COUNTRY REPORT ON ASSISTANCE TO JAMAICA Eva M EU ...

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Michael Hubbard - University of BirminghamAlicia Herbert - University of Birmingham

Yves Roumain de la Touche - Synergie

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c/o Nordic Consulting Group a/sKirkevej 8

DK-2630 TaastrupTelephone (+45) 43 71 62 00

Telefax (+45) 43 71 99 [email protected]

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1. Summary...................................................................................................................... 1

2. Design and implementation of the assistance .............................................................. 52.1 Identification and formulation process: ................................................................ 52.2 Coherence and realism of project design: commentary on log frame .................. 6

3. Relevance of the assistance to economic development strategy of the country.......... 11

4. Efficiency of the assistance ........................................................................................ 214.1 Cost effectiveness............................................................................................. 21

5. Effectiveness of the assistance .................................................................................. 235.1 Results achieved............................................................................................... 23

6. Impact of the assistance............................................................................................. 276.1 Contribution of the achievements of the project to the overall goal

of the assistance ............................................................................................... 276.2 Social impact..................................................................................................... 27

7. Economic and financial analysis................................................................................. 337.1 Financial viability of the key implementing organisations................................... 337.2 Major risks......................................................................................................... 33

8. Sustainability and Replicability ................................................................................... 35

9. Conclusions and recommendations............................................................................ 379.1 Overall outcome................................................................................................ 379.2 Market uncertainties.......................................................................................... 379.3 Future strategy.................................................................................................. 389.4 Recommendations ............................................................................................ 39


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A. Competitiveness of banana export production in Jamaica: achievementsand agronomic analysis

B. Logframe for assistance to Jamaica banana production under Regulation2686/94

C. Uses of assistance fundsD. How to overcome the problem of slow transfers from Brussels:

note from Rural Development AdvisorE. Price lists for BTC and St Vincent Banana Growers AssociationF. Terms of reference for a study of beneficial development of the working

relationship on the Jamaican estates, in an international contextG. Terms of reference for a participative study of social change and opportunities

in banana dependent parishes, accompanying the restructuring of the bananaexport industry

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AIBGA All Island Banana Growers AssociationBECO Banana Export Company of JamaicaBTC Banana Trading Company, which sells inputs to growers and manages

loans from revolving fundsCTO Certification and Technology Transfer Officers, i.e. extension officersCTU Certification and Technology Transfer Unit, carries out extensionDMU Disease Management Unit, in charge of sigatoka sprayingEUBSP European Union Banana Support Programme; the project management

unit within BECOJP Jamaica Producers Ltd


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Regulation 2686/94 was passed by the European Council in October 1994. Its purposewas to compensate ACP banana producers for losses suffered as a result of the newbanana regime which accompanied the creation of the single European market in 1993.It took effect retroactively from July 1 1993, and expired in February 1996. The assistanceamounted to ECU 180 million over three years, half of which would compensate for pricefalls resulting from the new regime and half of which would support diversification andmodernisation (Nurse & Sandiford 1995:118).

The overall objective of Regulation 2686/94 was to help traditional ACP banana producers‘adapt to the new market conditions following the establishment of a common organization ofthe market in bananas’ (Article 3.1). This provided for greater access to bananas from non-ACP sources (‘dollar’ bananas) and for easier movement of bananas among EU countries.

Specific objectives (Article 3.2) were to:

- improve quality- adapt production and distribution methods to meet quality standards specified

in Article 2 of Regulation (EEC) No. 404/93- establish producers’ organisations to improve marketing and competitiveness- develop a production/marketing strategy to meet the requirements of the market

in the Community in the light of common organization of the market in bananas- assist with training, market intelligence, development of environmentally sound

production methods, improving the distribution of infrastructure, improving tradeand financial services to banana producers and/or competitiveness.

Assistance under 2686/94 was determined by a formula estimating the gap betweencurrent competitiveness of the country concerned and the level to be reached in orderto be fully competitive. Under this formula the less the competitiveness, the greaterthe assistance. The mode of assistance (income support or financing agreement)was determined by whether market prices had fallen or not.

Jamaica received a total of 10.75 MECU through 2686/94 as follows:

Income support: 1994 1 993 496 ECU1996 5 774 000 ECU

Financial andTechnical assistance 1995 3 050 000 ECU

Details of the disbursements of funds are at Annex C.

The assistance was organised into a coherent Banana Support Programme, the overallobjective of which was to increase the competitiveness of the Jamaican banana exportsector. It is implemented in three phases, each governed by a separate agreement:


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Activities:

- Phase 1 Income support 1994 Water managementDisease controlInput supplies

- Phase 2 Tech & Financial Assistance 1995 Water managementDisease controlInformation system

- Phase 3 Income support 1996 Water managementFruit harvesting & Preservation ofQuality (Certification programme)Technology transfer (Extensionteam)

Phase 2 follows up Phase 1, while Phase 3 complements phases 1 and 2 and is implementedsimultaneously with Phase 2.

3. The mode of assistance was determined by whether market prices had fallen the pre-vious year in EU. Thus price falls in 1993 meant that 1994 assistance was in the form ofincome support, similarly in 1995. Rising prices in 1994 resulted in the 1995 assistancebeing in the form of a financing agreement.

4. The assistance is aimed primarily at the non-estate banana growers. The estate sectorexports some 70% of exports.

5. The evaluation visit took place 18-26 March1999. Information on the use of the assistanceand progress of the industry was given by BECO and the Jamaica Delegation, followed byvisits to the main smallholder banana growing areas receiving assistance and to the SanAntonio port. The three person team was:

• Alicia Herbert, University of Birmingham (sociologist)• Michael Hubbard, University of Birmingham (economist & team leader)• Yves Roumain de la Touche, Synergie (agronomist & banana industry specialist)

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This section summarises the overall arguments and recommendations of the evaluation.It begins with a SWOT analysis which overviews the strengths, weaknesses, opportunitiesand threats, first to the industry and then to the assistance. This is followed by anoverview of the assistance, its relevance to Jamaica, how well it has been designedand implemented, and its wider impact and sustainability. A list of recommendationsand lessons ends the summary.

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In the boxes below are brief SWOT analyses of the Jamaican banana industry and ofthe assistance, summarising the key issues.

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1. Jamaica’s banana export industry benefits from strong leadership in two areas:

(I) The Banana Export Company of Jamaica (BECO), which was established in 1985as part of a privatisation programme. It took over the business functions of theparastatal Banana Control Board. These include sole rights to export Jamaica’sbananas. BECO accepts growers’ bananas and sells them in the UK. Its UKmarketing arm is JAMCO which deals with import licence negotiations with theEC Intervention Board and oversees the grading of Jamaican bananas by theimporters (Jamaica Producers and Fyffes). BECO works closely with the com-mercial leadership in the Jamaican banana industry. BECO has no long termdebt (unlike Jamaica’s other commodity export organisations—citrus and coffee).BECO has therefore provided a stable and viable organisation on which develop-ment initiatives for the industry have been built, including the EU assistance.

(II) Commercial leadership is provided by the long established Jamaica Producerscompany, which has grown from a producers’ organisation into an integrated fruitgrowing and marketing company quoted on the Jamaica stock market. It hasownership in all three of Jamaica’s banana estates (which produce some 70%of Jamaica’s export bananas), charters the ships which carry Jamaica’s bananasand imports two thirds of them into the UK, possessing its own ripening facilities.Fyffes are the other major player in the industry, with joint ownership with JamaicaProducers of estates and importing one third of Jamaican bananas into UK.However, Fyffes keeps a generally lower profile locally than Jamaica Producers,whose managing director is chairman of BECO.

2. Jamaica’s population is larger and the economy more diversified than many otherbanana producers, with a larger local demand for bananas both fresh and as rawmaterial for processing (Jamaica Producers makes banana crisps, ketchups anda banana drink ‘Stamina’ informally promoted as the Jamaican answer to Viagra !).The local market often offers attractive prices with less work and care required bythe grower than for the export market.


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1. Like the Windward Islands, Jamaica’s banana exports suffer from falling volume ontrend since the mid 1990s, the result of weakening prices (especially for non-premiumfruit), natural disasters, arrival of black sigatoka, and labour difficulties on the estates[???].

2. The result is that their EU quota has not been filled.

3. A further weakness may arise from the demand for quota from other banana producers,enabling BECO to sell the quota at about 40% of the price received by growers (approx.US$4 per 18 kg box). Does this sale of unused quota reduce BECO’s incentive to fillthe quota itself, because the cost of not doing so is reduced ? If so, it is the industryas a whole which suffers since it is not given as much incentive to invest. However,the higher prices which producers receive through being paid the proceeds of the quotasale (BECO distributes all surpluses to growers) should increase growers’ incentive toexpand production. Whatever the outcome of these opposing forces on production, anet effect of the protection is to reduce the industry’s competitive incentive—perhapsin the downstream operations (shipping and UK sales) where there is a suggestion(not investigated by this evaluation) of room for greater efficiency.

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1. The accord reached between organised labour and Jamaica Producers on the estatespromises more productive cooperation. Labour has accepted a productivity related paydeal which, while reducing current pay, offers the opportunity for workers to earn morethrough productivity increases.

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1. Removal of privileged EU access. With evidence that production in the industryresponds to price, this would result in further decline in production.

2. If the forces which have resulted in decline in Jamaica’s exports in recent years are notsuccessfully countered by current initiatives, falling profitability will threaten the industry


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1. The assistance is intelligently and flexibly managed by the BECO team in a difficultinstitutional environment

2. There is strong commitment by BECO in providing bridging funds to ensure that theBanana Support Programme functions at times when EC assistance is delayed inBrussels (most crucially when the Phase 2 payment was delayed 6 months)

3. The inputs supply service, port improvements, and sigatoka control have alreadyproved of considerable benefit to growers.

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1. The design of the assistance underestimated the difficulties facing irrigation, and it leftthe start of the extension effort and certification until two years into the programme.The on-farm investments have been the slowest moving part of the assistance.

2. Insufficient engagement with the productivity problems of the estate sector, and to alesser extent the medium scale farms. But these provide over 70% of exports and theyare presently in crisis.

3. Insufficient orientation to performance targets for services taken on

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Where possible to put the service teams (sigatoka spraying, research, extension, tissueculture provision) increasingly on a cost recovery basis, letting them manage their ownresources, retain revenues and compete for project work.

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1. The operations of the extension team and spraying teams are presently subsidisedby the EC assistance, with their prospect for becoming cost covering depending onprofitability increases among the farmers they serve. Their existence is threatenedif assistance ends and such profitability increases have not materialised

2. There is a ‘capacity building’ approach to the assistance, with BECO taking on and re-invigorating service teams of other organisations in the banana industry. This createsthe risk of BECO moving away from its core function and having to finance high costservices, or abandoning the services.

The evaluation team focused on the aspects of the industry which are being assisted byEC, i.e. smallholder production, input distribution and the port. Nevertheless, we learnedsufficient about the situation on the estates to conclude that they are in a crisis with labourand in need of further investment to raise productivity. After forcing through a 30% wagecut and performance based pay in December 1998, disputes continued into 1999 with stayaways by workers, resulting in falling productivity and quality scores. Eastern estates hada PUWS score of only 75 for the first quarter of 1999, meaning a large fall in revenue. Withthe estates providing the commercial backbone of the export industry there is an urgencyto put them back onto a sound footing, which will require substantial investment.


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The assistance was consolidated into the EU Banana Support Project, located inBECO. It was designed to raise the incomes of farmers by on-farm investments inirrigation, drainage and packing, by port improvements, by sigatoka control and bymaking inputs more cheaply available. A certification programme modelled on thatof the Windward islands is being promoted.

The assistance has had clear success in the port improvements, input supplies andsigatoka control. The on-farm investments in irrigation and draining have proceededmore slowly than expected. The orientation of the project has been to the non-estatesector. Raising productivity on the estates and medium farms needs to be a priorityfor future assistance.

Recommendations:

• Set clear targets for the BECO service teams’ outputs

• Where appropriate, prepare BECO service teams for greater independence, inwhich they manage their own resources, retain their revenues and bid for BECOwork

• Find ways to reduce the cost of insurance, freight and EU marketing by BECO

• Evaluate the performance of SRC and Banana Board research departments,since this does not appear to have been done before committing Phase 3programmes to them

• Give priority in future assistance to on-farm investments to raise productivity.

• Engage the project more closely with the task of raising productivity on theestates and medium scale farms

• Commission a study of working and social relations on the estates (to helpresolve the current difficulties beneficially and with a view to internationalstandards of good estate practice). Draft TOR are at annex F.

• Commission a study of the social dynamics of the changes in the smallholderareas which are occurring with the drop out of many smallholders from thebanana export industry (with a view to alternative income generation).Draft TOR are at annex G.


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The value of assistance under Regulation 2586/94 to each ACP banana producingcountry was determined by the estimated gap between the costs at which it wasable to sell bananas in Europe and the lower production costs of ‘dollar bananas’.The intention was that the assistance should help ACP banana producers closethe competitiveness gap.

