March 2, 2021

Canary fears that the banana in Brazil will sink banana prices in Europe – La Provincia


An increase in the risk of over-supply and saturation of bananas in the European market and, therefore, a continuous collapse of prices in green and a reduction in the space for Canarian bananas. Banana trees in the archipelago warn of the damage that can be caused by the historic trade agreement between the European Union (EU) and Mercosur, reached after 20 years of negotiations in its sector. The Association of Organizations of Producers of Banana of the Canary Islands (Asprocan) regrets that the continuous decrease of the average amount of the import banana is now added "a new element of pressure" if finally the fruit of Brazil has the same preferential tariff conditions of those already enjoyed by Ecuador, Colombia, Peru, Costa Rica, Panama, El Salvador, Honduras or Guatemala.

The EU and Mercosur – made up of Brazil, Uruguay, Argentina and Paraguay – sealed a free trade agreement last Friday, very much celebrated on both sides of the Atlantic Ocean to be fruitful after two decades of intense work. The commercial pact puts on the table a market of 750 million consumers and contrasts with the protectionist policy practiced byDonald Trumpsince he occupied the White House. Despite the great step taken, the trade agreement still has to get the approval of the chambers of the 28 EU member states, the European Parliament, the Council of Ministers of the European Union and the four countries that give life to Mercosur . Asprocan fears that, as they have been informed by the Alliance for the Defense of European Agriculture, Brazil, Uruguay, Argentina and Paraguay count from 2020 with the same favorable export conditions as other countries. Thus, it is likely that the rate, currently set at 114 euros per ton, will be set from next January at 75 euros per 1,000 kilos, which will contribute, according to Asprocan, to the fall in prices.

Competitiveness

Of the four members of Mercosur, only Brazil exports bananas to the European market. Until 2010, that country placed around 100,000 tons in the countries of the EU. The approval, that year, of the preferential treatment for the importation of other countries affected its competitiveness and, therefore, reduced the amount of bananas it managed to sell in Europe. In the event that the terms of the trade agreement are confirmed, Asprocan argues that Brazil will regain competitiveness and increase its exports "remarkably" to the EU.

Canarian banana growers point out that Brazil, which produces approximately seven million tons of banana a year, has some of the most important multinationals in the production and export sector worldwide. Asprocan states that lowering the tariff by 39 euros per ton will further exacerbate the over-supply of bananas that the European market suffers and will aggravate the continued fall in the green amounts of bananas, which has fallen by 12% since 2015. The collapse of prices was such last year that it scored a record downward, a mark that Asprocan predicts break this year. With the free trade agreement with Mercosur, island producers criticize that the importation of bananas from third countries is favored, to which labor, safety, environmental and social demands are applied, which is much lower than European standards, "thus increasing competition in inequality and putting European productions at risk ".

The main destination of the Canarian banana is the Peninsula. However, in view of the increase in production, mainly due to the consolidation of a more tropical climate, the sector began to look for new markets to dispose of surpluses and avoidspades. The producers of the Islands are currently collecting more bananas than usual, although the first semester does not exceed the production of other years.

The Canarian banana growers receive weekly requests from several countries, not only Europeans. Morocco buys about 100,000 kilos per week and Switzerland about 20,000. France also offers Canarian plantains and with Germany, tests are being carried out. The increase in competition makes it more difficult to enter the European market, so Asprocan, besides regretting the consequences that the agreement with Mercosur can generate, recalls that the EU has not applied the stabilization mechanism to bananas that are imported of Guatemala, Peru or Nicaragua, a defense mechanism for Community productions that should have been activated when the import limit foreseen by Europe has been exceeded.

Asprocan does not expect to present, for the time being, any type of claim on the new commercial treaty. The association of producers is in contact with the General Directorate of Commerce and awaiting what happens during the process of technical validation of the agreement. The banana trees are still unaware if the implementation of a stabilization mechanism is planned.

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