The Association of Organizations of Producers of Platanos de Canarias (Asprocan) has warned that the agreement between the European Union and Mercosur will increase the risk of having an oversupply of bananas from third countries in Europe.
In a statement, Asprocan stated that Brazil produces about 7 million tons of bananas a year and that some of the most important multinationals in the banana production and export sectors are in that country.
"The continued fall in the average price of banana imports in the European Union adds a new element of pressure, especially when the agreement doesn't establish the same environmental and social production requirements that European farmers have to comply with to these countries," Asprocan stated. They also stated adding that the latest version did not indicate the tariff treatment for bananas coming from these countries.
However, according to the Canarian entity, sources from the Alliance for the Defense of European Agriculture in Brussels have warned that under the agreement, the Mercosur countries will be covered by the preferential tariff conditions for the export of bananas since January 2020.
Ecuador, Colombia, Peru, Costa Rica, Panama, El Salvador, Honduras, and Guatemala already enjoy these conditions.
It is possible that the tariff, currently set at 114 euro per ton, will be reduced to 75 euro per ton.
Among the Mercosur countries, only Brazil exports bananas to the EU market.
"Even though their export quantities to the EU market are currently small, Brazilian banana production has great agronomic potential and this country, which is one of the main exporters of fresh fruits and vegetables to the European market, has the infrastructure and the necessary experience to increase their exports of bananas," Asprocan stated.
In addition, they added, some of the most important multinationals in the banana production and export sector are in Brazil.
According to Asprocan, it is foreseeable that the tariff reduction will generate an increase in imports of Brazilian bananas into the European market, which would further exacerbate the oversupply that the EU already suffers and would aggravate the continuous fall in prices.
Brazil produced 6.6 million tons of bananas in 2017 and its production has experienced a slight decrease since 2011 when it produced 7.3 million tons.
Argentina produced 175,000 tons of bananas in 2017, Paraguay produced 72,000 tons, and Uruguay does not produce bananas.
The president of Asprocan, Domingo Martin, has stated that the sector is, once again, facing a situation in which a new free trade agreement favors the increase of banana imports from third countries.
The environmental, labor, social and safety requirements applied to these producers are much lower than the ones that European producers must comply with, he stressed.
"This increases the competition in unequal conditions and puts European productions at risk," Martin said.