CCP: 03/5(CCP:BA/TF 01/15)

Table of Contents

I. INTRODUCTION

II. DATE AND PLACE OF THE NEXT SESSION

APPENDIX A

REPORT OF THE SECOND SESSION OF THE SUB-GROUP ON BANANAS

I. INTRODUCTION

II. ECONOMIC AND TRADE ISSUES

A. Current Market Situation and Short-Term Outlook

B. MEDIUM-TERM PROJECTIONS FOR SUPPLY AND DEMAND TO 2010

C. the contribution of production and trade of bananas and plantains to food security

D. recent developments in the market for organic and fair-trade bananas

E. BIOTECHNOLOGY AND BANANA PRODUCTION

III. INTERGOVERNMENTAL ACTION ON BANANAS

A. review of policy developments

B. report on common fund activities relating to bananas

IV. OTHER MATTERS

APPENDIX B

REPORT OF THE THIRD SESSION OF THE SUB-GROUP ON TROPICAL FRUITS

I. INTRODUCTION

II. ECONOMIC AND TRADE ISSUES

A. CURRENT MARKET SITUATION

B. MARKET PROSPECTS FOR TROPICAL FRUITS IN INDIA AND THE RUSSIAN FEDERATION

C. TRADE POLICY DEVELOPMENTS

D. INTERGOVERNMENTAL ACTION ON TROPICAL FRUITS

i) Tropical Fruits Network (TFNet)
ii) Report on the Common Fund for Commodities activities relating to tropical fruits

III. OTHER MATTERS

APPENDIX C

LIST OF DOCUMENTS

I. INTRODUCTION

1. The Intergovernmental Group on Bananas and on Tropical Fruits held its Second Session from 4-8 December 2001 in San José, Costa Rica. It was attended by the following Members: Belgium, Belize, Bolivia, Cameroon, Costa Rica, Côte d'Ivoire, Cuba, Ecuador, European Community, Finland, France, Germany, Honduras, Ireland, Italy, Jamaica, Malaysia, Netherlands, Panama, Spain, Thailand, United Kingdom, United States and Venezuela. In addition, observers from the following organizations attended: the International Atomic Energy Agency (IAEA), the World Health Organization (WHO), the European Union of the Fruit and Vegetable Wholesale, Import and Export Trade (EUCOFEL), the Inter-American Institute for Cooperation on Agriculture (IICA), the International Banana Association (IBA), the International Centre of Insect Physiology and Ecology (ICIPE), the International Network for the Improvement of Bananas and Plantains (INIBAP) and Social Accountability International (SAI). A list of participants was distributed as document CCP: BA/TF 01/Inf.4.

2. The Group was welcomed on behalf of the Government of Costa Rica by Mr Alfredo Robert Polini, Minister for Agriculture, who explained the economic and social significance of banana and tropical fruit production in Costa Rica, and stressed the need for environmentally sustainable production systems.

3. The statement of the Director-General, Mr Jacques Diouf, was delivered on his behalf by Mr David Hallam, Chief, Raw Materials, Tropical and Horticultural Products Service of the Commodities and Trade Division who expressed appreciation to the Government of Costa Rica for hosting the Session, and to CORBANA and the Ministry of Agriculture for their contribution in making arrangements for the Session.

4. The Group elected Mr Jorge Sauma (Costa Rica) as Chairperson, and Mr Hagen Streichert (Germany) as Vice-Chairperson.

5. The Group adopted the Provisional Agenda, CCP: BA/TF 01/1.

II. DATE AND PLACE OF THE NEXT SESSION

6. The date and place of the Third Session of the Intergovernmental Group on Bananas and Tropical Fruits will be decided by the Director-General of FAO in consultation with the Chairperson of the Intergovernmental Group.

APPENDIX A

REPORT OF THE SECOND SESSION OF THE
SUB-GROUP ON BANANAS

I. INTRODUCTION

7. The Second Session of the Sub-Group on Bananas (San José, Costa Rica) opened on 4 December 2001 and concluded on 7 December 2001.