The competitiveness gap was always more likely to be closed more quickly by bananaproducers whose soils, climate, topography and sector organisation allowed increasedinvestment in improved varieties, water, drainage, packing and loading to yield moreand higher quality bananas. Jamaica is not in this first category, since:

• its growing conditions range from excellent on the best estates in the flat valleysto much less good in many smallholder farms on steep slopes

• the assistance can not be managed as direct supplementation of growers’investment plans, as in Cameroon, owing to the large number of growers tobe assisted

• the assistance requires some organisational development for the industryie. Banana Trading Company to sell the inputs, and the spraying teams,and extension team.

• there is much work to be done in the extension effort to educate andmotivate smaller growers

• there is good banana land lying idle owing to owners being occupied off-farm,and suggesting marginal returns to banana investment (perhaps particularlyfollowing the drought of 1997 and floods of 1998).

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• origin of project idea

The project was the result of dialogue between BECO, the Planning Institute ofJamaica and the Delegation of the EC in Jamaica. It stemmed from Jamaicanexports being consistently below their country quota to the EC, with productionconstraints being regarded as the major threat to income generation and to longterm competitiveness. In 1995 average banana production levels were about 7.5tonnes per acre. Medium and small scale farmers, making up 50% of the bananaacreage, were regarded as having potential for improving performance and wereselected as the main target for the assistance programme.

• involvement of beneficiaries and interest groups

• BECO represents a cross section of Jamaican banana growers and is thekey organisation in the banana industry of Jamaica

• studies undertaken

Field surveys were undertaken and consultancy inputs provided by theNatural Resources Institute of UK.


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The purpose of assistance under Regulation 2686/94 was to increase competitivenessof the ACP banana industries. The results of the assistance should therefore be in-creases in quantity and quality and reductions in costs of production and marketing.

The assistance aimed to increase profitability through providing cheaper inputs,irrigation and drainage, sigatoka control and improved packing, loading and storagefacilities. To put these into action it has established and operates its own inputssupply, spray teams and extension team, plus financing a research team, andproviding revolving funds of subsidised credit. The small project team is basedat Boundbrook wharf and is an integral part of BECO.

A log frame was prepared for Phase 1 (at Annex B), and has not been revised since.It set the target of increasing industry wide average yields to 15 tonnes per acre by1999. This is approximately a 33% increase over the peak year of 1996, which wouldtake exports up to Jamaica’s tariff free quota of 105 000 tonnes per annum. It seemsunlikely to be realised in 1999. But it remains a realisable target with time: the estatescontribute over 70% of exports and yield 14 tonnes per acre (peak year1996) ---without deep drainage, variety improvement or vitroplants. With such investmentsit should be possible to raise yields sufficiently to bring the industry average up to15 tonnes, especially if the non-estate sector can improve on its current yield of3.5 tonnes per acre.

However, in the logframe as it stands there is some lack of coherence between theorientation of the assistance towards non-estate banana producers, on the one hand,and the purpose and overall objective which are to raise exportable yields and raisecompetitiveness of Jamaica’s banana export industry within a short time frame.This purpose and objective would have been better served by focusing theassistance directly on the estates and large farms, perhaps on a co-finance basisas in Cameroon. So, since the project was designed to assist mainly the non-estatesector its purpose and overall objective cannot be simply to achieve a 15 tonnes/acretarget by 1999, which is not feasible for non-estate production.

Clear target setting and monitoring of achievement are particularly important forthe mode of assistance adopted by the project. As indicated in Figure 2.1 below,assistance can be delivered in different modes, ranging from direct subsidisation(which is the least difficult to deliver) through to institution building (which is themost difficult):


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1. Donor direct togrower

2. Donor to growerassociation togrower

3. Donor to changeagents to growerassociations togrowers

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Easy, provided growers arefew

Easy, provided growers arefew and association effective

Less easy if growers arenumerous and associationineffective

Difficult; very difficult if thereis conflict among them

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• No intermediaries to distortor absorb resources;

• Assistance can be linkeddirectly to growerinvestment priorities byco-financing.

Small, grower controlledassociation can facilitate

Ineffective association overwhich growers have littlecontrol is a problem

Complex chain, in which muchresources can be expendedwithout benefiting growers.Institutional change neededbefore financial assistancecan be effective.

The Jamaican assistance falls approximately into level 2 of difficulty in Figure 2.1:assistance is through an effective association but growers to be assisted are numerous.This requires a degree of organisation building, i.e. diversion of resources fromdirect assistance to beneficiaries into building capacity for provision of services.Experience worldwide underlines that capacity building projects must operate withclear output objectives to succeed. The EUBSP is involved in capacity building inrespect of: input supplies (BTC), sigatoka control (spraying teams), water managementteam, technology transfer (extension) and research and vitroplant generation (SRC).Over 40% of EUEUBSP expenditure has been allocated to these various services(Annex C). In the case of technology transfer, BECO has taken over the team fromthe AIBGA. In the case of research and vitroplants, the contract from BECO coversmany of SRC’s basic costs.

There is perhaps the risk here that the successful and resourceful management ofBECO is:

• taking on management of tasks that are not their core business of exportingbananas

• taking on the capacity that less successful organisations could not make gooduse of, partly for the sake of preserving that capacity. This is not a problemprovided that EUBSP can make good use of them, but could become one ifalternative providers (eg. importing vitroplants) provide a better service, or theservice is no longer needed, but EUBSP has locked itself into long term staff orsupply contracts.


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While building of local capacity is to be applauded it must be competitive capacity.To maximise the flexibility and competitiveness of new capacity, modern practice isto contract in an entire service (just as the Jamaica estates have for their staff) ratherthan individual staff and resources—particularly where the service concerned is notcore business. The basis of the contract is the performance level (the outputs), notthe inputs. Using this approach the arrangements for the employment of serviceswhich the EUBSP has taken on would have been governed more by contract andperformance, perhaps along the following lines:

1. The VSUD\LQJ�WHDPV would be managed as a separate entity, with the clear under-standing that they are being prepared for eventual financial independence. To dothis, staff contracts would be moved into the separate organisation and EUBSPpayments to the organisation would be on the basis of an output contract, relatedto the performance of the team (presumably a supplement to their earnings fromthe contract spraying they undertake, subject to maintaining a high standard).This would encourage them to find additional customers and keep on improvingthe standard of their work. They would control and maintain their own vehicles,equipment and stores and liaise directly with the meteorological services. In timethey would become a separate small business. To provide competitive incentiveto them EUBSP should move towards assisting sigatoka spraying (to the requiredstandards of course) carried out by any team or individual, not just by BECO’steam. 1 The licensed spraymen initiative is a step in this direction.

2. The WHFKQRORJ\�WUDQVIHU�WHDP��H[WHQVLRQ�WHDP��would be employed as a uniton contract, for a set task in a specific location, over a given time. The extensionteam would use its own vehicles (the main extension tool), and cover all its owncosts from the contract payment. Performance against the contract objectiveswould be monitored. The model could be the way NGOs are employed to carryout particular social projects.

3. The LQSXWV�VXSSO\�VHUYLFH, by contrast, would be retained within BECO—since ithas been specifically created because of the level of monopoly and inefficiency inprivate sector input supply firms. It has achieved great cost savings over privatesuppliers. Further cost savings might be attained by greater communicationamong Caribbean banana exporting firms regarding input prices and sources(see annex E which compares the BTC and St Vincent Banana GrowersAssociation prices). BTC should not subsidise input prices—it encourages on-selling of inputs bought below the market price, thereby frustrating the purposeof the subsidy. If it desired to help growers, subsidies should rather be directedto the product price to encourage increased production.

�� 9LWURSODQWV�SURYLVLRQ��would go to tender, including international suppliers

�� 5HVHDUFK�WHDP��would tender for a programme of research on specific problems,rather than being offered wide ranging funding for a general research programme.2

1 If public funds are to be used for sigatoka spraying in particular areas, the reason must be thatcombating sigatoka brings public benefit. Therefore whoever carries this out – not just one team –is providing public benefit.2 The Banana Board research team had previously relied on grants from BECO of some $JD 3 millionper year, plus outside assistance.


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The hypothetical arrangements outlined above are exclusively contract based.In practice, many considerations prevent actual arrangements adopted from beingbased purely on contracting with firms for outputs to be provided. It is necessaryto take on individual staff and resources when they are performing core functionsof the organisation. However, it appears that in the case of EUBSP services therehas been a tendency towards the opposite extreme: of internalising services andrescuing services of local organisations which were in financial need (i.e. theextension team taken over from the AIBGA, the vitroplant contract to the SRC andthe Banana Board’s research department). No doubt the excellent morale withinBECO and its high standard of management motivate all who are taken on to givetheir best. But there are risks in this strategy, regarding sustainability, costs andreduction in focus:

• The main risk is lack of sustainability: when the aid funds dry up the servicesstop or run down because the service organisations have not been helped tosurvive and compete.

• The extra costs tend to be in staff and resource use—particularly vehicles. Firmscontracting for business have to manage their staff and vehicle use carefully withregard to their goals. Aid sponsored organisations are under less pressure to do so.

• The focus on performance can be reduced where energies are going in tocapacity building in organisations

BECO’s success should not be allowed to hide the risk that it could in the future,through loss of the commercial support it receives from the estates for example, orloss of critical personnel, or of assistance, be left in the same position as the publicsector organisations whose services it is currently taking on. The challenge it facesis to change the way of providing services, so that they can compete and survivelocally. For that, tendering and contracting play a key role.


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Among ACP banana producers Jamaica occupies a middle position:

• with a GNP per capita of about US$1 500 per year, Jamaicans are abouttwice as wealthy as Cameroonians and Ivorians, but only two thirds as wealthyas Windward Islanders.

• it has major estates but also a non-estate export sector, whereas the Windwardshave only smallholders and Belize, Cameroon and Ivory Coast have only estates

• there is a strong local market for bananas, whereas in the African producers bananasand plantains are a staple while in the Windwards and Belize there is little domesticmarket.

• the population of two and a half million is a lot bigger than Belize or the WindwardIslands but much smaller than Ivory Coast or Cameroon.

While bauxite and alumina is the single largest export sector, the manufacturing sectorcontributes 18% of GDP consisting mainly of textiles, beer, rum and cigarettes. Tourismhas grown rapidly and is now the second largest foreign exchange earner, contributingabout 15% of GDP. Agriculture contributes a smaller share of GDP than manufacturing,but generates more employment. Sugar remains the principal export crop. Bananas,coffee, cocoa and citrus fruits are the other main agricultural exports. Bananas contributeabout 3% of exports currently.

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Jamaica was the first Caribbean banana exporter, shipping regularly to the UnitedStates from the 1860s from privately owned estates. Elders and Fyffes was thecompany which pioneered banana exports from Jamaica to UK in the late 19th centuryand initiated the first collision of interests between US and European based companiesover the European trade. The British Government had contributed a ten year subsidyof £40 000 per year (close to the real annual value of EC assistance under Reg 2686/94)to Elders & Fyffes to develop their UK banana trade together with British shippers.However, a cash crisis and unfilled shipping space caused Elders and Fyffes to sell45% of their stock to the newly formed United Fruit Company (UFC) of the US in 1902,in return for supplies of bananas. UFC took over Elders and Fyffes entirely in 1913and controlled the Caribbean-UK banana trade until the 1950s. Jamaican bananassupplied 60%-80% of the UK market during the 1930s.

The opportunity desired by the UK government to break the UFC monopoly camein the early 1950s after Jamaican production had fallen as a result of Panama andSigatoka diseases and a series of hurricanes. The Windward Islands, whose entryinto the UK market had been actively supported by the UK government, moved intothe gap under the leadership of Geest Industries. Production in the WindwardIslands rose eight fold between 1952 and 1959, beginning on estates in Dominicaand St Lucia, and moving to St Vincent and Grenada. This growth continued into the1960s, with the exit of supplies from the Cameroons and Canary Islands as a resultof the duties against non-Commonwealth imports, imposed from 1956.

Jamaican exports had also expanded after complete replanting with the Cavendishvariety had replaced the Gros Michel between 1950 and 1956. The result was oversupply, falling prices and the ‘banana war’ of the 1950s between Jamaica’s govern-ment and exporters (Elders & Fyffes) one the side and the Windward governmentsand exporters (Geest) on the other.


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It was resolved by Fyffes and Geest splitting the UK market between them 52% to48%, and agreeing not to import bananas from other sources unless the Caribbeancould not supply sufficient. (Information from Nurse & Sandiford 1995, Ch 2). Butthe result was that Jamaica had lost market share heavily and its exports wouldnot regain the levels of the 1930s (20 million bunches in 1930, equivalent to about268 000 tonnes).

By 1966 Jamaican exports had risen to181 000 tonnes. A second decline thenoccurred, with the weaker UK banana demand in the 1970s, nationalisation of theestates, and hurricanes in the late 1970s. By 1984 total Jamaican exports were11 000 tonnes, coming entirely from the non-estate sector. In the late 1980s estateproduction recovered rapidly (see figure A1), raising Jamaica’s exports from 11 000tonnes in 1984 to over 70 000 by the early 1990s. Joint public-private efforts helpedthis effort, notably the Eastern Banana Estates Project. (NRI 1995:5). HurricaneGilbert in the late 1980s caused a temporary setback. There was substantial privatisationof the estates in this period, with Jamaica Producers Ltd (JP) the dominant investor,together with Fyffes (now no longer owned by United Fruit’s successor company Chiquita).Both JP and Fyffes are also importers into the UK market and have an agreementwhereby JP takes two thirds of Jamaican bananas and Fyffes takes one third.

