such as the water and sewage systems in Dominica or the Western Highway in St Vincent, are prerequisites for diversification since these are primarily infrastructure and social projects that are expected to enhance the investment environment for diversification over the long term.
In Dominica, a coordinated effort is being made to promote the country in Europe as a tourist destination whilst at the same time strengthening the capability of areas where banana production forms an important part of the rural economy, to develop the tourism product and benefit directly from increased tourism earnings. In this regard, implementation of the West Coast Water Supply Project over the lifetime of the SFA is an important part of Dominica’s plans to develop the tourism product, especially in the Northeast around Portsmouth which is an important banana growing area.
SFA programme impact in Jamaica
In Jamaica, diversification was not introduced until SFA 2006, where the focus was on agro-processing and diversification into alternative production such as vegetables, poultry and dairy offer viable and sustainable income-generating prospects. Later initiatives propose: (1) skills development under technical and vocational education and training; (2) income and employment generating activities based on market-driven opportunities along the value chain; and (3) rehabilitation of rural infrastructure with economic or social benefits in target communities.
SFA programme impact in Suriname
Suriname is one of the two Caribbean ACP countries most likely to succeed in expanding production and reducing costs to take advantage of new market access following the adoption of the January 2006 revised regime. It has pursued restructuring of the industry with support from the EU since early 2000. Following the collapse of the state-owned sole banana producer in 2001, privatisation which is considered to be the key to ensuring the sustainability of the industry, is being pursued through, among other things, improving the competitiveness of the new state-owned company. Since 2001, production increased to about 20 000 tonnes by 2005 and more than doubled in 2006 to 45 146 tonnes. In 2007, Suriname increased exports to 54 342 tonnes i.e. by 20.4% and was the only traditional ACP exporter to do so that year. The industry also reduced costs by about 31% between 2001 and 2005. Production costs are now close to those of Costa Rica, one of the lower-cost Central American banana producing countries. This highly commendable success is largely attributed to SFA programmes aimed at improving productivity and increasing output. However, Suriname’s viability as a banana producer now rests on the smooth transfer to private commercial operators via completion of the transition to private ownership.
1RAC or Remainder to be Contracted indicates the percentage of funds allocated to the project for which no works, supply, services or grant contracts or programme estimates, have been signed.
2RAL or Remainder to be Liquidated indicates the (percentage of the) funds allocated to the programme not yet paid/disbursed. This includes the Remainder to be Paid (RAP) on existing implementation contracts.
3Building Capacity to Trade in the EU Market, Phase 5 Report: Summary of Recommendations and Proposed Actions, Cardno-Agrisystems Consortium, 2008.