8. The Sub-Group elected Mr Jorge Sauma, General Manager of CORBANA as Chairperson and Mr Hagen Streichert, (Germany) as Vice-Chairperson.

9. The Sub-Group adopted Item II of the Provisional Agenda in document CCP: BA/TF 01/1.

II. ECONOMIC AND TRADE ISSUES

A. CURRENT MARKET SITUATION AND SHORT-TERM OUTLOOK

10. The current market situation and short-term outlook were reviewed based on the most recently updated statistical information contained in document CCP: BA/TF 01/2 (Rev.1). Delegates were invited to comment on the information presented and to assist in its improvement. The Sub-Group welcomed the statistics provided in the document but noted certain limitations notably with regard to the reliability of some data which is essential for an accurate assessment of international banana trade. It was suggested that a working group, much like the former statistical sub-group of the Intergovernmental Group on Bananas, might be established to consider the quality of statistical data and to assist the Secretariat in its improvement. However, it was stressed that the activities of any such working group should not entail additional expenditure.

B. MEDIUM-TERM PROJECTIONS FOR SUPPLY AND DEMAND TO 2010

11. The Secretariat reported on work in progress on the development of methodologies for medium-term projections for supply and demand to 2010 on the basis of document CCP: BA/TF 01/3. The nature of the model under development was outlined and some preliminary results were presented. The difficulties of making projections of exports and imports over a long time horizon were acknowledged. The Sub-Group urged caution against over-optimistic projections of future consumption levels. The importance of accurate data on which to base projections was stressed, and particularly the need for meaningful fob price data.

C. THE CONTRIBUTION OF PRODUCTION AND TRADE OF BANANAS AND PLANTAINS TO FOOD SECURITY

12. The Sub-Group considered the item on the contribution of production and trade of bananas and plantains to the food security of both smallholders and plantation workers with the aid of documents CCP: BA/TF 01/4, CCP: BA/TF 01/CRS.6 and CCP: BA/TF 01/CRS.7. The value of such studies was recognized by the Sub-Group, but the difficulties of data collection were emphasized. Nevertheless, the Sub-Group concluded that further work in this area should be undertaken.

D. RECENT DEVELOPMENTS IN THE MARKET FOR ORGANIC AND FAIR-TRADE BANANAS

13. The market for organic and fair-trade bananas was reviewed with the assistance of document CCP: BA/TF 01/5. The Sub-Group expressed its appreciation for the work on organic and fair trade bananas and requested that social and environmental issues be considered in on-going work by the Secretariat.

14. The definition of organic production was considered and a careful exposition of production and market growth in European and North American markets was provided. It was noted that the attractive premiums currently available for organic bananas may be eroded by growth in production ahead of growth in demand. The Sub-Group noted the need for constant updating and dissemination of information on organic and fair trade bananas in order to closely monitor the supply and demand balance.

15. The lack of harmonization between organic standards set by different countries and the absence of mutual recognition of national certification systems were considered to be a potential barrier to trade. The Secretariat was encouraged to seek to promote harmonization of standards. The meeting also noted the potential for confusion between organic and fair trade products. The view was expressed that the Secretariat should study both organic and fair trade issues in greater depth, including international trade and market surveys, as a way to assist developing countries.

16. It was requested that the Secretariat should study banana market trends over the past few years to examine reasons behind the long term price decline while the gap between prices received by growers and paid by consumers has continued to widen.

E. BIOTECHNOLOGY AND BANANA PRODUCTION

17. The Sub-Group considered this item with the assistance of document CCP: BA/TF 01/6. A presentation on this subject was made by Mr Simon Gowen of the University of Reading covering a range of issues related to banana cultivation. Mr Gowen detailed the possibilities offered by the application of biotechnology to efforts to meet pest and disease challenges with reduced applications of pesticides and other chemical products which impact on the environment in banana growing zones. However, there was a need to avoid excluding small farmers who may not be producing for export from the benefits accruing from the application of biotechnology to the sector.