The resurgence in production in ACP countries in the late 1980s was partly the resultof recovery of demand for bananas in Europe and repositioning by international fruitcompanies in prospect of the single European market in 1993. This included US basedcompanies (Delmonte and Dole) investing in Cameroon and Ivory Coast --which heldthe best prospects for rapid expansion of production--- and in European companies.3

In Jamaica, the new ownership arrangements of the estates, plus the creation ofBECO in 1985 to manage exports, provided a stable basis for the recovery of theexport industry. BECO has sole rights to export Jamaican bananas. All exportersare members and vote in proportion to their contribution to exports. With the estatesproviding over 70% of exports, and JP the largest shareholder in the estates, JP isthe dominant influence in BECO, and holds the chair.

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The creation of BECO represented an important victory for the exporters. The parastatalBanana Board and the All Island Banana Growers Association, had previously con-trolled exports. Both organisations are still in existence in reduced form, and BECOcollaborates with them. BECO operates on licence from the Banana Board. TheBanana Board still provides freight insurance (at exorbitantly high cost) and the AIBGAprovides some packing facilities for small growers who don’t export frequently andtherefore do not have individual export numbers. This institutional change from para-statal control (which many countries have found difficult) is an impressive feature ofthe reorganisation of the Jamaican banana industry. A challenge facing the industrynow is to avoid recreating the subsidised, inefficient structures of the past in anotherform. Since much of the assistance under Reg 2686/94 has gone into taking onunder BECO services formerly operated by AIBGA and Banana Board (spray teams,extension team, research) there needs to be a particular concern with ensuring thatthese are put onto a competitive and sustainable basis. While there is progress inthis direction, there is room for further progress (as indicated in Chapter 2 andChapter 9). 3 The change in the banana regime in 1993 with the creation of the single European market allowed greatermovement of bananas among EU countries, and more access to non-ACP bananas. But the importlicensing arrangements (‘partnership scheme’) gave European companies a share of the licences fornon-ACP imports, thereby creating an incentive for mergers between European companies and U.S.based multinationals.


13

During the 1990s exports more or less levelled off. They did achieve 87 300 in theexceptional year of 1996, but declined in 1997 and 1998 as a result of drought andfloods. The goal of the industry is to fulfil its EU quota of 105 000 tonnes per annumand to recover its profitability. Given that large increases in acreage or productionare unlikely, increased profitability will need to come through raised productivityand/or reduced cost of land, labour and other inputs.

6WUXFWXUDO�DGMXVWPHQW

Formerly a relatively prosperous part of the Caribbean, Jamaica’s economy under-performed in the 1970s and 80s, with falling GDP per capita, high levels of governmentdebt and inflation. Structural adjustment has dominated economic policy. During the1990s, inflation has been cut back, the Jamaican dollar devalued, taxes raised andthere is a programme of privatisation. Privatisation has included state interest inagriculture, most prominently the sugar sector. Economic recovery is fragile, withfurther falls in GDP in 1996 and 1997, accompanying widespread banking failures.

)XUWKHU�WDVNV�IRU�UDLVLQJ�FRPSHWLWLYHQHVV

The current competitiveness in the Jamaican banana export industry is discussed inAnnex A, which concludes that Jamaican fob costs are about 20% higher than CostaRica’s, regarded as a benchmark for competitiveness.

To reduce costs by 20% or more will require a range of changes in the industry, including:

• Further modernising the estates, which produce over 70% of the exports---sincetheir yield of about 14 tonnes/acre is low by international standards for estates.This may require further reducing harvesting costs4, replanting more frequentlywith vitroplants and deep drainage, plus better irrigation, to increase yields. Thisis the basis of the strategy being pursued in the ACP countries which are movingahead quickly towards competitiveness, i.e. Ivory Coast and Cameroon. Thereis an urgency here since the estates provide the basis for the export industry,yet they are technologically behind their competitors.

• Continuing to build the group of medium and small scale growers who canparticipate successfully in the export industry. They are the main target groupof the assistance under Reg 2686/94. Improved drainage, chemical use, re-planting, plus irrigation where feasible and improved harvesting, are the focus.The intention is that improved productivity and quality will raise incomessufficiently to enable the key services provided to the non-estate growers(particularly the spraying teams) to operate on a full cost recovery basis.

• Reducing downstream costs: the question of whether BECO’s downstream costs(including the costs of operating JAMCO, the London based marketing arm) canbe reduced should be investigated.

4 Two of the estates have cableways and centralised packing. The third, St Marys estate, packs on adecentralised basis, using the miniwetpack system, in which hands are cut in the field, the latex allowedto drain, then packed on trays and taken to small packing houses. This is the system used by small-holders.


14

+RZ�UHOHYDQW�WR�-DPDLFD�LV�WKH�RYHUDOO�DSSURDFK�RI�WKH�DVVLVWDQFH�"

The overall approach of the assistance under 2686/94 in Jamaica, as in other ACPcountries, is to support a drive to higher volumes and quality of production for the EUmarket, at lower cost. The object is that each producing country should survive as anexport banana producer when the Lome preferences end.

The EUBSP is built on the assumption that a banana export industry in Jamaica ispotentially viable without Lome preferences, but will depend on the main producers(the estates) raising their productivity and profitability, along with the most productivesmall and medium scale banana producers.

Whatever the likelihood of all ACP banana exporters surviving in an open Europeanmarket –and that must be slight—it is in the interests of all to lower their costs ofproduction. To the extent that the assistance makes for greater efficiency in theindustry there is general gain. The more risky area is where the attempts to reducecosts require investment which may be wasted if the market is later not there.

The EUBSP is encouraging farmers to make investments in banana production forexport, including borrowing to do so. It is also oriented mainly to the non-estatesector, raising the question as to whether investment in export banana productionis the best option for smallholders, given the likely weakening of export prices asLome preferences end. These questions are explored further below

$OWHUQDWLYH�DSSURDFKHV�WR�WKH�DVVLVWDQFH�DGRSWHG

Alternatives are at the general and specific levels.

At the general level, the approach adopted under Regulation 2686/94 was to regardall ACP banana exporting countries as potentially competitive without protection,once protection under Lome ended. The assistance was intended to achieve this.An alternative general approach would have concluded that not all the currentACP banana producers will be able to survive post-Lome and would have directedassistance more substantially to replacement activities in such countries, rather thanto the banana industry. This would avoid the potential waste of resources of bothgrowers and EU being invested in a vain attempt to create competitiveness inbanana exports where it is not possible.

The analysis in Annex A suggests that Jamaica should be able to preserve its bananaexport trade post-Lome provided that the estates, accounting for more than 70% ofexports, can increase their productivity---thereby giving stability and more time for thenon-estate sector to improve. Therefore, there is a case in Jamaica for assistance tothe banana industry, rather than to substitute activities only.

At the level of the specific assistance to the banana industry and its mode of deliveryin Jamaica, alternatives to the existing design include:

• Direct cofinancing of investments needed to raise productivity, as in Cameroon.This would have been the obvious mode for all the assistance had it been con-fined to the estates and a few larger non-estate farmers. A separate projectadministration would then not have been required. Cofinance has the advantageof matching the incentives of donor and recipient. It is being used in EUBSPfor the construction of the sheds by registered farmers—where the project isproviding the materials and the farmers the labour.


15

• Use of financial assistance to raise prices for the top quality. The ECU 10.75million of assistance (approximately J$430 million) could have made a not in-significant impact on price at the top grade, given that total advance paymentsto producers are currently just above J$1 billion per year. If directed only tosmallholders a sizeable price impact could have been made. This approachis administratively simple, would not have required a separate projectadministration, and would have put all assistance into farmers’ pockets, whilestimulating higher quality exports. The objection to this approach is that it doesnot get farmers to make the investments needed to produce at lower cost, ratheroffering them short term gains for higher quality volume. But producing higherquality volume requires the better management which the project is trying topromote. This approach has the basis as EC trade benefits to ACP exporters(the tariff free quota and access to import licences) which directly subsidisesthe export price. The difference is that the assistance would be targeted to topquality production. It would require a grading system which allows individualfarmers’ consignments to be graded.

• Since the package of assistance has several components, there are alternativesin design of the assistance with regard to balance between the components.

For example:

Estate vs Non-estatePublic investments vs Private investmentsLoan finance vs Services to farmers

The existing package emphasises services to farmers (about half of total expenditureis on the sigatoka control, extension, research, water management, input supply,with about a quarter going to sigatoka control alone, mainly the sprayteams).A change in the balance of future assistance towards both public and privatedirect investments, while putting services on a progressive cost recovery basismay be sensible, so that the services become more sustainable (see discussionin Chapter 2 above).

7KH�VRFLDO�FRQWH[W�DQG�WKH�FRQVHTXHQFHV�RI�WKH�GULYH�WR�FRPSHWLWLYHQHVV

Jamaica is by no means a ‘banana dependent’ economy. However, the bananaindustry dominates the social and economic lives of the people in particular parishes.For example, fifty per cent of the island’s small banana farmers are concentrated inthe parish of Portland where a number of communities are almost entirely dependenton the returns of the banana industry. The parishes of St. Mary, Clarendon and St.Thomas are also dependent on the industry to varying degrees. With 2 500 employedon the estates and a further 1 500 on other banana farms, plus employment in theservices to the industry, the banana sector probably generates jobs for 10 000 persons,supporting some 50 000 (with a family size of five). Consequently, changes in theindustry bear important social implications not only for particular parishes but haveripple effects in the wider parish communities.

Banana export production on the island revolves around approximately 400 mediumand small farmers and three large estates: Eastern Estate, Victoria Estate and St.Mary Estate. The estate sector accounts for over 70 per cent of production whilethe remainder is supplied by the small and medium producers.


16

As would be expected, the social reality of production on the estates is different tothat on the small and medium sized farms. For example, labourers on the estateswork on contract and have access to a range of benefits including health care andcredit facilities while those in the non-estate sector are employed in a less formal way(no written contracts or clear terms laid down) and do not have access to such workbenefits. Indeed, many are employed on a part-time basis. The majority of smallfarmers also tend to depend heavily on unpaid family labour. Farmers in the non-estate sector also depend on a mixture of private, public and informal sources for arange of social benefits such as health care, training, housing and credit (see table 1)

The range of social conditions under which people work in the banana industry sug-gest that the impact of broader changes as well as individual project components areexperienced differently by different groups and that the responses vary:

The consequences of fall outThe weakening international prices for bananas after 1993, the drought and floodswhich devastated the industry in 1997/1998 and the drive to increase quality andcompetitiveness led to increasing numbers of farmers leaving the Jamaica bananaexport industry. Between 1993 and 1996, for example, 500 small and medium sizefarmers went out of the export sector and it is expected that as the demands of theindustry become more stringent, more farmers will fall out. Industry fall out on thisscale would also have reduced business for service providers to the industry.In addition, excluded farm labourers would have had to find employment.

Indeed, the rising rate of unemployment and related social problems in the bananadependent parishes in recent years has been partially attributed to the decline in thebanana industry. The increase in praedial larceny (theft of bunches from trees) onbanana farms and estates is believed to be linked to the rising levels of unemployment,for example. Expenditure on security (sometimes armed) has risen over the yearsand the large estates now spend an estimated J$ 2,000,000 per year on security.On medium size farms as much as quarter million Jamaican dollars could bebudgeted for security. The high level of theft on the farms and estates not onlyconstitutes an added expenditure for those who have remained in the sector butalso a loss of income, whereby exacerbating their situation.

The impact of the fall out at the individual and household levels would vary, however,with such factors as age, gender, level of skill and education of individual farmers aswell as the number of economically active household members. For example, younger,more educated farmers may be more pre-disposed than older, poorly educated farmersto re-training and to taking up employment in the non-banana sector. Qualitativeinformation gathered during the course of the is Evaluation indicated that while manyerstwhile banana export farmers have taken up alternative forms of employment suchas taxi driving and trading, the vast majority remain unemployed.

Interviews with project staff indicated that in determining the impact of the fall outfrom the industry, a distinction should be made between part time and full timefarmers. Part-time farmers, i.e. those farmers with an alternative source of income,many times in the formal sector, have tended to abandon or else lease their farmswhile those who depend solely on agriculture may have turned to the domesticbanana market which is less demanding in terms of quality and/or diversified intoother crops. However, producing for the local banana market is less prestigious thanproducing for export. The limited development of a diversified food crop exportmarket also constrains the income and the range of alternatives available tothose farmers leaving the banana industry.


17

Overall, it is believed that part-time farmers have been less adversely affected thanfull time banana farmers by the recent changes in the industry. Bananas constitute asupplementary income for them and so they are insulated, to varying degrees, fromthe full impact of declining prices and production.

Consequences for those who persistedThose farmers who have stayed in the banana export industry have displayed immenseresilience and a determination to meet the challenges and demands of the increasinglycompetitive international market. But this should not belie the difficulties that theyhave had to face. The impact of praedial larceny has been discussed earlier. Therecent decline in production has also meant that they have not received an ‘interimpayment’5 in almost six months. This has had important social implications.Farmers tend to view the ‘interim payment’ as their ‘profit’ to be used to re-invest inthe farm and purchase a range of consumption goods and services. The paymentsare therefore important for the maintenance of the farmer (and their families’)standard of living. A group discussion with farmers in the Rio Grande valley gavesome indication of the social impact of not receiving this payment. Farmers andtheir families have had to cut household expenditure and develop a range of copingstrategies to deal with the reduced income.

