EU Banana Skin Awaits Fruit Growers

Germany is a banana republic. Within the EU, which is the largest importer of bananas worldwide, over 1.1 million tons end up in Germany. The country leads in consumption of the tropical yellow fruits. In 2003, Germans ate 17.7 kilograms of bananas per household. Only the teacher's favorite, the apple, is more popular.

The popularity of bananas isn't hard to explain. They are healthy. Their color and taste remind us in freezing winter that there are places out there that are sunny all year round. Bananas are endowed with a naturally practical packaging, ensuring you don't make a mess. Plus, they have an ample supply of serotonin, a hormone which puts us in a good mood.

But German fruit companies are afraid the euphoria surrounding the banana could soon evaporate. With the European Commission recommending raising duties on bananas from countries outside the EU to €230 ($298) per ton by 2006, there is fear that prices could spiral.

Calculations not correct

Representatives from the German Fruit Retail Association (DFHV) had a bitter taste in their mouths when they heard the announcement.

According to the DFHV, the European Commission made their duty recommendation of €230 per ton on bananas as of 2006 based on wrong price statistics.

"The calculation of the duty is based on wrong numbers," said Ulrich Boysen, head of the DFHV. He said that the numbers the commission used were simply a false sample of data. The European Commission had come up with a price of € 890 per ton. The DFHV's calculations lie at under €700 per ton.

The result will be a higher customs duty on the banana. But to understand how the commission reached its decision one has to understand the complicated duties system of the EU.

It starts with the fact that European banana producers are subject to competition from so-called cheap "dollar" bananas outside the EU. In order to protect the EU farmers, a complex set of quotas was implemented. Currently, EU fruit retailers import over 3 million tons of bananas annually. The duty stands at 75 euros/ton.

Beginning in 2006 however, the EU wants to simplify the importation. The quota system will be dropped in favor of a straight-forward customs duty. This was the result of an agreement Ecuador, one of the world's biggest banana exporters, made with the US and the EU. This new duty will be markedly higher and German retailers are worried that the bendy tropical wonder will lose its appeal.

The future of the banana

European banana producers do not have it easy against their cheaper competitors from Latin America. Their wares are currently protected but the banana is still a good bargain. If the customs duties are tripled like the European Commission suggests they should be, it will be the consumer who will have to dig deeper into his pocket -- and possibly decide to buy fewer bananas.

The fruit retailers may just be suffering from a case of sour grapes. On the other hand, consumers may just decide to purchase more grapes -- or oranges, or pineapples in the future. This should equally satisfy the fruit retailers.