III. INTERGOVERNMENTAL ACTION ON BANANAS

A. REVIEW OF POLICY DEVELOPMENTS

18. Developments in trade policies for bananas were discussed with the assistance of documents CCP: BA/TF 01/7, CCP: BA/TF 01/8, CCP: BA/TF 01/CRS.4, CCP: BA/TF 01/CRS.9 and CCP: BA/TF 01/CRS.11.

19. An assessment of the new EC banana import regime (CCP: BA/TF 01/7) was presented by Mr Hervé Guyomard of the Institut National de la Recherche Agronomique. This provided an analysis, using an econometric model of the world banana market, of the impact of the revised tariff rate quota regime operating in the transition to a tariff-only regime to be introduced by January 2006. The Sub-Group welcomed the analysis in the paper, but agreed that it was not appropriate in the present Session to discuss the likely course of future negotiations and the details of the eventual tariff-only policy. The EC delegation described the development of EC policy to comply with WTO rules, and outlined some features of the new transitional policy finalized since the preparation of document CCP: BA/TF 01/7. The delegation provided a written statement, and this was distributed as document CCP: BA/TF 01/CRS.16. A written statement was also provided by Ecuador and this was distributed as document CCP: BA/TF 01/CRS.18. Some delegations noted that while policy developments had a significant impact on banana trade, market trends were also important, and that recent depressed prices highlighted the continuing need for improving competitiveness especially under a tariff-only regime.

20. The Sub-Group noted the importance of accurate trade data to quantitative policy analyses of the type presented, and reiterated the need for better statistical information. Some delegates repeated their call for the establishment of a banana statistics working group, while others felt that the need was for improved exchange of statistical information, for example through the more effective use of electronic communication.

21. Banana trade policies in other countries were summarized in document CCP: BA/TF 01/8, and the Sub-Group was invited to comment and update the information provided. The value of continuing monitoring of trade policy developments by the Secretariat was noted. Concern was expressed that in spite of moves towards liberalization, banana exports still faced significant trade barriers in some instances with adverse effects on export revenues, food security and rural development.

B. REPORT ON COMMON FUND ACTIVITIES RELATING TO BANANAS

22. In its role as the International Commodity Body for bananas, the Sub-Group reviewed activities related to banana projects previously submitted to the Common Fund for Commodities (CFC) based on document CCP: BA/TF 01/9. The Sub-Group was informed that both projects endorsed in the First Session of the Group were approved by the CFC and that the project involving improved germplasm dissemination was in fact in the implementation phase. Additional projects were presented as outlined in documents CCP: BA/TF 01/CRS.5 and CCP: BA/TF 01/CRS.12. These proposals were: Promotion of transformation through modern biotechnology tools of commercial banana and plantain cultivars with available precursors, genenes and terminators through greenhouse and field evaluation of transformed materials; screening of Musa variants for reaction to fungal diseases and nematodes. Several delegations and experts made positive and helpful comments on both projects and the Sub-Group endorsed the projects for submission to the Common Fund for Commodities. Concern was expressed in relation to the application of various biotechnology tools that might potentially affect consumer perceptions of bananas. Some delegates indicated that there is a need for an analysis of consumer perceptions of the application of biotechnology in fruits, including bananas. The goal would be to enable interested parties to develop a strategy for an information campaign to better inform consumers. The Sub-Group looked forward to any contribution FAO could make in this effort.

IV. OTHER MATTERS

23. Some delegates expressed concern over the consequences of increasing market power of supermarkets on the banana value chain and on producer interests, particularly on prices received. It was suggested that the Secretariat should undertake research into these structural changes and their implications.

APPENDIX B

REPORT OF THE THIRD SESSION OF THE SUB-GROUP ON TROPICAL FRUITS

I. INTRODUCTION

24. The Third Session of the Sub-Group on Tropical Fruits (San Jose, Costa Rica) opened on 6 December 2001 and concluded on 8 December 2001.