Moreover, surviving in the newly competitive and quality driven environment hasmeant an intensification of effort on the part of farmers. On the small farms wherefamily labour is more widely used, this has been manifested in longer and moreintensive working hours for family members and in some instances the participationof younger members who may not have been previously involved in the farm. Theachievement of higher levels of production and productivity on these farms maytherefore bear a high social price for the families concerned.

Industry RestructuringOne of the strategies to increase the competitiveness of the banana industry inJamaica has been to cut labour costs and increase workers’ productivity in order tobring them in line with their Central American competitors. To this end, an agreementwas struck between the four estate workers’ unions and the three large estates inNovember 1998. Under this agreement, the system of payment was to be changedand the number of workers and base rate of pay were to be decreased. It wasbelieved that productivity gains would compensate workers for the lower rate ofpay; at least maintaining their overall level of income. New targets for workers andthe industry were also set. The minimum number of boxes per day produced byworkers was increased from 13 to 19 and the estates aimed to decrease the costof production per 18 kilo box from US$10.50 to US$7.50.

In December 1998, all workers were made redundant and 2,000 (of a total of 2650)were re-hired by the newly formed Agri Services Limited,6 who in turn seconded themto the estates. Workers are now paid on a ‘piece rate’ basis and wages have beencut by approximately 30 per cent. On average, workers earn between US $8 to $15per day depending on the region, the task and worker’s productivity.

5 Farmers are essentially paid in two instalments: (a) ‘an advance payment’ for fruit deliveredto the wharf. This price is based on the fruit quality achieved by the grower in the four pre-vious weeks and (b) an ‘interim payment’ which is based on the difference between theadvance payment and the actual income from banana sales. BECO accumulates thisdifference in its account and when it reaches a significant level, the Board approves aninterim payment which divides the available funds according to quantity and quality of fruitsshipped since the last interim payment.6 As part of the restructuring process the three large estate came together to create asingle entity called Agri Services Limited.


18

Despite the fall in the base rate of pay, workers re-hired under the new contractgained in terms of working conditions. In addition to the health insurance and pensionschemes which were available to them under the ‘old’ regime, training schemes,providing basic literacy and a range of other courses were set up and a workercouncil which brings together workers, supervisors and management on a monthlybasis to discuss a range of concerns was also established. Workers also now haveaccess to new equipment and counselling services. Indeed, these changes are partof the wider strategy to build a foundation for greater production and efficiency(Marshall Hall, The Gleaner, 15.12.1998, p.1)

The six hundred and fifty workers who were not re-hired were given severancepayments. But they obtained no support or guidance to find alternative employmentor advice on how to invest the lump sum payment that they received. It would be safeto assume, however, that the loss of employment and income would have impactednegatively on the individual worker and his/her family. Moreover, in those areaswhere the banana industry is the principal employer, the impact on the widercommunity would have been strongly felt.

The loss of employment on the estates would not only have constituted a loss ofincome for retrenched workers but also the loss of a range of social benefits such asfree health care, ‘back-to-school’ loans, crisis loans and other safety net provisions.To the extent that the retrenched workers are unable to secure these serviceselsewhere, their health status and their children’s access to education would beadversely affected. Moreover, the absence of interest free crisis loans to cushionthe cost of events such as funerals and weddings increases household vulnerability.The alternative for the poor and unemployed is usually moneylenders who chargevery high rates of interest. The ‘social status’ of a retrenched worker could also havebeen affected particularly if s/he found alternative employment on a smaller farm.It is considered more prestigious to work on the large estates than on small ormedium size farms.

There are also gender implications of the estate labour restructuring process;approximately six out of every ten workers on estates are women. The comparativelylow wages in the agricultural sector have meant that more women than men havetended to be employed as estate workers. The impact of a fall or loss of income bywomen often has disproportionate impact on household welfare (because women’sincomes tend to be used more for the household than are mens’). The effect wouldbe particularly hard on female headed households.

In sum, current changes in the industry are having considerable social impact.However, the impact is not well understood. There appears to be a dearth of ruralsocial analysis in Jamaica. Two critical areas where social analysis is particularlyneeded in relation to further development of the banana industry are:

• Employment on the estates: the long running labour disputes continue to reduceperformance and incomes. For Cameroon we have recommended a study ofhow employment on estates can be stabilised, with raised performance andprospects. There is an international dimension here—to learn from and build onthe best estate practice internationally, with a view to an international code ofgood practice (this aspect is currently being explored by some multinationals).A similar study in Jamaica would be appropriate. Terms of reference are atannex F.


19

• Opportunities for drop out smallholders: given the high drop out of smallholdersfrom banana exports it can no longer be assumed that in the ‘banana parishes’bananas provide the main income for many householders. Little is known abouthow they are making a living. As the certification strategy for the banana industrydevelops further their number is likely to increase. A participative study ofchanges, strategies and opportunities of smallholders is recommended.Draft TOR are at annex G.

7DEOH�� &RPSDUDWLYH�WDEOH�RI�LQFRPH�DQG�VRFLDO�FRQGLWLRQV�RI�ZRUNLQ�-DPDLFD�EDQDQD�LQGXVWU\��LQFRPSOHWH�

ESTATEWORKERS

FARMLABOURERS

OWN ACCOUNT SMALL/MEDIUMFARMERS

Wages/Income US$8-$15 perday

No data No reliable data available. Dependson quality and quantity of production.

SocialProtection

✔Healthinsurance

✔Pensionscheme

✔Traininginc. basicliteracy

✔Workers’council

sHousing

✔Loan/creditscheme

✔Counsellingservices

✗ Healthinsurance- self provisioningor depend onstate system orelse pay privately

✗ Pensionscheme

✗ ‘Formal’training

✗ Workers’councils/unions

✗ Housing- self provision(rental or owneroccupied)

No structuredloan/creditscheme -depends onrelationshipwith farmer

Range of health provision -private/public/self - depends onincome level and beliefs/practices.

Pension scheme - access variesamong farmers - overall fig. Not known

Access to training through BECO

Housing - mix of owner occupier andrental.

Can access loans from formal financialmarket but constrained. Reluctance ofinstitutions to lend.


20


21

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This section overviews the cost effectiveness of the assistance (whether the activitiesfunded by the assistance might have been carried out as effectively at lower cost)and comments on the adequacy of implementation arrangements7, and on thelimitations on assistance in the environment of Jamaica.

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A detailed evaluation of the assistance is currently underway in Jamaica, so weconfine ourselves to an overview.

We were impressed by the ability of BECO and project staff to manoeuvre throughthe considerable challenges of delayed fund transfers from Brussels (particularlyPhase 2---Phase 3 has been much better) and relations with the former controllingorganisations of the Jamaican banana industry (Banana Board and AIBGA).

Nevertheless there was some complaint of delays---regarding flood relief assistance(see Chapter 6).

The setting up of revolving funds is not only a way of getting more efficiency ininvestments (since the funds to the investor are not grants) but also of simpler, localtendering procedures permitted by EC in the case of revolving funds rather thangrant funds.

The key issue regarding efficiency is whether the approach of building up directservices to farmers under BECO (spray teams, water management, extension,research) gives sufficient orientation in these teams to cost management and goalachievement. As discussed in Chapter 2 above, there is a case for consideringtendering for such services as a whole from firms, rather than buying in the resourcesand creating the service. The case is in terms of efficiency, effectiveness andsustainability of services.

The inputs supply service under BTC is excepted here: its achievements in costsavings are clear (see annex A), though there may be room for increasing thesefurther by a sharing of information about least cost sources among the various inputsupply purchasers in the Caribbean. We recommend that an initiative to set up aninteractive website on input costs be funded, which would be a service for all involvedas well as suppliers. It would operate by input supply services such as BTC postingon the site their current price list and suppliers. Suppliers could be invited to indicatetheir current prices.

7 A detailed evaluation of the funding arrangements is currently underway in Jamaica. The purpose ofthis study is to overview performance, therefore there is no attempt to assess cost effectiveness foreach of the many investments listed in Annex C.


22


23

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The activities and results to date are summarised in Figure 5.1 below and in Annex C.

In terms of the stated goal in the logical framework for Phase 1 (‘Jamaican exportssustained at a level of at least 105 000 tonnes per annum post 2002’, with ‘industry-wide average yields increased to 15 tonnes/acre by 1999’) the EUBSP does notappear to be on target. Exports have sagged from their 1996 high for the decade of87 300 tonnes, with no evidence of rising yields (see Annex A). But Jamaica in thepast three years has been through one of the phases of climatic stress which havepunctuated its history in banana exports: a drought in 1997 followed by floods in1998, and heavy prolonged rainfall in 1998-9. All of these were preceded in 1996-7by the arrival in Jamaica of black sigatoka. It is therefore not possible to assess theassistance by its results as yet.

Has it put in place the basis for much increased production and profitability in thebanana export industry when conditions improve ? Probably not in the short term.To do this it would need to have in place by now substantial replanting with improvedvarieties, irrigation and drainage---the investments which increase productivityquickly. But it has ongoing activities in all these areas which give promise for thelonger term. Furthermore, there are already increases to net income for non-estategrowers from cost savings through BTC’s input supply programme, plus someincrease in earnings from raised quality scores, to which project activities(spraying in particular) have contributed.

The goal for the industry is not a large increase in exports (roughly a 20% increaseonly is required to fill its tariff free quota of 105 000 tonnes), rather to increase itsefficiency. In this it has made two strides to date:

• Provision of inputs to the non-estate sector at much lower prices than previously,through BTC

• Improvements to Boundbrook wharf, preserving fruit quality in the cool rooms andreducing congestion in offloading

The main activities of the programme (sigatoka spraying, extension, packing sheds,revolving funds for investments) should all in time contribute to lowering costs,particularly in the non-estate sector.

The chief risk to this strategy over the long term is a falling price—which is the likelytrend post-Lome, when ACP preferences end. Jamaican export trends appear pricesensitive, rising with the stronger market from the late 1980s and falling after 1993.The EUBSP is faced with the task of breaking this link.

Figure 5.1 below summarises the activities, targets and results to date of theReg. 2686/94 assistance.


24

)LJXUH��

$&7,9,7,(6��7$5*(76�$1'�5(68/76�2)�$66,67$1&(�72�%$1$1$�,1'8675<81'(5�5(*8/$7,21��

3URMHFW�DFWLYLW\ 7DUJHW 5HVXOWV,1&20(�6833257�75$16)(5��1RYHPEHU��(&8��3+$6(�� Begins June 19961. Improved watermanagement

1.1 Irrigation /drainage systemsinstalled on 400 acres inYear 1

1.2 Training of two specialists1.3 Training and practical as-

sistance to all loan recipients

Difficulties with retainingwater managementspecialist and suitableirrigation sites. Irrigationon 170 acres, through7 loans by 1999

2. Improved sigatokacontrol

2.1 Disease developmentforecasting system in twopilot districts (Portland & StMary by end Year 1

2.2 Disease management teamstrained and operational inthe two pilot districts in Year 1

Completed

3. Improved availability ofinputs

3.1 Industry-wide coordinationof input purchasing estab-lished in Year 1

3.2 Operational input supplydepot established atBoundbrook wharfby end of Year 1

Completed

4. Emergency assistanceto flooded farmers Jan. 98

Completed

),1$1&,1*�$*5((0(17�5(*�%�� ((&8��'HFHPEHU��3+$6(��Begins October 19971. Water management Water management to be im-

proved on 720 ha, resultingin production increasing by3 tonnes/ha and PUWS by 5%

Not achieved

2. Sigatoka control Disease forecasting and moni-toring unit will be operationalisland-wide, to dictate thefrequency of spraying and thespecific fungicides and mediumof application i.e. oil or emulsionbase

Operational

3. Packaging pilot testwith plastic crates over a5 month period

Explore feasibility of alternativeplastic packaging on a 3 weeklybasis

Tested but foundunsuitable


25

4. Computerisation 4.1 Establish information net-work to link Boundbrookwharf, BECO head office,AIBGA, JAMCO and anybanana farm with computercapability

4.2 Computerise weighbridge

Completed

Completed5. Project managementincluding audits6. 10% contingency fund3+$6(��,1&20(�75$16)(5��(&8��0DUFK��Begins concurrently with Phase 2 in October 19971. Sigatoka control Maintain and extend to Western

Jamaica the spraying services?

