Markets for agricultural products: Bananas16 December 2009
by Ina Dimireva -- last modified 16 December 2009
The European Union's common organisation of the market in bananas allows the EU market to receive satisfactory supplies of quality bananas at fair prices for producers and consumers and ensure a balance between the various sources of supply.
This market organisation had already been amended to take account of the switch to a tariff-only system from 1 January 2006,. At the end of 2006, the Council adopted a thorough-going reform of the CMO aimed primarily at allowing measures to reflect differing regional circumstances.
Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organisation of the market in bananas.
The products concerned are fresh and dried bananas (excluding plantains), frozen, provisionally preserved and prepared bananas, banana juice and banana flour, meal and powder.
The marketing year runs from 1 January to 31 December.
Common quality and marketing standards
The Commission lays down quality standards for bananas that are to be sold fresh to the consumer. The adoption of standards for products processed from bananas is optional. The Member States, through control bodies, must ensure that these rules are observed.
Producer organisations and the consultation mechanism
The existing provisions on producer organisations were repealed as part of the December 2006 reform.
Previously, support to encourage the setting-up of producer organisations recognised by the Member States had been granted for a period of five years.
Producer associations or organisations (which could also include processors and traders) could carry out measures of common interest, including applied research or training, and participate in the preparation of operational programmes. The rules adopted by these associations could be extended to non-members on condition that the rules of competition contained in the Treaty were observed.
As from 1 January 2007, the aid arrangements for the setting-up and administrative operation of producer organisation have been dropped. As compensatory aid no longer exists, having been incorporated into the single payment scheme under Regulation (EC) No 1782/2003, one of the reasons for supporting producer organisations has ceased to apply.
Nevertheless, aid will continue to be paid to recently-recognised producer organisations that had already started to receive the support.
The December 2006 reform wound up the compensatory aid scheme that had applied until then. Production had been supported through operational programmes drawn up under the Community support frameworks and implemented by the competent authorities in the Member States in association with the Commission and producer organisations, associations and groups of operators. At least two of the following objectives had to be achieved:
- improvements in the preparation of the marketing of products;
- greater competitiveness;
- utilisation of resources which is mindful of the environment.
In order to offset any drop in income, associations of producers and individual producers unable to participate in a producer group on account of their geographical remoteness could receive compensation. The guaranteed Community quantity for which compensation could be claimed was 854 000 tonnes, allocated among the producer regions (Canary Islands, Guadeloupe, Martinique, Madeira, Azores, Crete, Algarve and Lakonia). A guaranteed quantity of 13 500 tonnes had been granted to Cyprus in the accession negotiations. The Commission would determine the amount of the compensation each year in the spring.
As from 1 January 2007, there has been a switch from supporting production to supporting producers. This has involved dropping the compensatory aid arrangements and incorporating the associated funds into the single payment scheme established under Regulation (EC) No 1782/2003.
An additional envelope of EUR 278.8 million will be added to the budget for the POSEI programme (programme d'options spécifiques à l'éloignement et à l'insularité) for the outermost regions.
Banana-producing areas other than the outermost regions (and thus not covered by the POSEI programme) will receive an additional EUR 4.5 million and come under the single (decoupled) payment scheme. The overall financial envelope will be based on average aid granted over an historical reference period of a number of years. It will be allocated according to relative shares in the year 2000.
Trade with non-EU countries (fresh bananas)
The customs tariff rate for imports of fresh bananas, as established under the General Agreement on Tariffs and Trade, entered into force on 1 January 2006.
Switch to the single system (or tariff-only system)
On 1 January 2006, the market organisation for bananas switched to a tariff-only system with a single tariff of EUR 176 per tonne and a zero-duty tariff quota of 775 000 tonnes for bananas from the ACP countries.
The CMO reform adopted in December 2006 also involved repealing a number of provisions under Regulation (EC) No 404/93 that had become obsolete; these related to trade with non-EU countries prior to the entry into force of the tariff-only import system.
The common customs tariff rates for all products apply.
Charges having an effect equivalent to customs duties and the application of quantitative restrictions on imports or measures having equivalent effect are as a rule prohibited in trade with third countries.
Save where the Regulation contains provisions to the contrary, the Treaty rules on State aid apply to the banana sector.
The Member States and the Commission notify one another of the information necessary for implementing the Regulation.
The old Management Committee for Bananas, made up of representatives of the Member States and chaired by a Commission representative, was wound up under the December 2006 reform. The Commission will now be assisted by the Management Committee for Fresh Fruit and Vegetables.
In 2009, the Commission will present a report to the European Parliament and the Council on the implementation of the POSEI programmes. This will enable an in-depth analysis to be conducted as to the effectiveness of the reform and will cover the banana sector, as far as the main areas of production are concerned.
In view of the fact that the coverage of the CMO was extended to ten new Member States in 2004 and given the previous arrangements agreed with Ecuador and the United States in 2001, the Commission decided in 2005 that it would the following year propose a reform of the internal aspects of the CMO. In the reform, it places particular emphasis on the rules concerning the granting of aid to European producers.
The aim is also to undertake a thorough overhaul of the banana CMO so that it can be incorporated more easily into the Commission's proposal to subsume all existing sectoral CMOs into one single CMO.
Following an impact study carried out by the Commission on the various options for reforming the banana CMO, it was decided that the POSEI option - i.e. abolishing the existing system of producer support and transferring the funds previously devoted to the compensatory aid to the POSEI programmes - would be the most effective, as it means that the support can be given in the form most suited to regional circumstances.