25. The Sub-Group elected Mr Hagen Streichert as Chairperson, Mr Alberto Montero as First Vice-Chairperson and Mr Prasert Anupunt as Second Vice-Chairperson.

26. The Chairperson drew attention to the Rules of Procedure of the Group (document CCP: BA/TF 01/CRS.3) and the extract from the 63^rd Session of the Committee on Commodity Problems (CCP), document CCP: BA/TF 01/CRS.1, particularly paragraphs 28, 29 and 30 which were directly relevant to the Sub-Group.

27. The Sub-Group adopted Item III of the Provisional Agenda, CCP: BA/TF 01/1 subject to a change in the order of discussion of the two items under III.D.

II. ECONOMIC AND TRADE ISSUES

A. CURRENT MARKET SITUATION

28. The Sub-Group discussed this item with the assistance of document CCP: BA/TF 01/10, which provided the Secretariat's assessment of the current market situation. A statistical compendium, document CCP: BA/TF 01/CRS.2, containing supplementary detailed information on production, trade, prices, import tariffs and maximum residue levels was tabled.

29. The Sub-Group noted that although annual growth rates of imports were high, import volumes were small compared to those of traditional deciduous fruit or more common exotics, such as pineapple or mangoes. A major challenge facing future market growth was the need to develop a co-ordinated approach to managing the field-to-market-supply chain, for both fresh and processed products. The Sub-Group noted that issues related to food safety, pest and disease control as well as quality of produce should find a proper balance between costs and consumer demand. The Sub-Group recognized the need to better monitor products not detailed individually under currently applied trade classification systems, such as those grouped under HS code 08.10.90. Some delegates stated that the data presented on minor fruits underestimates the production, trade and growing importance of this category in overall fruit consumption. Others requested that information on diversified products such as organics and processed products be included in future market analysis. The Sub-Group recommended that each delegation should make a greater effort in responding to the Sub-Group's annual questionnaire, in the first instance, and where possible provide disaggregated data with the assistance of their respective customs authorities. The Secretariat was also requested to assist member countries where necessary to improve data collection and to discuss with relevant institutions the provision of more detailed data, including data on organic products.

B. MARKET PROSPECTS FOR TROPICAL FRUITS IN INDIA AND THE RUSSIAN FEDERATION

30. These items were considered by the Sub-Group with the assistance of documents CCP: BA/TF 01/11, CCP: BA/TF 01/11 Add.1, CCP: BA/TF 01/CRS.14, CCP: BA/TF 01/12 and CCP: BA/TF 01/CRS.13.

31. In considering the market study on India, the Sub-Group noted that although India was the world's largest producer of tropical fruit, less than one percent of production entered the world market. Domestic demand for tropical fruits in India has steadily increased, largely attributable to rising incomes, population growth, increased urbanization and greater awareness of the improved nutritional aspects of tropical fruit consumption. However, per capita consumption levels have remained low compared to other major tropical fruit producing countries in Asia, such as Malaysia and Thailand.

32. The Sub-Group noted that trade in tropical fruits was a recent development in the Russian Federation and that availability was limited. However, this emerging market for tropical fruit showed strong growth potential, the full extent of which was just becoming apparent prior to the economic crisis of 1998. The main factors constraining the potential for increased tropical fruit consumption were high prices, seasonality and low consumer incomes.

33. The Sub-Group expressed its appreciation of the two market studies, and recommended that the Secretariat continue its work in the analysis of markets of interest, subject to available resources. Future studies might include an analysis of the Canadian tropical fruits market and an update of the Chinese market study which was presented at the Sub-Group's Second Session in Australia in 1999. The Sub-Group also suggested that future studies be extended to include more detailed analyses of the processing of tropical fruits and diversification efforts.