2. Certification &technology transfer unit

Design and operate a certificationprogramme for non-estate sector

Operating

3. Research programme Banana Board Research Dept:programme on plant nutrition,pests and disease management

4. Tissue culture 500 000 tissue culture plantletsto be bought from SRC, to en-able 10% of Jamaican bananastock to be replanted every year

Beginning

5. Refrigeratedcontainers & fork lifts

To maintain quality and reduceport congestion

Complete

6. Farm packing sheds To enable farmers to complywith certification packingstandards

Underway

7. Refurbish AIBGAcollection points

To improve quality for thesmallest growers who marketthrough a common box numbervia AIBGA

To be done

8. Wharf improvements Extend the roof to create morecover from rain

To be done

The project is proving adept at taking on and running well services formerly run by theAIBGA and parastatals: input supply, spray teams, extension team, SCR research andtissue culture. The investments in the port are successful. Slower progress to date is inthe on-farm investments

Overall, the main achievement of the EUBSP is to put in place a strong project teamwith high morale, focused on controlling sigatoka and improving the productivity andquality, mainly of the non-estate sector. In essence, the approach taken is that of atraditional small farmer development project: multiple components, incorporating avariety of services run by the project with some cost recovery from users. With allthe components of the projects now running, evaluation will be more telling twoor three years from now. The potential weaknesses of the project are those oftraditional small farmer projects: subsidising high cost services which maynot be sustainable after the project ends.


26


27

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The overall objective of Regulation 2686/94 was to help traditional ACP bananaproducers ‘adapt to the new market conditions following the establishment of acommon organization of the market in bananas’ (Article 3.1). The goal set by theassistance (Phase 1 is to sustain Jamaican exports ‘at or above 105 000 tonnesper annum post 2002’).

As discussed in section 5 above, it is too early yet to assess whether the goal isattainable, and its attainment will depend on the on-farm investments moving ahead,particularly the estates, since they contribute over 70% of exports.

Although banana exports are a small part of a relatively diversified nationaleconomy they are the main economic activity in the north east of the island, a yearround regular source of weekly income to some 3 000 households directly, and thebasis for regular export shipping space availability for other fruits from Jamaica.Therefore the wider implications of success or failure of the industry in the likely opencompetition in the EU market post Lome are substantial.

�� 6RFLDO�LPSDFW

We noted in section 3 above that the social context of the assistance is one of rapidchange as hundreds of small holders drop out of the export industry in the traditionallybanana dependent parishes (St Thomas, St Mary, Portland), and the estates lay offsome 650 workers and change to a piecework basis of pay. We discuss herepossible social implications of some of the key project components.

*URXS�DSSURDFK�WR�H[WHQVLRQIn January 1999, a group approach to extension was introduced, under the Certificationand Technology Transfer programme. This centres around bringing farmers intogroups for the purpose of sharing their expertise and knowledge under the guidanceof an extension officer. It also seeks to develop a more ‘holistic’ approach to exten-sion, recognising that the constraints on farmers are more than technical; the socio-economic situation of the farmer should also be taken into account. It is expectedthat through a series of activities around which the groups co-operate such as thepurchase of inputs and transport and the pooling of labour particularly at harvesttime, that they would develop a dynamism of their own. The project envisages theinclusion of community leaders (formal and informal) into this approach; recognisingthat they could be conduits for important messages. It is also hoped that the farmers’groups, with time, would assume a wider community development role by becominginvolved in the management of their communities.

At the time of writing, 28 groups had been initiated and there are plans to initiate atleast 10 more. In those instances where farmer groups already existed these havebeen formalised and members of these groups have been encouraged to share theirexperiences with other farmers and fledging groups.

It is still too early to assess the performance of this new approach but a number ofissues should be borne in mind. First, though there have been attempts to build onexisting farmer groups, in the majority of cases new groups have been formed.


28

But communities often have their own organisational structures. Projects adopting agroup approach tend to be more successful when working through existing structureswhile at the same time trying to influence them. The introduction of another institutionalstructure in a community can prove to be disruptive and threaten the status quo.

Second, developing cohesive, dynamic groups take time. The process of buildingtrust, modes of communication, and ways of raising and resolving issues within agroup is often slow. The results from this approach may therefore be long in coming.A full appreciation of this is necessary since attempts to force the process may leadto its failure.

Third, this new approach to extension demands a wider range of skills of theextension officer. The task is changed from a traditionally technical one to a rolethat encompasses various aspects of farmers’ lives. The mode of interaction with thefarmer is also different in this new approach; it is collaborative rather than top downand the farmers’ knowledge and expertise are given prominence. The extensionofficer also has to facilitate group meetings; another new role requiring particularskills. The amount of training and re-orientation that is required to achieve this andthe length of transition should not be under-estimated. Moreover, it is still not clearto the evaluation team what incentives exist for the extension officer to assume thisadded responsibility.

Fourth, farmers would also require additional training and re-orientation if the groupsare to work and particularly if in the longer term they are to take on the role ofcommunity managers. Again this is inevitably a slow process.

Finally, it is also important to pay particular attention to issues of diversity suchas gender difference, in groups. For example, are both male and female farmersincluded? Do they have differing needs? Have these needs been acknowledged?

%R[�$��%XLOGLQJ�6RFLDO�&DSLWDO

The isolation of Belle View high up in the Rio Grande valley was probablythe main force which brought Jamsey and many of the banana farmers inthe area together to form an informal group. The group has been runningfor several years and they depend on each other in a number of ways. Inthe simplest form, the group operates to fill any gap in supplies that farmersmay have. For example, if farmer X runs out of boxes on packing day, hecan easily borrow from another. Farmers also share the cost of other in-puts and the transportation of fruit to the port. The group also acts as an‘insurance policy’ for individual farmers. In the event that a group memberis ill and cannot harvest his crop, others club together, harvest and pack hiscrop so as to ensure that he has a weekly income. The group also performsan important social function in that they often get together for drinks on aSaturday evening and other social occasions.

The effort and process involved in building this level of trust, reciprocity,and ‘social capital’ should not be under-estimated. The challenge for thisgroup and others would be to use the social capital as a base from whichthey can improve their competitiveness as individual farmers and acollective in the ‘new’ environment.


29

Are the timing and conduct of meetings sensitive to the particular constraints thatfemale farmers face? Do issues of race and social class play a role in the communityand how are they to be reconciled in groups?

6LJDWRND�&RQWUROOne of the successes claimed for the Sigatoka Control Programme is that it hascontributed to an improvement in the quality of fruit exported. And given the pricepremium on high quality fruit, farmers have experienced an increase in income.To the extent that the additional income is used to purchase a range of goods andservices then the farmers’ material standard of living would have been improved.Field officers have noted improvements in some farmers’ status in the communityachieved largely through upgrading their wooden homes to concrete; the purchaseof vehicles and the expansion of the acreage that they farm, in some instances withinadequate planning and forethought.

The control programme may also have had an impact on the non-material aspect offarmers’ lives. It is believed that the use of spray teams frees up farmers’ time. Theyno longer have to engage in this activity - experts now carry out this function moreefficiently and effectively. To the extent the farmers use ‘the freed up time’ to engagein leisure pursuits their quality of life has improved.

The Control Programme has also trained a compliment of spray men, some of whomwork full time for BECO while others earn an independent living, often complimentingBECO staff at times of high demand. The programme has therefore built the capacityof local men and created employment, albeit on a small scale. But as in many otheraspects of the Assistance programme, this component did not seek to break the rigidgender division of labour which exists within the industry. No women were trained inthis capacity.

7KH�%DQDQD�7UDGLQJ�&RPSDQ\��%7&�The BTC was formed in 1996 to ensure that the agricultural inputs necessary tobanana cultivation would be available in a consistent and timely fashion at areduced cost to the farmers. Project progress reports confirm that these objectiveshave been largely achieved. Recent figures show that since the establishment ofBTC, the price of certain chemicals, for example, has fallen by almost one half; asignificant achievement in a context of rising inflation (see table A4). Interviews withfarmers indicated that they were generally pleased with the downward trend in inputprices. It proved difficult, however, to disentangle the social impact of these lowerprices. To the extent that farmers use any additional disposable income derived fromtheir lower expenditure on inputs to improve household living standards then theimpact would have been positive.

There is some resentment, though, that inputs are not cheaper, if not even free, tofarmers. Some assume that any foreign assistance intended for farmers should notcome at a cost. Project staff believe that such attitudes are vestiges of a culture ofdependency which has existed in the industry for a number of years; and one whichthe project is trying to break. But this attitude by farmers may also stem from seeingproject staff well looked after with jobs and vehicles by the EU, while they have topay for the inputs provided. There was also some resistance to the recently intro-duced policy of making the availability of inputs conditional. For example, a farmercould only access the fertiliser programme, if s/he has a charcoal pit (for the disposalof unused fertiliser) in place. Farmers felt that they were level headed enough to takethe new changes (such as the pits) on board and did not need to be coerced intodoing so.


30

7KH�&HUWLILFDWLRQ�3URJUDPPHAt the time of the Evaluation team’s field visit, the Certification Programme hadbeen in place only one week. It was therefore too early to assess its impact. Ofnote, however, is the attention paid by project staff to the social context within whichthe Programme is to be implemented. Though these considerations are not detailedin project documents, discussions with staff indicated that they had a good sense ofthe temperament of small farmers and understood their thinking and reasoning. TheProgramme is therefore being implemented slowly and in stages so as to minimiseopposition and reduce the risk of derailment. This has to be balanced, though, withthe pressing need to improve quality and production.

,PSDFW�RI�WKH�GHOD\�LQ�SURYLVLRQ�RI�WKH�$VVLVWDQFHThe nature of the agreement for Phase II of the Assistance package meant that thefunds were held in Brussels and disbursed against requests from BECO. But therehave been significant delays between the time of request and actual disbursement,with adverse consequences for growers. The late arrival of assistance following thedrought and flood which devastated a large proportion of the land under bananacultivation crushed the morale of farmers and has affected their capacity to producethe quantity and quality of fruit that is required to restore their earning capacity (seebox B). At the time of the field visits, for example, farmers were still awaiting the loanscheme for fertiliser which many of them desperately needed. Others had long delaysin getting drainage work done on their farms and the shed programme, thoughpromised some months before, was still not on line.

The performance of the Assistance package has been assessed largely in ‘technical’terms; namely changes in levels of production and quality and degrees of competitiveness.But the dominance of the industry in the lives of men and women in particular parts ofthe country demand that the performance criteria embrace social and gender issues.As the restructuring process forges ahead, a continued lack of attention to theseissues may undermine the technical achievements and threaten the sustainabilityof the assistance programme. Moreover, certain project components such as thegroup approach to extension require the input of a social analyst.

%R[�%��7KH�+XPDQ�)DFH�RI�%XUHDXFUDWLF�'HOD\V

Mr. G has been a banana farmer for more than twenty years. Bananas arethe only source of household income and the farm is ‘family run’ engaginghis wife and teenage children. The flood in 1998 devastated Mr. G’s farm -he lost all his crop. The past year has been a struggle. He has had to dependon savings and has cut household expenditure back to a minimum. Hebelieves that the delay in assistance exacerbated his situation - his mostpressing needs are drainage and fertiliser. He is still struggling to regainthe quantity and quality of output that he had achieved prior to the floodand is forced to sell on the domestic market. He knows that his fruit is stillnot of export quality. Mr. G summed up his current situation in a few words‘It rough man, it rough’.

Miss B also noted that the delay in assistance has added to her woes.As she said - ‘the flood devastated us but they (referring to BECO andthe delayed assistance programme) finished us off.’


31

The Evaluation recommends:

• a more thorough assessment of the social and gender impact of the currentassistance package and the changes in the industry than this Evaluation wasable to provide (see terms of reference at annex G). The upcoming Programmeevaluation should take these issues on board. The results of such an assessmentcould better inform the shape of the next phase of the Assistance programme.

• the input of a social analyst at key stages of the next phase of the Assistance

programme - design, implementation, monitoring and evaluation;

• the development of a range of indicators which would monitor and evaluate thesocial and gender impact of the various interventions in the next phase;

• that greater attention needs to be paid to diversification within and outside the

banana industry so as to provide viable alternatives for farmers leaving the exportbanana sector.

• that social programmes which target different vulnerable groups be put in place.This is a task for government as much as for the assistance. These groupswould include retrenched estate labourers; farmers who have already left theindustry and those marginal farmers who leave in the near future; unemployedyouth.


32


33

�� (&2120,&�$1'�),1$1&,$/�$1$/<6,6

�� )LQDQFLDO�YLDELOLW\�RI�WKH�NH\�LPSOHPHQWLQJ�RUJDQLVDWLRQV

The creation of BECO in 1985 and subsequent privatisation of the estates strengthenedand stabilised Jamaica’s banana export industry. This creates a strong organisationalbasis for the assistance.

�� 0DMRU�ULVNV

However, profitability of the estates is marginal and they are currently engaged in aprotracted and conflict ridden reorganisation of work. Since a period of lower pricesis likely as Lome trade preferences end, there is a risk of the industry re-entering aperiod of slump and virtually closing down—as in the 1970s. If the estates fail, theindustry as a whole fails. In order to prevent this there is an urgency to bring theproductivity of the estates rapidly above the present levels of 14 tonnes/acre. The20-odd medium scale farms are a further underperforming sector, with some ofthe best of these currently idle. The assistance programme’s water managementcomponent has targeted the medium scale farms to a degree and there are now7 loans for some 170 acres of irrigation.

In the next period of assistance there is a case for targeting the estates and mediumfarms in the same manner that the previous assistance targeted the small farmsector, in order to ensure that on-farm investments move ahead, social relationson the estates improve, and idle medium scale farms come back into production.This should not be at the expense of continuing the work with the small farm sector.


