Following the UK’s suspension of banana trade with Saint Lucia, Alfred P. Prospere, Minister for Agriculture, Fisheries, Food Security and Rural Development, made a statement to the nation.
Here is the press release issued by the minister:
In July 2021, when the Saint Lucia Labor Party (SLP) government took office, we found a banana industry that had collapsed under the United Workers Party (UWP) government. The banana trade with the United Kingdom was interrupted for two years.
The essential infrastructure necessary for the efficient operation of the industry has been dismantled. The main banana exporting company WIBDECO/Winfresh ltd has been placed in receivership. key assets such as the Stanstead ripening facility (UK) and Winfresh’s stake in shipping company Geest were sold to third parties to meet debt payment.
This meant that the main components of the banana exporting business, such as shipping, marketing and logistics, were lost. The local producer base/farmer organization, NFTO, was facing financial losses and technical challenges. They had to immediately assume responsibility for the commercial side of the trade, although they lacked the resources and expertise to adequately fulfill this role. The situation at the time seems rather grim.
My Government, aware of the socio-economic consequences and the crucial role of the banana trade in rural communities, has deemed it necessary to intervene to maintain social peace and economic mobility in rural communities. In the national interest, we felt it prudent to inject the necessary financial and technical support to resume trade with UK supermarkets. A loan facility has been established to inject EC$3.8 million into the NFTO.
To further underline the government’s commitment to our farmers and the people of Saint Lucia, a government-led delegation traveled to the UK to meet with supermarket representatives to determine how best to proceed with trade. and to finalize the contractual relations with our farmers.
As the trade evolved, I demonstrated the interest of the Government of Saint Lucia in the banana trade by staying in direct contact with our farmers, the NFTO and our UK supermarket partners.
In early May 2022, a technical delegation from the United Kingdom visited Saint Lucia to determine the state of readiness before the start of the exchanges. The technical field visit was deemed satisfactory and exchanges with the UK began immediately on May 15, 2022.
During the trade period, the Saint Lucia Labor Party government continued to support our banana growers by subsidizing inputs such as oils and fertilizers to farmers. In addition, we have actively sought out other regional markets to provide new opportunities for our farmers.
We were successful for a while as 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 major challenges that threaten the economic viability of trade at this time.
The high cost of shipping and fuel associated with a container of bananas is estimated at $8,200.00 per container and rising. Although 50% of shipping costs were subsidized by the supermarket chain, it was difficult to sustain them once fuel prices continued to rise.
The costs of major inputs such as fertilizer, oil, sacks and other inputs are increasing every day. The extended journey time to reach the UK proves to be uncompetitive with other providers.
The shipping company Geest has a monopoly on the route, it has shown no interest in upgrading the container units that transport our bananas. It is critical to note that if the UWP government had not sold our stake in the shipping business, we may be able to subsidize our freight costs and retrofit containers to our needs and choose a travel route shorter which would give our bananas a competitive price. advantage as it used to be when we once owned shares in the Geest range. Today, we are now haunted by this crucial decision to sell our stake in the shipping sector.
Ongoing challenges have necessitated a review of the transaction to assess the business case and determine whether the parties are earning the amounts they had anticipated prior to the start of the transaction.
Contracting parties, NFTO, and the UK supermarket chain have informed the government that they have mutually agreed to suspend trade as they monitor current situations affecting trade in both the Caribbean and the UK. -United.
The cost of living crisis and rising energy prices over the next few months have created great uncertainty for everyone. As soon as both parties are convinced that it is profitable to continue, the transaction will be activated.
Fortunately for our farmers, our efforts to capture regional markets are showing signs of progress and growth. The shipment of bananas originally intended for the UK market will now be diverted to the regional market and the weekly trade will be maintained.