More than 15,000 direct and indirect jobs are currently being affected negatively due to the failure of Ghana and UK to sign a post Brexit trade agreement that allows Ghanaian fruit producers’ tariff free access to the UK market as exists under the Economic Partnership Agreement (EPA).
Ghana and UK failed to finalise a trade agreement before the end of the BREXIT transition on 31st December, 2020. This means exorbitant tariffs for Ghanaian banana, cocoa and other fruit exporters who are now trading under the Generalised Scheme of Preferences (GSP). For the banana sector, exporters who were previously trading under the Economic Partnership Agreement (EPA) with the EU, without payment of tariffs, now have to pay 95GBP tariff per ton of banana
Affected companies that are Fairtrade Certified producers and members of Fairtrade Africa (FTA) namely the network of all Fairtrade Certified Producer Organisations in Africa and the Middle East are: Golden Exotics Limited (GEL), Volta River Estates Limited (VREL) and Blue Skies Company Limited.
Livelihoods at stake
These Fairtrade Certified Producer organisations together employ over 5,000 direct workers and create more than 10,000 indirect jobs. As Fairtrade Certified organisations, these fruit producers ensure safe working conditions, fair wages, protect workers’ rights, and most recently the Banana producers have committed to working progressively towards paying living wage to workers in the next three to five years.
The banana producers’ association of Ghana comprises of three companies; Golden Exotic Limited, Musahamat Farm Limited and Volta River Estates Limited situated in the Greater Accra and Eastern regions with a surface area of about 2,500 hectares and a workforce of about 4500. These companies also provide an additional 10,000 indirect employment. The industry has been actively exporting bananas for the past 26 years to the EU market to which the UK belonged until BREXIT came into force as from 1st January, 2021.
Two of these companies are Fairtrade certified and altogether, the three companies export about 85,000 MT of bananas annually with about 60 per cent of exports going to the UK market. Fairtrade bananas exported to the UK are considered a premium product that allow companies to earn social premiums that help to improve infrastructural development in local communities where the companies and its employees are located.
Effects of delay
The currently delay by the Ghanaian and UK governments in concluding and signing an agreement to allow tariff free access of these producers to the UK market means an increase in the cost of their business resulting from significantly high tariffs they have been required to pay since 1st January, 2021.
The Golden Exotics Limited (GEL), which exports around 45,000 tonnes of Fairtrade and organic bananas to the UK each year, had to pay a £17,000 duty on its first post-Brexit shipment to arrive in the UK this year. Ghana’s Volta River Estates Limited (VREL) plantation exports around 9,500 tonnes of Fairtrade-certified bananas to the UK each year for sale at Co-op and Waitrose supermarkets. Banana is a perishable product with a strict weekly export regime – Fairtrade members are bound to pay these exorbitant tariffs on a weekly basis. It had to pay a duty of £16,000 on weekly shipments of nine containers of bananas. An additional £53,000 has been paid for three more deliveries since then. The introduction of these new tariffs therefore puts a heavily unsustainable burden on these companies.
Anthony Blay, Director of Agric, VREL said: “Volta River Estates exports about 85% of its volume to the UK, having developed long term trade relation with the COOP and Waitrose supermarkets. The company cannot survive this level of tariffs even in the short term, putting the jobs of its 700 direct employees at risk”.
The Corporate Affairs Manager Golden Exotics, George Kporye, added that the tariffs should be waived in the interim and the deal concluded in days, rather than weeks. “We had to reduce the volumes because of the uncertainties of reaching a deal on time,” he said.
Ghanaian banana exporters risk losing their market to other African exporters who were able to broker some transitionary agreement with the UK before the deadline and are therefore not subject to duty payment. Most Latin America banana exporting countries also reached a deal with the UK. Exports from Ghana can therefore not compete with these other origins at the current rate of tariffs, needlessly threatening the survival of an otherwise successful industry. This situation is applicable to related industries like canned tuna, cocoa processing, processed fruits/salads, pineapple etc., with the UK being a major destination.
The resultant effect of the rising cost of business for these companies as a result of these tariffs is that new jobs would not be created, some current jobs would be lost and efforts made towards ensuring workers in Fairtrade farms earn a living income would be thwarted. This situation coupled with the impact of Covid19 makes the situation even precarious
Fairtrade Africa welcomes the joint announcement by the Ghanaian Ministry of Trade and the UK Department of Trade earlier this month that an agreement has been reached to allow tariff free access, however we call on both the UK and Ghanaian governments to immediately sign an agreement to bring this into effect. Fairtrade Africa also requests that exporters be compensated for the tariffs already paid as it will be unfair for them to bear the brunt of the two governments delay in finalising an agreement. Thirdly, Fairtrade Africa requests that the government of Ghana involves all key stakeholders especially the producers in the negotiation process and ensure they are fully and speedily informed on the negotiation process. These requests will collectively ensure that jobs are not only protected or secured but that new jobs are created and that Fairtrade plantations can keep to their commitment to paying workers a living wage.
Fairtrade Africa is committed to supporting its members by advocating to remove bottle necks in trade that impact negatively on livelihoods. Working together with all stakeholders across different sectors both in public and private sector, we ensure that our member organisations thrive in order to support their workers and communities.
This article is from Fair Trade West Africa Network