34


35

�� 6867$,1$%,/,7<�$1'�5(3/,&$%,/,7<

This evaluation has raised questions concerning the sustainability of the interventionsto date. The approach has relied on reviving and re-equipping service teams(spraying, extension, research and tissue culture) run by other organisations in thebanana industry and putting them to work. There is a high standard of morale andgood organisation and admirable finesse in working with the old structures. Theproject has coped well with the setbacks of black sigatoka onset, drought and floods.Hopefully these teams, now up and running, will enable the much slower moving on-farm investment components of the programme to move ahead quickly.

The sustainability weakness in the approach is that a focus on capacity buildingcan divert attention from performance. There is no log frame for Phase 2 or 3 of theassistance and the reporting ---in all other respects excellent—has little to say aboutperformance in relation to set objectives. The research component in Phase 3 will bevirtually funding the Banana Board research organisation. There appears to havebeen no tendering or ‘market testing’ before awarding the tissue culture contract toSRC. While both of these services may be of high standard and delivering what isneeded (our brief overview could not judge that) this approach is not oriented toperformance, and also reduces sustainability if these services cannot cover theircosts directly and must rely on a future cess on growers. It is planned to shift thefunding of the teams gradually 10% per year from project funds to BECO, over theten years of the next assistance.

In order to reduce the risk that BECO over-expands and becomes too high cost- thereby repeating the history of banana export associations across the Caribbean -BECO needs to define its core business as coordinating the industry and exportingbananas. BECO certainly has a development role, which it is presently well equippedto undertake. But there is a strong case for BECO to avoid any tendency to empirebuilding. It can do this by contracting in services from other firms on a competitivebasis, as discussed in section 2 of the report above, and retaining only the mostessential developmental staff as core employees.

Regarding replicability, the Jamaican approach provides the best hope at the presenttime for inclusion of small and medium farmers in the post-Lome banana export tradeon a competitive basis. It has been built around the commercial stability of the estates,which provide the volume and the organisational leadership, including shipping arrange-ments. With such organisation in place, the best of the smaller farmers (hopefullymany rather than few) may improve their productivity sufficiently to find it profitableto export through these structures. This suggests that - ironically perhaps - the ACPcountries with established estate sectors may be the best placed to develop smallerfarmer participation in the export industry in the post-Lome banana trade.


36


37

�� &21&/86,216�$1'�5(&200(1'$7,216

�� 2YHUDOO�RXWFRPH

Any judgement on the overall outcome of the EUBSP assistance must await theresults of its largely capacity building oriented programme. These results will be inthe form of increased investments on farm, raised productivity and raised exports.That the project is well managed there is no doubt. It also has some clearachievements: the port improvements, containment of black sigatoka in the non-estate sector, and raised quality scores.

�� 0DUNHW�XQFHUWDLQWLHV

Practical questions concerning the changing market environment include:

• Will grower investment strategies accord with the priorities of the EUBSP pro-gramme, given the changes expected in the European banana market in the future ?As a result of the WTO ruling (April 1999) EU banana prices may fall, as dollarbananas offer more competition to ACP bananas.

The consequence of lower EU prices may be to:

½ Increase demand for bananas in EU at the lower price½ reduce profits from banana growing relative to substitute crops½ make non-EU markets more attractive½ make processed banana products a more attractive market

• After the Lome preferences end, will quotas end, and banana imports into EUbecome a simpler, contractual arrangement between importers and exporters?

The consequences of this may be to:

½ make price competition rather than quota availability the critical factordetermining sales in Europe.8

½ broaden the EU market in terms of quality and type, reducing the singleminded pursuit of top quality as presently defined

½ create a wider range of niche markets (eg. organic, small size)

Falling prices and widening market opportunities for lower quality bananas would putpressure on growers to alter their investment strategies:

• towards less rather than more investment in banana production

• towards substitute crops

• away from banana specific investments (cableways ?, specialised trailers ?)

• towards cost lowering, multi-purpose investments (eg. irrigation) ratherthan quality enhancing investments (eg. better packing and transport)

8 To maximise profits within a quota, the maximum percentage of exports should be of top grade(‘Extra’) since they yield the highest value per kilo. With the value of quota alone being approximatelyUS$4 per 18kg box, there is an incentive to fulfil as much quota as possible with the highest grade.In the absence of quota, exporting lower quality bananas does not have this opportunity cost, allowinglower quality bananas to contribute usefully to lowering transport costs by filling empty shipping, truckingand storage space. The quantity of lower quality bananas is potentially large. For example, CDC Tikocurrently discards 20-30% of bananas arriving at packing stations because they are not top quality.


38

The observation that Costa Rican growers, faced with falling prices recently, havereduced their productivity (JEXCO 1999:34), suggests the impact which falling pricesmay have on grower strategy.

In the light of the above discussion, government policy for the banana sector shouldfocus on:

• Reducing excess costs in the Jamaica business environment

• Public investments for the benefit of the industry and locality, such as local roads.

• Social investments, both to improve living standards of the workforce and to raiselabour productivity.

�� )XWXUH�VWUDWHJ\

Competitiveness needs to be maintained by ongoing investment, particularly inan industry with such small margins as banana export. Therefore, establishingcompetitiveness should not be seen as attainable through a single large investmentprogramme; rather through creating the conditions which attract continuing invest-ment from growers. This will be a particular challenge given current marketuncertainties.

In Jamaica, meeting the challenge requires:

• maintaining the stability which the industry has achieved since 1985, whichhas been the basis for its recovery. BECO and the estates play the central role.BECO needs to ensure that its costs are contained, so that these do not burdengrowers in a falling market. These include the costs of services that it takes on(spraying, extension, research, input supply, tissue culture) as well as down-stream costs (freight, insurance, EU marketing).

• raising the profitability of the estates by increasing their productivity above itscurrent 14 tonnes per acre level, and resolving the current working disputes tothe benefit of all parties.

• continuing the efforts being made through EUBSP to raise the profitability ofthe smallholder and medium scale sector. This includes ensuring that thecertification programme is not socially disruptive.


39

�� 5HFRPPHQGDWLRQV

• Set clear targets for the BECO service teams’ outputs

• Where appropriate, prepare BECO service teams for greater independence,in which they manage their own resources, retain their revenues and bid forBECO work

• Find ways to reduce the cost of insurance, freight and EU marketing by BECO

• Evaluate the performance of SRC and Banana Board research departments,since this does not appear to have been done before committing Phase 3programmes to them

• Give priority in future assistance to on-farm investments to raise productivity.

• Engage the project more closely with the task of raising productivity on theestates and medium scale farms

• Commission a study of working and social relations on the estates (to helpresolve the current difficulties beneficially and with a view to internationalstandards of good estate practice). Draft TOR are at annex F.

• Commission a study of the social dynamics of the changes in the smallholderareas which are occurring with the drop out of many smallholders from thebanana export industry (with a view to alternative income generation).Draft TOR are at annex G.


40


41

5HIHUHQFHV

K Nurse and W Sandiford (1995) ‘Windward Island Bananas: Challenges andOptions under the Single European Market.’ Jamaica: Friedrich Ebert Stiftung

CIRAD (1995) ‘Evaluation de la competitivite de la production de bananes despays ACP: Jamaica’

JEXCO (1999) ‘Strategie de filiere bananiere camerounaise pour une ameliorationde sa competitivite’.


$11(;��$

&203(7,7,9(1(66�2)�%$1$1$�352'8&7,21�,1�-$0$,&$�$1'$*52120,&�$1$/<6,6


1

&RPSHWLWLYHQHVV�RI�%DQDQD�3URGXFWLRQ�LQ�-DPDLFD

The critical question to be answered in evaluating Regulation 2686/94 is how muchit has improved the competitiveness of Jamaica’s banana industry. The measures ofcompetitiveness used in this study are discussed in the Synthesis report (Annex A).In brief any change which contributes to a sustained increase in profitability improvescompetitiveness. These changes are of four types:

• ([SDQGLQJ�PDUNHW��larger volume of exports results in better utilisation ofcapacity, thereby reducing costs per unit.

• 5HGXFHG�FRVWV� of consumables, of capital, of labour, of taxes, of excesscapacity.

• ,QFUHDVHG�SURGXFWLYLW\� better utilisation of scarce resources through bettertechnology, of all sorts.

• ,PSURYHG�TXDOLW\�VFRUH��the higher the quality score of a consignment the morevaluable it is.

5HFHQW�FKDQJHV�LQ�FRPSHWLWLYHQHVV�RI�-DPDLFD�EDQDQD�H[SRUWV

The Jamaican banana export industry has had a mixed experience during the 1990s.On the positive side there is some increase in quality and productivity. On the negativeside, export volume has increased little since the early 1990s and declined from itspeak in 1996, while costs have not shown any downward trend. On balance, this hasmade for falling profitability, with the estates forcing through a new deal with theiremployees in late1998 to try to recover profitability by performance related pay.Wages are cut by some 30% and all employees are on a piecework basis. At thesame time the non-estate sector has experienced considerable fall out of growers.The onset of black sigatoka, followed by drought in 1997 and floods in 1998, plusweak prices and a more demanding market in terms of quality standards, are blamedby many for the fall out.

The mixed performance of the 1990s contrasts with the rapid increase in estateproduction post privatisation in 1985.

The data underlying this trend are incomplete. Those available are presented below.

Figure A1 shows the export trend, with the marked recovery in estate production afterprivatisation in 1985.


2

Figure A1

-$0$,&$�%$1$1$�(;32576��WRQQHV�

0

20000

40000

60000

80000

100000

120000

TotalNon- estateQuota

Total 11058 12742 34231 28058 42607 75290 76723 78577 85223 87433 61938

Non- estate 10744 6069 6829 5163 6210 16114 19833 21404 21238 22863 12703

Quota 1E+05 1E+05 1E+05 1E+05

1984 1985 1987 1988 1989 1991 1992 1994 1995 1996 1998


3

UNIT COSTS: Estimates of unit costs indicate that Jamaica is not competitive withCentral and South American production, which dominate world banana exports.Despite receiving an fob price of some $US10 per 18 kg box—some of which is asimple transfer to the industry from selling about 30% of its tariff free quota at about$US4 per 18 kg box— the industry has a crisis of profitability. This is indicated by therecent dispute on the estates, in which the companies opened their books to thetrade unions to indicate the urgency of reducing labour costs.

The industry aims to be profitable with an fob price of US$7.50-8.00 per 18 kg box —a level they estimate will be competitive with Costa Rica, provided Costa Rica stillfaces the ECU 75 per tonne tariff. This amounts to a 20%-25% reduction in costs.Costa Rica currently receives an fob price of $US 6 per 18 kg box, with Ecuadorcloser to $US 4. If the ECU 75 per tonne tariff against non-ACP producers isabolished, the Jamaican industry to be competitive would be faced with makinga 40% reduction in costs.

LAND PRODUCTIVITY: During the 1991 to 1996 period, annual export yields variedaround 12-14 tonnes/acre on the estates and 3-4 tonnes/acre in the non-estate sector,according to BECO data. (The non-estate yield seems particularly low, perhapsbecause acreage devoted to bananas for the domestic market is included ?)

LABOUR PRODUCTIVITY: Costa Rican estates pack average of 28 boxes ofbananas per worker per day, compared with 12 boxes in Jamaica, according toJamaica Producers Ltd, which manages the estates. Health insurance and in-kindbenefits apart, wages vary between $US8-15 per day in Jamaica, according toBECO, compared to average daily wage in Costa Rica of about $US10.50 (JEXCO1999:36) Given the labour crisis on the estates it is critical that the estates—and theindustry more widely—find a way of raising productivity, for the benefit of all.

QUALITY SCORE: As with all other ACP producers, Jamaica is achieving increasingquality scores on its bananas shipped. But there is a need for caution in interpretingincreased quality scores as a factor promoting increased profitability, since increasedquality scores can be quickly achieved simply by excluding at source the lowerquality fruit. This would show up in increased reject rates on farms and increaseddrop outs of producers who produce mainly low quality fruit. The net effect in theshort term of tighter quality control is to divert more fruit to the local market. Forincreased quality scores to contribute unambiguously to increased profitability theyshould represent rising quality scores of fruit grown not simply fruit exported. 9

In 1996 BECO and the UK/Jamaica Banana Marketing Committee established thefollowing criteria for quality:

- to maintain a minimum average PUWS of 80%- no fruit scoring less than 65% puws to be shipped to Europe- suspension of packing stations which score less than PUWS for three consecutive

shipments.

9 We must bear in mind too that the quality standards required for exports at present are extremely highand possibly result not entirely from consumer preferences in EU but from the need for exporters tomaximise their quality scores within tariff free quotas, given the opportunity cost of using up the quotaswith lower quality. It is at least possible that in a more open EU market with lower banana prices, amarket for slightly lower quality may re-emerge, especially if they are discounted. The currently rejectedbananas (20-30% on estates in Cameroon) would provide a ready source of lower quality bananaswhich would help to fill ships, and therefore be worth selling at much reduced price if the tariffs didnot prevent it.


