Study shows positive impact of CAP on the preservation of EU banana production

Today, the European Commission published a report on the situation of the EU market for bananas and EU banana producers after the expiry of the stabilisation mechanism for bananas. The report finds that POSEI (scheme of specific measures for agriculture in favour of the outermost regions of the Union) and Rural Development Programmes (RDPs) continued to support EU banana producers in the outermost regions and helped the preservation of banana production in the EU in a context of increasing import volumes and competition from third countries.

The regulatory framework for imports of bananas in the EU underwent several changes in the last 30 years. Recently, imports of bananas from Latin American countries were subject to a Banana Stabilisation Mechanism (BSM), which lasted until 31 December 2019. The BSM was introduced in 2013 by the Free Trade Agreement between the EU and Colombia and Peru (joined by Ecuador in 2017), and by the EU-Central America Association Agreement comprising Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. It was designed as an accompanying measure to the progressive implementation of the tariff preferences.

The report looks at the evolution of the EU market for bananas from 2012 up to 2021. It finds that in the EU, total supply comprising imports and domestic production has increased by 37% over the period to reach 5.8 million tonnes in 2021, making the EU the most important banana market in the world. In 2021, EU production represented around 11% of total supply, while imports were mainly from Latin American countries (74%) followed by ACP countries (15%).

While EU supply has been quite stable between 2012 and 2021 (with important regional variations due to climatic events and pests), the increase in demand from EU consumers was met by an increase in imports accounting for 89% of total supply in 2021 and increasing from 85% in 2012.

The report also highlights the positive evolution in prices for EU producers in recent years against lower and decreasing values of imported bananas (especially from Latin America). This has allowed EU producers to keep a rather stable market share in terms of value for most of this period. Within the EU, marketing strategy and an efficient use of the POSEI and RDPs resources seem to play an important role in the competitiveness of the European banana sector.

The report also confirms that EU trade policy struck the right balance between different objectives by respecting the EU’s international obligations, maintaining a stable relationship with all EU trading partners and meeting the steadily increasing levels of EU consumption.

Finally, the report reiterates that following a specific review clause in the Agreements, it was discussed and concluded that no further concessions would be considered after 2020.

Background

Due to their specific characteristics, the EU supports the agricultural sectors of the outermost regions – Guadeloupe and Martinique, (France), the Canary Islands (Spain), the Azores and Madeira (Portugal). The POSEI scheme provides targeted assistance to these regions. 

The POSEI scheme is essential to maintain local agricultural production and ensure an adequate supply of agricultural products in the outermost regions. The POSEI programmes are designed by the Member States based on the principle of subsidiarity.

The amount available for the three Member States concerned is EUR 653 million per year, of which 43% goes toward the banana sector: Spain allocates an annual budget of €141.1 million for the Canary Islands, France €129.1 million for Martinique and Guadeloupe, and Portugal €8.6 million for Madeira and Azores.

The POSEI basic regulation does not define any specific allocation for banana production. Member States decide, based on the identified priorities in the programmes of each outermost region, the types of measures to apply, their financial allocations and conditions of eligibility. Membership of a recognised producer organisation is a common eligibility condition.

The Member States concerned (France, Portugal, Spain) report to the Commission on the performance of the programmes through annual implementation reports (AIRs).