The following is a statement on the UK banana trade suspension by Hon. Alfred P. Prospere, Minister for Agriculture, Fisheries, Food Security and Rural Development.
In July of 2021 when the Saint Lucia Labour Party government came into office, we found a banana industry that had collapsed under the UWP government. Banana trade with the UK was halted for two years. The critical infrastructure required to efficiently operate the industry was dismantled. The main banana exporting company WIBDECO/Winfresh ltd went into administration. key assets such as the ripening facility at Stanstead (UK) and Winfresh’s stake in the Geest shipping line were sold off to third parties to meet debt payments.
This meant that the main components of the banana exporting company such as shipping, marketing, and logistics were lost. The local producer base/farmer’s organization, the NFTO was facing financial losses and technical challenges. They had to immediately assume responsibility for the commercial arm of the trade although they did not have the resources and expertise to adequately perform that role. The situation at the time seems rather bleak.
My government, in recognition of the socioeconomic consequences and the critical role of the banana trade in rural communities found it necessary to intervene for the sake of maintaining social peace and economic mobility in rural communities. In the national interest, we saw it prudent to inject the necessary financial and technical support required to recommence trade with the UK supermarkets. A loan facility was established to inject EC$3.8 million dollars into the NFTO.
To further emphasize the commitment of the government to our farmers and the people of St Lucia, a government lead delegation traveled to the UK to meet with the supermarket representatives to ascertain how best to proceed with the trade and finalize contractual relations with our farmers. As the trade evolved, I demonstrated the interest of the Government of St Lucia in the banana trade by keeping in direct contact with our farmers, the NFTO, and our UK supermarket partners.
In early May of 2022, a technical delegation from the UK, visited St Lucia to determine the state of readiness prior to the commencement of trade. The technical field visit was deemed satisfactory and trade with the UK commenced immediately on the 15th of May 2022.
During the period of trade, the Saint Lucia Labour Party Government has continued to provide support to our banana farmers by subsidizing inputs such as oils and fertilizer to farmers. In addition, we have actively pursued other regional markets with a view of providing further opportunities for our farmers.
We were successful for a certain period, whilst we tried to rebuild the banana industry. Unfortunately, the long-term impact of covid on the supply chain and the ongoing war in Ukraine have presented some major challenges that threaten the economic viability of the trade at this time.
The high shipping and fuel cost associated with a container of bananas is stated at US$8,200.00 per container and rising. Although fifty percent of the shipping cost was subsidized by the supermarket chain, it was difficult to sustain once fuel prices keep rising. The costs of key inputs such as fertilizer, oil, bags, and other inputs are rising daily. The extended journey time to reach the UK is proving uncompetitive as compared to other suppliers.
The Geest shipping line has a monopoly over the route they have shown no interest to modernize the container units that transport our bananas. It is critical to note that if the UWP government had not sold off our stake in the shipping business, we might be able to subsidize our shipping cost and modernize the containers to our requirements and select a shorter travel route that would give our bananas a competitive advantage as was previously done when we once owned shares in the Geest line. Today we are now being haunted by this critical decision to sell our stake in the shipping business.
The ongoing challenges required a review of the trade to evaluate the business case and ascertain whether the parties are making the monies that they had anticipated prior to the commencement of the trade.
The contracting parties, NFTO, and the UK supermarket chain have informed the government that they have mutually decided to suspend the trade as they monitor the current situations impacting the trade both in the Caribbean and the UK. The cost-of-living crisis and rising energy costs over the next few months have created major uncertainties for everyone. As soon as both parties are satisfied that it is profitable to proceed then the trade will be activated.
Fortunately for our farmers, the efforts that we have employed in pursuing the regional markets are showing signs of progress and growth. The consignment of bananas originally assigned to the UK market will now be diverted to the regional market and the weekly trade will be maintained.
The NFTO along with government support are currently following up on additional inquiries within the region and shortly they will be able to increase our regional market presence and volumes. We continue to encourage our farmers to maintain the highest quality that is associated with our bananas as we look forward to expanding the regional trade.
My government, a St Lucia Labour Party Government that “Puts People First”, will continue to do what is necessary, to ensure that we respond to what is in the interest of our farmers, as they seek to make a decent living, by doing what they love, and what they are very good at doing.
SOURCE: Ministry of Agriculture