4

Since then quality standards have been further tightened, introducing a penalty forfruit below PUWS 80% and rejecting any less than 75% PUWS. In both 1997 and1998 the average for the industry’s exports exceeded 80% (80.2 in 1997 and 81.6 in1998). Current advance prices by quality are as below, along with proposed newprices:

)LJXUH�$��$GYDQFH�SULFH�SDLG�E\�%(&2�DFFRUGLQJ�WR�IUXLW�TXDOLW\

Quality 1998 price per kg Previous price per kg

PUWS > 85% 19.73 JMD 19.33

80% < PUWS < 85% 18.00 JMD 16.66

75% < PUWS < 80% 14.33 JMD 15.33

PUWS < 75% 11.00 JMD 11.33

The 1998 price changes further increased the premium for top quality, as a comparisonof the ratios of the >85%/<75% and >85%/75%-80% for the old and new pricesindicates (rising from 1.7 to 1.79, and from 1.26 to 1.38 respectively).

SHIPPING COSTS: No historical data on costs. However, it’s likely that the costshave reduced since privatisation in the mid 1980s, after which the industry took overthe organisation from government. Given current low volumes the key issue is howmuch of the weekly ship can be filled. At present the ship comes from Costa Rica sothat only part of the freight (1500 pallets per week) are contracted to Jamaica, withpenalties for being over or under this amount.

PORT HANDLING COSTS: The investments at Boundbrook wharf, Port Antonio,have reduced handling and queuing times. With the wharf operation taken over byBECO port costs apparently have been reduced.


5

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To reduce costs by 20% or more will require a range of changes in the industry,including:

• Further modernising the estates, which produce over 70% of the exports---sincetheir yield of about 14 tonnes/acre is low by international standards for estates.This may require further reducing harvesting costs10, replanting more frequentlywith vitroplants and deep drainage, plus better irrigation, to increase yields. Thisis the basis of the strategy being pursued in the ACP countries which are movingahead quickly towards competitiveness, i.e. Ivory Coast and Cameroon. There isan urgency here since the estates provide the basis for the export industry, yetthey are technologically behind their competitors.

• Continuing to build the group of medium and small scale growers who canparticipate successfully in the export industry. They are the main target groupof the assistance under Reg 2686/94. Improved drainage, chemical use, re-planting, plus irrigation where feasible and improved harvesting, are the focus.The intention is that improved productivity and quality will raise incomessufficiently to enable the key services provided to the non-estate growers(particularly the spraying teams) to operate on a full cost recovery basis.

• Reducing downstream costs: the question of whether BECO’s downstream costs(including the costs of operating JAMCO, the London based marketing arm) canbe reduced should be investigated.

The following section considers the agronomic aspects of the Banana SupportProgramme in more detail.

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From1993 to 1996 production increased, despite the fact that 500 small and middlefarmers left their banana crops. In 1996 the growers were also producing a betterquality (6% improvement in PUWS). This continued in 1997 (increase of 16% of theproduction on small farms due to better control of sigatoka disease and application offertilizers). A drought in 1997 affected all production, decreasing both quantity andquality. In January 1998 heavy rains and flood compromised the renovation of theplantations. At the end of 1998 there were more exceptional rains, but the damagewas less serious. This unusual weather has hindered the programme.

Figure A3 below shows details of growers by type and by acreage, export orientation,quality score and method of sigatoka control.

10 Two of the estates have cableways and centralised packing. The third, St Marys estate, packs on adecentralised basis, using the miniwetpack system, in which hands are cut in the field, the latex allowedto drain, then packed on trays and taken to small packing houses. This is the system used bysmallholders.


6

)LJXUH�$� *URZHUV�E\�W\SH��DFUHDJH��H[SRUW�RULHQWDWLRQ��TXDOLW\�VFRUHDQG�PHWKRG�RI�VLJDWRND�FRQWURO

Largeestate

Middlesize

“Smallfarmers”

Smallfarmers

< 2 acresAcreage acreage % number

3 60045%3%

1 20015%

40

3 12039%400

801%50

Production % of exportation 75% 15% 10% < 0.1%

Quality Export % Local market %

80%20%

75%25%

70%30%

50%50%

Quality > 85% UWPS 80-85% 80-85% 75-80% < 75%

Spraying Themselves or spraymen Spareyteam

100% 80%20%

30%70%

100%

The main target of the project in Phase III is to increase average production for certifiedgrowers they work with, to 8 tonnes/acre. Some of them have already average yieldsof 10 t/acre on rainfed farms and 12 to 14 t/acre on irrigated farms, showing that thetarget is not unrealistic.

The project has the following organisational structure for its services:

• Sigatoka control : DMU (Disease Management Unit) and Research Support Project• Inputs distribution : BTC (Banana Trading Company)• Quality control : banana : BECo (Banana Export Company)• Soil and leaf analysis : Research Support Project• Tissue culture plantlets : Research Support Project• Management improvement : CTU (Certification/Technology Transfer Unit)

We look next at each of the activities being undertaken by this organisationalstructure:

7UDLQLQJ�DQG�FHUWLILFDWLRQ�The most recent addition to the structure is the CTU which has just started work.The main program of this unit is to train the growers in better management :

• Growers, very often, know the recommendations but for lack of faith or moneythey don't apply fertilizer or pesticide at the right rate or at the right time.Also they are not convinced about some technical practises.

• Preparation of the land : some they have to dig manually because of the steep,but in flat land it would be better to use a plough.

• Planting : The right density, according to their area, is not often practised.• Fertilizer, pesticides are applied at the right rate and time only on 25% of the

farms. This a major problem to be solved.


7

• Pruning : too many growers keep two followers, instead of one, and their size isvery irregular, because this operation is not done at the right time.

• Weed control : it could be better done, manually and with herbicide.• Sleeving and care of the bunch : another major problem. This practise is often

done too late, sometimes without deflowering and taking out the leaves whichcan damage the bunch.

• Ribbon system : not yet practised by many farmers, so it is difficult for them toforecast their production, and therefore their freight reservation.

• Propping : should be done more often.• Harvesting : too much losses during the harvesting, bruising and scarring.

The grade is not enough considered, because of the quantity of boxes thegrowers want to pack fortnightly.

• Packaging : The sheds used to day are in very bad condition. Also the mixturesof fungicides and alum used is rarely right and the water in the tanks cannotallow a good sanitation.

• Transportation : expensive for small farmers, a result of poor organisation.• Better irrigation and drainage are needed in some farms to facilitate better

management.• The tissue culture plantlets will be useful only with good technical practises.

The plantlets are provided to farmers at 20% of their costs.• The implementation of new packing sheds (around 400) will improve the quality

of the fruits. The materials needed will be provided by the project while thegrowers provide the labour.

Through the certification programme, farming operations, now badly conducted, canbe improved. However, the CTO will have to be particularly convincing, using thegroups whenever it is possible, and demonstration plots on various farms to comparethe old and new practices: growers believe only what they see. The CTO havealready started their training and are aware of what they have to do.

3URYLVLRQ�RI�FRROLQJ�FRQWDLQHUV�DQG�HTXLSPHQW�DW�WKH�SRUW�The provision of twenty five cooling containers, with 4 electric forklifts, allows a betterorganisation for the shipping but mainly better conservation of the fruit, so better quality.Together with the takeover of Boundbrook wharf operations by BECO this has greatlyreduced congestion at the wharf.

,QSXWV�By the end of Phase I farm inputs were available through BTC at a much cheaperprice than before, as indicated below. Short-term credit for the inputs is alsoavailable for those in good standing.

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Type of chemical Price of chemical BeforeBTC (J$)

Price after BTC –August 1997 (J$)

Triton X 45 18.30 10.40Benlate ‘OD’ 132.00 118.48Tilt 560.00 294.57Calixin 264.30 183.16Topsim-M 147.34 82.88Anvil 475.38 292.32Oil 97.79 97.79


8

It appears that there may be further gains to be made in inputs purchase by BTC.A comparison of the BTC price list and that of St Vincent Banana GrowersAssociation indicates lower prices in St Vincent for some items(see price lists at Annex G)

:DWHU�PDQDJHPHQW��The water management has not given the results expected : this is due to :

• The change of the specialist (the last one is the fourth one)• The poor availability of water• The authorisation needed from "Water Authorities", before water for irrigation.

Drainage : In Phase I there were small scale drainage works in Portland : 1,750 mof drains cleaned. In Phase II there were loans for the large estates : very largeand deep drains rehabilitated. 120 projects were approved and completed in 1998.Other ones will be approved and among the first ones 10% will have to dig againafter the flood. Phase III funds are contributing to the revolving fund for drainageworks for large farms.

Irrigation : Only a few small and middle farmers are close to adequate sourcesof water to enable irrigation to be undertaken. In Phase II 5 farms were irrigatedcovering 73 acres, 2 farms are in the process of application (about 100 acres) and4 others farms have applied, but the absence of a water mangement specialistdelayed the program. Nevertheless, some training of potential beneficiaries hasbeen done.

'LVHDVH�FRQWURO��Phase I : Sigatoka disease control started in June 1996 , with the the pathologistsfocusing on disease diagnostic and forecasting and fungicide sensibility. Theagronomist organised and monitored all field operations which began in November1996. In the Disease Management Unit there were 3 spray teams of 4 persons,along with 3 vehicles and 25 mistblowers. Activities include spraying, data collection,also giving advice for fungicides, spraying schedules for farmers and training offarmers and licensed spraymen. Laboratory and climatology equipment was set upin Sept 97. Achievements of the DMU are in acreage covered : Sprayteams (3): 700acres for 80 farmers; Spraymen : (12) : 1,300 acres, with 7mistblowers. In terms ofquality : YLS>8 is reached after 4 to 5 sprays.

Phase II : DMU was expanded to 7 spray teams, along with 7 vehicles and 63mistblowers, using protective gear. 1684 acres for 143 farmers in July 1998 werecovered by DMU, decreasing to 1492 acres for 136 farmers due to the heavy rainsand the abandonment of spraying by in farmers the last quarter. 227 acres for 15farmers were covered by licensed spraymen.

The data collected are now entered in a computer, allowing better forecasting.By next year biological and climatic observations will improve forecasting.

5HVHDUFK�6XSSRUW�3URMHFW�The EU funded part of the laboratory equipment and the climatic station.Working closely with the DMU the research takes part in the sigatoka control :

• Biological analysis; resistance to fungicides• Schedule of fungicides; best periods of use,


9

Working with the CTU the research takes part in the extension effort :

• Leaf and soil analysis for a better use of fertilizer : for the same efficiency somegrowers may reduce by 30% their amount of fertilizer.

• Soil and root analysis for nematodes. It will be possible to spread nematicideswhen needed, so more efficiently, reducing the application. Better for the farmer,and also for the environment.

• Production of tissue culture plantlets; this operation has started for some farmersbefore E U decided to give help. In phase III, E U will fund the Science ResearchCouncil for 50 000 plantlets in order to replant 10% of Jamaica’s banana areaper year. Small growers will pay 20% and large farms 80% of the costs (throughloan if needed); the repayment will serve as revolving fund for the growers. Thisoperation will start as soon as an agreement is signed between BECo and theSRC for the planning of production. The varieties will consist of Grande Naineand Williams for large farms, Williams and Valery for middle farms and smallfarms irrigated and Robusta and Valery for the small farms. In the annual workprogram, it was originally foreseen that the hardening of the plantlets will bemade in the nursery of large estates or in Portland by BTC : now it has beendecided that the plantlets will be given directly to the growers, after training.This is an error, the hardening is a sensitive operation which has to be doneby specialists who can also easily detect the mutants and weak plants.


10


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1

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INTERVENTION LOGIC OBJECTIVELY VERIFIABLEINDICATORS

SOURCES OFVERIFICATION

ASSUMPTIONS

Overall Objectives International competitivity ofJamaican banana industryimproved

Jamaican exports sustained at alevel of at least 105,000 tonnesper annum post 2002

Annual Reports of BECo

Project Purpose Increased exportable yields Industry-wide average yieldsincreased to 15 tonnes/acre by1999

Annual Reports of BECo No widespread storm damage

Results 1. Improved water management

2. . Improved Sigatoka control

3. . Improved ability of inputs

1.1 Irrigation/drainage systemsinstalled (and/or upgraded)on 400 acres in Year 1

1. 2 Intensive technical andpractical training providedto 2 trainees

1.3 Training and practical as-sistance provided to all loanrecipients in water manage-ment and agronomicpractices

2.1 Disease - development.Forecasting systemoperational in two pilotregions (Portland and St.Mary) by end Year 1

2.2 Disease ManagementTeams trained andoperational in two pilotregions in Year 1

3.1 Industry-wide coordinationof input purchasing estab-lished in Year 1

3.2 Operational input supplydepot established atBoundbrook Wharfby end Year 1

Reports to the TechnicalManagement Committee by:(i) Water Management Spe-cialist, (ii) Audited accountson loan administration

Reports of Pathologistand Disease ManagementTeams to Project Manager

Annual Audited Reportsand Accounts of Depotoperations provided toProject Manager

Suitable candidates forSpecialist and trainee postsidentified

Viable loan applicationsidentified

Cost of irrigation equipmentstable

Sustainable applicantsfor Pathologist and DMTSupervisors identified

Building Permit for Construc-tion at Boundbrook granted

Equity in Trading Companytaken up by industry


2

INTERVENTION LOGIC OBJECTIVELY VERIFIABLEINDICATORS

SOURCES OFVERIFICATION

ASSUMPTIONS

Activities 1.1 Recruitment of WaterManagement Specialist andtwo trainees

1.2 Revolving loan schemeestablished

1.3 Training provided in watermanagement and agronomicpractices under irrigation

2.1 Recruitment and training oflaboratory and field staff

2.2 Equipping of laboratory,climatology stations anddisease management teams

2.3 Disease forecasting, trainingand practical assistanceprovided to growers in pilotareas

3.1 Construction of input supplydepot at Boundbrook

3.2 Establishment of inputinventory

EU funding for project manage-ment/auditing and evaluationJA$ 3.084m 1995/96

EU funding of sub-componentJA$ 35.018 1995/96

EU funding of sub-componentJA$ 10.997m 1996/96

EU funding of sub-componentJA$ 38.470m 1996/96

Audited accounts to ProjectSteering Committee

EU funding support continuesin 1996/97


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(actual) (estimate) (estimate)

Project management 3.0 3.5 23.0 29.5 10.3 Functioning well

Water management 2.1 2.2 4.3 1.5 Early difficulties, now operational

Input supply (Banana Trading Company) 2.4 2.4 0.8 Operational with partial cost recovery

Sigatoka control 7.0 28.9 30.1 66.0 23.1 Operational with partial cost recovery

Information systems 5.3 5.3 1.9 Online link. Complete

Certification & technology transfer unit 24.2 24.2 8.5 Operational. Extension team

Research programme(Banana Board) 28.2 28.2 9.9 Plant nutrition & disease research

Tissue culture plantlets 12.0 12.0 4.2 To be sold at 25% of price

Refrigerated containers & forklifts 36.0 36.0 12.6 Complete

Farm packing sheds 8.0 8.0 2.8 To support certification

Refurbishment of public collection plants 3.0 3.0 1.1 AIBGA handling & storage

Wharf improvements 6.8 6.8 2.4 Cooling rooms & roof extension

Revolving funds:

Technology transfer revolving fund 16.0 16.0 5.6 New fund ?

