European Union expansion offers potentially lucrative new banana markets - UN

With bananas providing the fifth most important commodity for world food security, European Union (EU) expansion from 15 to 25 countries in May could signal the promise of lucrative new markets for African, Caribbean and Pacific Group (ACP) producers, the United Nations agricultural agency said today.

"One of the most coveted emerging markets for banana producers is that of the 10 new countries that will join the Single European Market in May," the Food and Agricultural Organization (FAO) Commodity Specialist Paul Pilkauskas told the Third Session of the Intergovernmental Group on Bananas and Tropical Fruits in Puerto de la Cruz, Canary Islands, Spain.

In the coming weeks, the EU will decide how the transitional tariff-quota system will be applied to banana imports between 2004 and 2006. Beginning in January 2006 a tariff-only system will be established. According to FAO, these two decisions will have a significant impact on producer countries, because currently one third of the world banana trade is destined for the EU.

A final decision, Mr. Pilkauskas said, will affect all banana producers, whether in the Canaries, in Latin America or in the ACP countries. “Currently only the ACP countries are allowed to enter the single European market free of any tariff or charge,” he noted.

Oversupply relative to demand is a continuing issue in the banana trade, while the future of the sector is less than clear given the evolving world agriculture trade system, FAO said.