Regulation (EEC) No 404/93 - 26.2.1993 - OJ L 160 of 26.6.1999
Regulation (EC) No 3518/93 - 29.12.1993 - OJ L 320 of 22.12.1993
Regulation (EC) No 3290/94 - 1.1.1995 - OJ L 349 of 31.12.1994
Regulation (EC) No 1637/98 - 31.7.1998 - OJ L 210 of 28.7.1998
Regulation (EC) No 1257/99 - 24.5.1999 - OJ L 160 of 26.6.1999
Regulation (EC) No 216/2001 - 5.2.2001 - OJ L 31 of 2.2.2001
Regulation (EC) No 2587/2001 - 1.1.2002 (Partial application) - OJ L 345 of 29.12.2001
Regulation (EC) No 2036/2003 - 20.11.2003 - OJ L 302 of 20.11.2003
Regulation (EC) No 414/2004 - 7.3.2004 - OJ L 068 of 6.3.2004
Acts concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic to the EU. - 1.2.2004 - OJ L 236 of 23.9.2003
Regulation (EC) No 2013/2006 - 1.1.2007 - OJ L 384 of 29.12.2006
Transitional and specific measures
Commission Regulation (EC) No 838/2004 of 28 April 2004 on transitional measures for imports of bananas into the Community by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia [Official Journal L 127 of 29.4.2004]. Amended by Regulation (EC) No 1260/2004 [Official Journal L 239 of 9.7.2004].
Commission Regulation (EC) No 414/2004 of 5 March 2004 adopting specific measures with a view to adapting the arrangements for administering tariff quotas on banana imports as a result of the accession of new Member States on 1 May 2004 [Official Journal L 68, 6.3.2004].
Regulation (EC) No 689/2004 [Official Journal L 106 of 15.4.2004].
Regulation (EEC) No 1858/93 - Official Journal L 170 of 13.7.1993
Commission Regulation of 9 July 1993 laying down detailed rules for applying Council Regulation (EEC) No 404/93 as regards the aid scheme to compensate for loss of income from marketing in the banana sector. This Regulation was last amended by the following Regulation:
Commission Regulation (EC) No 908/2003 of 23 May 2003 [Official Journal L 128 of 24.5.2003].
Regulation (EC) No 471/2001 - Official Journal L 67 of 9.3.2001
Commission Regulation of 8 March 2001 amending Regulation (EEC) No 1858/93 laying down detailed rules for applying Council Regulation (EEC) No 404/93 as regards the aid scheme to compensate for loss of income from marketing in the banana sector.
Regulation (EC) No 919/94 - Official Journal L 106 of 27.4.1994
Commission Regulation of 26 April 1994 laying down detailed rules for the application of Council Regulation (EEC) No 404/93 as regards banana producers' organizations. This Regulation was last amended by the following Regulation:
Commission Regulation (EC) No 1042/2002 of 14 June 2002 amending Regulation (EC) No 919/94 [Official Journal L 157 of 15.6.2002].
Communication from the Commission on the modification of the European Community's import regime for bananas [COM(2004) 399 - Not published in the Official Journal].
The Community intends to negotiate, under the WTO, trade compensations for the increase in import duties for bananas resulting from the application of the EU 15 tariff to the new Member States. The Commission has asked the Council to adopt negotiating guidelines with a view to amending the obligations applicable to bananas in the Community tariff schedule for agricultural products. The Commission will notify the WTO subsequently. The Communication states that the Commission intends to defend the interests of banana growers in the EU and the ACP countries during the negotiations on the move to a tariff-only regime.
Regulation (EC) No 856/1999 - Official Journal L 108 of 27.4.1999
Council Regulation of 22 April 1999 establishing a special framework of assistance for traditional ACP suppliers of bananas.
Regulation (EC) No 1609/1999 - Official Journal L 290 of 23.7.1999
Commission Regulation of 22 July 1999 laying down the detailed rules for the implementation of Council Regulation (EC) No 856/1999 establishing a special framework of assistance to traditional ACP suppliers of bananas.
Regulation (EEC) No 1662/93 - Official Journal L 158 of 30.6.1993
Commission Regulation of 29 June 1993 laying down detailed rules for the application of Council Regulation (EEC) No 404/93 as regards the conditions for the application of protective measures in the banana sector.
Report from the Commission on the operation of the common organisation of the market in bananas [COM(2005) 50, Official Journal C 125 of 24.5.2005]
This report provides an overview of the functioning of the common market organisation since 1999. It takes stock of the use of import licences. Between January 1999 and June 2001, virtually all the licences applicable to dollar bananas (from Latin America) were used. As for bananas from the ACP countries, the number of new countries on the market increased during the second half of 2001 and all the licences for the three quotas were used in 2001 (unlike in previous years). In January 2004, the European Community notified the WTO of the withdrawal of its schedule and those of the ten new Member States and the temporary application of the schedule covering the EU 25. In July 2004, the Commission notified the WTO of its intention to modify the bindings on bananas in the Community GATT tariff. The negotiations were launched in November 2004. Under the Special Framework of Assistance for traditional ACP banana suppliers, EUR 216.18 million were assigned to its beneficiaries between 1999 and 2003 (51% of this amount to the Windward Isles). The report analyses trends in the supply of the Community market. Total EU production increased overall by 3.5%, to 754 000 tonnes in 2003. The consumption of bananas within the Community market increased by 5% between 1999 and 2003. The evolution of imports from ACP countries has differed by country of supply. Between 1999 and 2003, imports from the Caribbean decreased, whereas imports from the Dominican Republic and Africa increased. Among the new Member States, Poland is the largest importer. CIF prices (cost, insurance, freight - at the border of the importing country) of green bananas increased by 8% between 1999 and 2003 (EUR 598 per tonne in 2003). The wholesale prices of yellow bananas on the EU market reached an average of EUR 808 per tonne over the same period.