Water management credit line 40.0 40.0 14.0 Number of loans ? Repayment ?

Large farms loan fund 4.0 4.0 1.4 New fund ?

TOTAL EXPENDITURE IN EACH PHASE 14.5 39.9 231.3 285.7 100.0

1RWHV� 1. Some of the Phase 3 items are for two years or more

2. There are payments into the revolving funds in Phases 1 and 2 which are not separately identified 3. The totals are only illustrative of magnitudes since they are sums of estimates and actuals


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There is discussion within banana export industries internationally of settingstandards for quality and “fair trade”. Conditions of employment are included.This is a welcome development, since the image of estate agriculture in the areaof employment is often negative.

A study has been recommended for Cameroon of the relation between workingconditions (organisation, career structure, social facilities and housing, pay, skills)and labour productivity, to provide guidance in the effort to improve both.

A similar study is recommended for Jamaica, given the current critical state ofworking relations there.

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The study will be divided into a baseline study and a monitoring exercise which willmonitor the implementation of upcoming social investments and changes to workingconditions with regard to their impact on labour productivity.

1. Study existing employment conditions in export banana production in Cameroon,detailing differences in employment structures, pay, hours incentives, savings,accumulation, and in social facilities and housing on the one hand, and produc-tivity of employees, at different stages of the production process.

2. Compare this with employment arrangements on banana estates in a countrywith higher labour productivity (possibly Costa Rica) and which provides anexample of good estate practice.

3. Report and advise on desirable changes and likely impact of planned socialinvestments by growing companies.

Monitoring exercise:

4. Monitor over an appropriate period (two or three years) the impact of socialinvestments and changes in working conditions on labour productivity and socialwelfare on the estates.

5. Report regularly to all parties concerned.

6. Make a final report which integrates both parts of the study and analyses theperformance of social investments in Cameroon against good internationalpractice in this area.


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prices in US $

St Vincent : SVBGA Jamaica : BTCcost price selling price selling price

Unit

Fertilizer NPK Bag 13.8 17 14.8 Urea Bag 15.1 16.7 17.2

Nematicides Furadan Bag 63 67.8 73.5 Mocap Bag 35.7 39.2 52.2 Rugby Bag 85.1 91.1 106.8

Insecticide Primicid litre 9.9 10.4 17.22

Weedicide Gramoxone litre 5.2 6.3 6.85

Fungicides Imazalil Kg 102.7 120.4 121.6 Benlate Kg 24.5 ? 30 Calixin litre 16.62 ? 23.13 Tilt litre 48.7 ? 55.5

Ribbons Kg 3.65 ? 2.13Cartons each 1.2 ? 1.1Glue litre 2.8 ? 4.9Trays each 16.1 21.5 14.85Knives each 5.9 6.29 6.33

Prices given as at March 11th, 1999 for St VincentPrices given as at February 1st, 1999 for Jamaïca


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2

(8523($1�81,21DELEGATION OF THE EUROPEAN COMMISSION IN JAMAICA

)LOH�1RWH(# 31.2.3)

Project: EU Banana Support Programme Jamaica, Phase IIFinancing Agreement No REG / B7 - 5023 - 95/1

Subject: Annual Work Programme (AWP) 01 October 1997 to 30 September 1998Delayed Transfer of Funds to the Programme’s AWP Imprest Account

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The Banana Support Programme Jamaica has been designed to increase the competitivenessof the Jamaican banana industry. The Programme is implemented in three phases, whichare governed by separate agreements and accounted for separately, by the %DQDQD�([SRUW&RPSDQ\�OLPLWHG (BECO). BECO is a private company owned by all banana exporters, andthe sole purchasing, shipping and marketing organization for Jamaican bananas exported tothe EU.

While Phase I and III are financed from Income Support resources (IS), Phase II is financedfrom Technical Assistance resources (TA). To date the total amount of 10.816.257 ECU hasbeen made available for supporting the Jamaican Banana Industry as follows:

Phase/Agreement Agreement Signed Amount (ECU)I (IS) 21 November 1995 1.993.496

II (TA) 18 December 1995 3.048.650III (IS) 24 March 1997 5.774.111

Upon signature of the transfer agreement, the funds for Phase I and III have been transferredto two double signature interest bearing accounts held at the 1DWLRQDO�&RPPHUFLDO�%DQN�RI-DPDLFD. The account holders and signatories are the 3ODQQLQJ�,QVWLWXWH�RI�-DPDLFD (DNAO)and the Delegation. Contracts are awarded on the basis of EDF conditions: for every pay-ment the dossier is kept at the Delegation

However, the funds for Phase II are managed by the Financial Services in Brussels (formerVIII/C/4. now SCR/D2).

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Phase II continues and expands the Pest Control and Water Management activities startedunder Phase I, and aims in addition to make modern Information Technology available toBECO. In accordance with the Financing Agreement, most activities under this Phase arethus being implemented through an Annual Work Programme, which started 01 October1998.

However, the supply of agricultural inputs for which some one million ECU are earmarkedwill be contracted separately following open international invitation to tender published on23 June 1998, and funds earmarked for a Water Management Loan Revolving Fund are tobe transferred upon signature of the agreement governing this Fund.


The AWP in the amount of 43,446,000 JMD (some 1.2 MECU) covers the period from01 October 1997 to 30 September 1998, and includes detailed provisions for the preparationof quarterly technical and financial reports as a basis for replenishments.

Taking into account the projected high initial capital expenditure under this AWP, BECO re-quested an advance payment of 40% of the Cost Estimate (common practice for EDF fundedwork programmes). Based on our previous experience with tardy transfers from Europe, thisrequest was supported by us as well as by DG VIII/F/1 and VIII/F/5 (cf DG VIII’s Note No.14410 of 30 September 1997). However, eventually the initial advance of only 20% of theCost Estimate was received six months after inception!

In order to illustrate the situation, the following summarises the received payments under theProgramme’s second AWP II:

Payment Requestedby Delegation

Payment Creditedto AWP Account

Amount of Payment(JMD)

Advance (20%) 02 October 1997 16 April 1998 8,915,691.76First replenishment 18 March 1998 24 June 1998 6,347,381.35Second replenishment 25 June 1998 17 August 1998 7,870,170.087RWDO ��

It must be highlighted that the transfer of the advance, if it still could be referred to as such,arrived eventually some six months after the work programme and the request wasforwarded to Brussels.

While the first replenishment of justified expenditures as of January 1998 arrived some threemonths after the approved technical and financial Progress Report and replenishment requestwas forwarded to Brussels, the second replenishment of justified expenditures as of April1998 arrived within two months after the approved Progress Report and the request wasforwarded. As such a remarkable acceleration can be observed. However, it is obvious that,under such conditions, the financing of a work programme that is being well implemented(i.e. where spending is on schedule) cannot be secured by EC funds.

Due to the delayed transfer of the advance payment for this AWP, the activities have beenpre-financed by BECO (i.e. the banana growers themselves), which made an amount ofeight million JMD available on condition that the funds will be reimbursed as soon as thetransfer of the initial advance arrives from Brussels. Due to the delayed transfers of theadvance and the first replenishment, however, the implementation of the AWP dependedon the funds advanced by BECO up to August 1998 (i.e. 10 months after inception).

The experienced delays did not only prevent the Project from reimbursing BECO, but alsothreatened to exhaust the Project’s account despite BECO’s advance. Naturally, it wasextremely difficult for the Project Management to implement the planned activities undersuch conditions: e.g. the Project Management could not launch restricted local tenders orapprove a contract without knowing if funds would be available to respect its financialcommitments.

With the last replenishment in August 1998 this situation has changed and Project couldeventually repay BECO’s advance.

An issue closely related to the delayed transfers is an apparent confusion concerningexecutive powers: Once the AWP has been endorsed by DG VIII’s Technical Services, whoaccepts and endorses the Project Progress Reports and authorizes subsequent payments?


4

In view of ensuring an effective management of those Programmes, this role ought to clearlybe assigned to the Delegation (similar to the management of EDF funded projects).

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As illustrated above, the financing of work programmes in a benefiting ACP country througha centralized system managed by the Financial Services in Brussels is clearly not workable!

While the European support is highly appreciated by the beneficiaries and the Jamaicanpublic, the delayed payments have caused considerable embarrassment for the Delegation(public attention through press, rumours that the Project might not be able to pay the staff’ssalaries, delayed payments to local suppliers etc).

It must be emphasized that it is not the intention of this note to lay the blame, but torecommend feasible improvements. In order to improve the financial management of theforthcoming Special Framework of Assistance for Traditional ACP Suppliers of Bananasfinanced from the EC budget, two options to improve the current situation are thussuggested for consideration:

(i) Upon signature of the transfer/financing agreement the total funds are lodged intoa foreign exchange interest bearing account held at a commercial bank in Jamaica.The account holders and signatories are the DNAO and the Delegation. Contracts areawarded on the basis of EDF conditions and for every payment the dossier is kept atthe Delegation (i.e. same procedure for the funds provided under the previous IncomeSupport).

(ii) A payment system similar to the management of EDF resources: Payments of localexpenditures (work programmes, local contracts etc) are to be made from a specialbank account held in the benefiting country to be replenished in advance by the Finan-cial Services, whereas foreign payments (European TA, supply contracts etc) areexecuted by the Financial Services in Brussels.

Based on the Jamaican experience it is recommended to follow the first option which isbeing applied for the funds of Income Support financing Phase I and III of the JamaicanProgramme and proved to allow an efficient management of the funds

Upon signature of the financing and transfer agreement, the total funds are transferred to aforeign exchange account held at a commercial bank in the benefiting country Jamaica.

All local and foreign payments will be made from this account, through payment orderssigned by the DNAO and the Head of Delegation. In view of the lack of clear proceduresfor the management of EC budget funds for such programmes, the normal EDF financial,contractual and procurement procedures will be applied. All relevant supporting originaldocuments (tender documents, contracts, invoices etc) are to be kept at the Delegation.

In view of facilitating the management and smooth implementation of our supportedprogrammes in the field, I trust that above-outlined recommendations will be consideredwhen designing the management and implementation procedures for the forthcomingSpecial Framework of Assistance for Traditional ACP Suppliers of Bananas.

Rainer J SchierhorstRural Development AdviserDelegation of the European Commission in Jamaica


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The restructuring of the banana export industry in the 1990s with its increasing qualitystandards, relatively weaker prices and certification programme now beginning, is beingaccompanied by drop out from the industry of hundreds of smallholders who formerly soldbananas for export. This is changing to a degree the income base of the banana industrydependent parishes of Portland, St Mary’s and St Thomas. There is a need that thecertification programme succeed in order to allow smallholder participation in the exportindustry, and for those dropping out of the export industry to make the transition smoothly toalternative income sources. Yet the process is little understood from the perspective of thesmallholders themselves.

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The study will consist of two parts. The first part will be a baseline profile of the situationof a cross-section of small growers in the banana dependent parishes, representing bothgrowers who have dropped out of banana export and those who continue to be exporters.It will indicate their sources of income, how their relation to the banana export industry ischanging, and what opportunities they see for themselves and family.

The second part will follow up the households in this profile over a two year period as thecertification programme is implemented further. The purpose will be to monitor the impactof the programme socially and to monitor the ease or difficulty that drop out families have inreplacing their banana export income.

The results of the study will be used for designing further on farm assistance.It will be a means of providing independent feedback on the programme


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