Wednesday, September 24, 2008

JP looks to Latin America - Banana producer examines option to expand Honduras, Costa Rica farms to supply UK market

Published: Wednesday September 24, 2008

Jamaica Producers Group, having announced that it will stop growing bananas here for export, is considering expanding its production in Central America to maintain a toe-hold for its own-grown fruits in the UK market.

We look at going forward and Costa Rica is an option," Charles Johnston, JP's chairman, told Wednesday Business. "We had land in Costa Rica years ago where we used to contract workers."

JP eventually pulled out Costa Rica, but two years ago it spent US$2.5 million to develop a 500-acre farm in Honduras, from where it exports bananas to the United States.

Johnston suggested that expanding that farm was also an option, although he stressed that any such discussion remained preliminary.

Jamaica Producers Group has been a major player in Jamaica's banana industry for more than half a century, but said it would stop growing the fruit here for export after a series of storms over the last four years destroyed farms.

Low-wage farms

Before Hurricane Dean, banana export from Jamaica was 30,000 tonnes, from annual average of around 50,000 tonnes. And even that was down from the island's heyday as a banana exporter when it sold more than 150,000 tonnes a year abroad. But even with preferences, Jamaica and members of the African, Caribbean and Pacific (ACP) group of countries found it difficult to compete with more efficient, low-wage farms in Latin America.

JP, which controls an estimated one-third of the British banana market, fetching premium prices for its Fair Trade-certified fruits, had just resumed exports last month when Tropical Storm Gustav, romping across the Caribbean, again destroyed its Jamaica plantations.

Local market

The precarious nature of the business in Jamaica, plus the increasingly successful challenges by Latin American producers at the World Trade Organisation to Jamaican preferences in the European Union influenced JP' decision to end export production in Jamaica.

JP intends to maintain some of its banana farms to grow the fruit for chips and other snacks, as well as the production of root crops for its agro-processing business.

Rolf Simmonds, JP' commercial director, said that the withdrawals of banana exports from Jamaica would not undermine the viability of the goup's UK-based logistics business, JP Fruit Distributors Limited, acquired last year from Dole Food Company.

Source: Jamaica Gleaner

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