Fyffes faces challenge from Chiquita

 

FYFFES, which has bought the Geest banana business in the Windward Islands for £147.5 million in a joint venture with the Windward Islands Banana Development Company (Wibdeco), is facing a challenge from Chiquita to its dominance of the Windwards' banana industry.

Governments and marketing agencies in the Windward Islands are battling to prevent rebel banana farmers from selling their fruit to an American company, a move they contend will damage the already troubled trade in the islands.

The four islands are the main source of bananas consumed in Britain, and the differences between the marketing boards and some farmers coincide with criticism of the recent purchase of the banana business of Geest by a joint venture created by the islands and Fyffes.

This has further damaged the prospects for the industry, which has longer standing concerns over the future of its preferential access to the European Union for a commodity that is the pillar of several island economies.

American banana producers, the US government and some EU governments, want greater access for Latin American bananas to Europe, while the islands and other traditional suppliers to the EU say this would destroy their industry.

This explains the sharp reaction by governments and marketing boards in the islands (Dominica, Grenada, St Lucia and St Vincent) to a move by Chiquita to purchase fruit directly from the islands' farmers.

The farmers traditionally sell to the region's marketing boards and have been told by the boards and the governments that the higher prices being offered by Chiquita should not blind them to the longer term benefits of their traditional markets.

"We would be interested in marketing any portion of the crop that is available, from some minimum volume up to all of it", Mr Michael O'Brien, senior vice president of Chiquita Brands, said.

He said his company wanted to get involved again in the industry in the Windwards as it was before the region was given preferential access to the EU. He denied charges from Windward Islands officials that the company had not discussed its interest in marketing the region's bananas.

Concern in the Windward Islands over the involvement of Chignita in the trade is based on the company's complaint to the US government that the EU import regime is discriminatory as it caps Latin American exporters' access to Europe. The US trade representative agreed and has complained to the World Trade Organisation.

Legislation passed to the parliaments of each of the Windward Islands late last year gave Wibdeco sole authority over the sale of exportable quality bananas, he said.

They fear that others will follow the Banana Salvation Committee, a St Lilian farmers' union, which said it would sell to the US company. In addition to higher prices, Chiquita was offering firm to port transportation and other conditions that were more favourable than those offered by the new joint venture created by Wibdeco and Fyffes, said the union.

"The proposal from Chiquita is like heaven against the hell we are getting now," said Mr Patrick Joseph, the union's general secretary. Farmers were left out of the recent negotiations with Geest.

The £147.5 million joint venture been attacked by Mr Julian Hunte, Lucia's opposition leader, who that the operation would not be profitable, and that about £50 million too much was paid to Geest.

The acquisition includes Geest's British banana holdings with supply and licence to 1999, Geest's European business, two vessels - Geest St Lucia and Geest Dominica - and a Costa Rican farm.