UK and EU find themselves in a banana price war

06/11/2023    16

The price of bananas in the United Kingdom has remained remarkably stable over the past three decades, and an unexpected twist in the form of Brexit could potentially cause banana prices to fall. As of now, a kilogram of bananas costs around 115 pence (equivalent to €1.32), which astonishingly matches the price back in 1990.

In the United Kingdom, the banana market is predominantly controlled by Latin American “dollar bananas” producers. These Latin American exporters have been able to offer their products at competitive prices, largely thanks to the free trade agreements brokered by the European Union (EU), which significantly reduced import taxes.

Currently, as part of their independent trade agreements with Andean countries such as Colombia, Ecuador, and Peru, the British government is conducting a thorough review of banana tariffs. This move has sparked a contentious debate within the industry, with Afruibana, the Pan-African association of banana producers and exporters, insisting that the UK’s deviation from the EU’s obligations amounts to a “departure for a ‘reason’ of the United Kingdom.”

Over the past year, the UK has taken significant steps to slash banana tariffs, extending favorable treatment to countries like Mexico and Peru when it joined the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Additionally, the UK is currently pursuing another ambitious trade agreement with Australia, with a goal to eliminate all tariffs within the next eight years.

These recent developments in the UK’s trade policy, alongside the repercussions of Brexit, have left the banana market at a crossroads, raising questions about its future pricing dynamics and the implications for both domestic and international banana producers.

Source: Talk Finance