Prior to this the main export had been sugar, but the crop was not sustainable when sugar beet was introduced and grown in Europe, this brought a huge reduction in prices for the exports from the Windward Islands. The Islands were in danger of economic collapse and social unrest.
There was, at the time, no viable alternative to agriculture and bananas seemed like the perfect crop. The sugar cane fields were easily adapted to banana production and were a perfect cash crop for small peasant farmers.
The British Government saw the import of bananas from Windward Island as a perfect solution, the islands were still crown colonies therefore Britain was responsible for them, banana production avoided a further drain on its Treasury, also since they were crown colonies they dealt in Sterling. In the period just after the war this was much more advantageous than dealing with the Dollar countries as it would save Britain valuable foreign exchange. There was also a large and growing market for bananas in the United Kingdom.
"In 1993 things started to change which led to the open market of today. Before 1993 bananas from the Dollar countries were subject to quantity restrictions," explains Bernard Cornibert, Group CEO of Winfresh. "Nowadays there is no limit in volumes from any country as long as they pay the tariff. This has had a huge influence on the UK banana market."
Despite Caribbean bananas still enjoying favourable tariffs on the UK market, the Windward Islands banana industry was affected dramatically by this change in the UK market.
"As a company Winfresh has been able to survive by expanding its supply base, and sourcing from a wider graphical base, primarily from the Caribbean and West Africa, to achieve the best competitive and ethical product mix. However, the changes in the market environment have not been particularly kind to the small producers of the Windward Islands. The fall in the volumes from the Windward Islands, which supplied about two-thirds of the UK market in the years prior the market liberalisation, have been quite dramatic. The majority of the small producers simply do not have the capacity to compete with bigger suppliers to the market However, we continue to work with the producers in the Windward Islands on productive and product improvements to ensure that they maintain some space, however small, in the market" states Cornibert.
1996 in a Joint Venture with Fyffes, Winfresh bought the Geest business in order to protect their interests, "It was rather a bold move on our part given our size and very limited financial resources then," explains Cornibert.
Before this JV, WinFresh exported the bananas to Geest who ripened sold them, so Winfresh just became a more integrated company and took on a wider role in the supply chain. The size of the company obviously grew but the volume of bananas it handled remained more or less the same.
Winfresh's main supplier these days is the Dominican Republic but increasingly they are sourcing from West Africa, "We see ourselves primarily as Caribbean suppliers. We are the single largest supplier of Caribbean bananas to the UK. We are not big in Latin America and do not seek to compete the with companies that source from there. Our unique selling point is that we are of the Caribbean; we know the Caribbean; it is in our DNA and we are proud to be premier Caribbean suppliers of bananas." according to Cornibert.
"The Windward Islands were traditionally the biggest suppliers of bananas to the UK market and so the British consumer grew up with these bananas. We have been in the UK market for over 60 years and we have many loyal customers. We know we supply our customers consistently with good quality bananas and they recognise this. Indeed, there are many end consumers who believe the bananas from the volcanic soils of the Windward Islands bananas are the best tasting bananas."
All of Winfresh's bananas are 100% Fairtrade, the company did some small volumes of organic bananas in the past but Cornibert said that the volumes were not commercially viable. However, with the recent rise in demand for organic, he said the company could reconsider its position on organic.
On the the issue of Panama Disease, Cornibert thought there was a bit of scaremongering. He acknowledged that the disease was dangerous, having virtually wiped out the Gros Michel variety and was already attacking the Cavendish variety in some parts of the world , he did not see the threat to the world banana trade as something imminent. “Obviously, it is something which has to be watched but it is not something over which we are loosing any sleep at the moment", he added.
Cornibert said it is very difficult to predict the market, "The prices of bananas are ridiculously low. Take the UK market for example, the retail price today in nominal terms is half of what it was about 20 years ago. There have been some improvements in productivity, which could have been passed up the value chain, but this could not in any way support the extent of price deflation that we have seen in the market in the last decade. The truth of the matter is that it is hurting and the pain is felt almost throughout the supply chain although the pain is shared quite disproportionately.”
"All the supermarkets know that the price of bananas does not reflect reality and that its too low; that nobody is really making money from it, but no one wants to bell the cat. Maybe when the Panama disease eventually spreads and begins to wipe out the Cavendish supplies the market will get to its senses," comments Cornibert.
He does not think that consumers would buy any less bananas even if the price were doubled, to the level it was two decades ago. "Not that I think the price needs to be doubled, but a reasonable increase in price would give proper returns to all players in the supply chain, be it grower, importer, ripener as well as the retailers themselves. This pressure to keep reducing the price year after year is patently unsustainable."
As for supermarkets using bananas for loss leaders, Cornibert is not sure that this is really the case or does not make sense. Even if it were the case, it does not work because the minute one supermarket drops the price the rest follow suit, so he says that the idea that if you drop the price to attract customers is a fallacy.
"In fact, if one increased the price they would all increase the price, which is what everybody wants. The supermarkets do not earn a proper margin on a big volume item like bananas at the prevailing prices and so a reasonable price increase would make perfect sense. But I will not hold my breath. I think it will take something catastrophic such as devastation from the Panama disease to make this happen," concludes Cornibert.
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or more information:Bernard Cornibert
Winfresh (UK)
Tel: +44 (0) 1371 877000
Fax: +44 (0) 1371 877 038
Email: bcornibert@winfresh.net
www.winfresh.net