C. TRADE POLICY DEVELOPMENTS

34. The Sub-Group reviewed trade policy developments with the assistance of document CCP: BA/TF 01/13. It was agreed that the implementation of SPS measures continued to be the most significant policy issue for international trade in tropical fruits. A major potential obstacle to fresh tropical fruit trade was the lack of appropriate alternatives to methyl bromide. Possible alternatives were discussed in a presentation by an FAO expert on SPS measures. The Sub-Group was further informed that the use of pest risk analysis in assessing and managing phytosanitary risks associated with tropical fruits would become increasingly important in order for countries to be able to access markets. The use of systems approaches, or integrated measures for managing risks, was highlighted as one of the more promising options for tropical fruit exporting countries.

35. The Sub-Group expressed concern that the implementation of phytosanitary measures was costly and problematic for many developing countries. The importance of harmonization of phytosanitary measures was noted, and the need for additional guidance on alternatives to methyl bromide in the form of international standards was stressed. It was suggested that the Sub-Group might investigate means to overcome the problems posed by the implementation of SPS measures through increased country to country cooperation on SPS issues.

D. INTERGOVERNMENTAL ACTION ON TROPICAL FRUITS

i) Tropical Fruits Network (TFNet)

36. The Sub-Group was informed by the current Chief Executive Officer of the Tropical Fruits Network (TFNet) of the progress of TFNet, with the assistance of documents CCP: BA/TF 01/14 and CCP: BA/TF 01/CRS.17. While recognizing the generous contribution of the Government of Malaysia for funding the first three years of operations of TFNet, the Sub-Group expressed concern at the small number of ordinary members of the Network. The Sub-Group recommended that the Provisional Management Committee (PMC) urgently review the structure and activities of the Network with the view to improving its attractiveness and added value for participants. It was suggested by some delegates that the PMC should look at reviewing the Constitution of TFNet to allow private sector participation as ordinary members, and simplify entry conditions, including a review of membership fees, to widen membership. In addition, TFNet should select projects that yield immediate benefits rather than embarking on long-term projects. Some delegates expressed their preference for regional rather than global networks but considered it useful to cooperate with TFNet.

ii) Report on the Common Fund for Commodities activities relating to tropical fruits

37. The Secretariat reported on the status of project proposals that had been endorsed by the Sub-Group for submission to the Common Fund for Commodities (CFC). The Sub-Group expressed its concern at the further delay which could lead to a direct negative economic impact on the implementation of the CFC component of the African fruit fly initiative project and requested that the Secretariat should follow up with the CFC and IFAD to resolve the current impasse. Regarding the project entitled Expanding the production, processing and marketing of dried tropical fruits in Uganda, the Sub-Group was informed that the Project Execution Agency (PEA) had successfully obtained alternative funding and had therefore formally withdrawn its request for financing from the CFC. The project Enhancing the export competitiveness of tropical fruits was submitted to the Sub-Group's intersessional mechanism for consideration by the UN Agency for Economic and Social Cooperation for Asia and the Pacific (ESCAP) in 2000. The CFC Consultative Committee recommended that a fully fledged project proposal be elaborated with the assistance of a consultant to be hired by the CFC Secretariat. Finally, the project proposal Diversification of agriculture in Guatemala and Chiapas through the production of export fruits was submitted for consideration by the CFC in 2001. The Sub-Group noted that the CFC Consultative Committee considered that the proposal had a wide array of project activities and needed to focus on a specific component for which CFC could provide support. The Committee therefore suggested that the CFC Secretariat hire a consultant to identify specific activities within the areas of production and marketing in consultation with the proposed PEA and other stakeholders.

38. The Sub-Group reviewed and endorsed two project proposals (document CCP: BA/TF 01/CRS.10): Organic production of under-utilized aromatic, medicinal and natural dye plants (MADP) for sustainable rural livelihoods in India and Nepal and Genetic conservation, germplasm collection and sustainable utilization of spices, herbs and medicinal plants in Ethiopia.

III. OTHER MATTERS

39. The Sub-Group expressed concern at the considerable delays in processing of project proposals by the CFC and felt that the CFC needs to be more sensitive to the needs of the industry. It should take note of the careful discussions of project proposals by the Sub-Group prior to their submission to the CFC. The Secretariat was asked to convey these concerns to the CFC.

APPENDIX C

LIST OF DOCUMENTS