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Cameroon and Ivory Coast's counter-attack as the end of their customs arrangement in the European market looms.

Adopting a more cautious attitude, the Ivory Coast decides upon pursuing the regional market.

Adopting a more cautious attitude, the Ivory Coast decides upon regional market.

By Hance Guèye

Cameroon and the Ivory Coast, the two main African banana producers, fear for the future of their exports after an agreement was signed between the European Union and South American banana producers.

The agreement signed in December 2009 will lower the price demanded by European Customs Authorities of South American bananas by 2017, from 176 Euros per ton to 114 Euros per ton. This is of great concern to the two African countries given their yearly production reaches more than 400,000 tons. Since 1993, Cameroon and the Ivory Coast have benefited from a banana import scheme which granted them access to 775,000 tons of the European market without any customs penalties.

South American bananas are traded by American multinational companies and enjoy the advantages of an economy with lower transportation and transaction costs as well as better organized production.

The ACP (African, Caribbean and Pacific) countries recently lost the battle against their banana import scheme. South American producers sought a legal settlement at the World Trade Organization which the ACP countries claimed was discriminatory. On August 28 2008, the African counterpart launched the "Yaoundé call" to thwart the South American process.

Conceding for nothing

The South American banana industry is more competitive than the African industry. South American produce benefits from a weaker exchange rate between the US Dollar and the Euro. This rate is intended to equate to the CFA franc used in these two countries. Secondly, the South American banana produce is traded by multinational American companies who benefit from a much more developed economy. This makes transportation and transaction costs far more advantageous and facilitates greater organization of production.

The stakes are high for the African countries and the European Union has jumped at the chance to use the banana market as a lever to pressure Cameroon and the Ivory Coast into ratifying various economic partnership agreements. The Ivory Coast, a member of the Western African states like Cameroon who is also a member of the Central African Monetary and Economic Community, were specifically positioned to negotiate this agreement on behalf of other African country members. At first, they refused to sign, but after considerable international pressure they signed the agreement to the dismay of their communities. In hindsight, they conceded for nothing as the European Union gave in to South America's demands.

Cameroon on the offensive

 Cameroon and the Ivory Coast are now forced to adjust to this new situation so as to avoid serious difficulties in their sector. In 2009, Cameroon exported 270,000 tons of bananas to the European market which corresponded to a 170,000 million CFA Franc turnover. With these figures, it seems that at least for the time being, Cameroon does not seem concerned by the reversal of situation. Adopting an offensive attitude, Cameroon in the short term intends to export 400,000 tons to the European Union. Part of this strategy is based on the launch of a new brand of banana called the Makossa Banana. The Cameroon Development Corporation, one of the most important producers in the country, stands as the project manager of this operation which is expected to reach a production of 1750 hectares within three years. The UGPBAN (Bananas from Guadeloupe and Martinique) company who originally supplied fruit beyond the borders of the West Indies, will be in charge of the marketing aspect.

Ivory Coast's attitude of caution

Adopting a more cautious attitude, the Ivory Coast has decided upon pursuing the regional market in West Africa and North Africa.

They currently export 230,000 tons per year to the European market.

The Central Organisation of Producers and Exporters of Pineapples and Bananas in the Ivory Coast (OCAB), who are directly affected by this issue, intend to "focus on the development of the domestic, regional and sub-regional markets". This sector represents 8000 employees but according to the National Organization of Pineapples and Bananas Producers (ANOPACI), this figure could reach 50,000 employees. The organization fears a 14% decrease in production.

The Sahel could be a potential new market to tap into and an interesting source of profit. Production in the Sahel has been reduced to almost nothing after unfavorable climatic conditions. For example, one bunch of 20 bananas would cost 300 francs FCFA (the equivalent of 0.7 Euros) and could be sold in the Ivory Coast for approximately 4.5 Dollars. However, the question of transportation (via roads or trains) remains unsolved along with issues of preservation and meeting the necessary levels of bureaucracy

Despite these concerns, restructuration of the fruits sector is necessary for continued improvement of production and quality. Even in Sahel, progress has been made. In 2001, Senegal produced 15,000 tons of bananas, 18 times its production levels from 4 years ago.