Ghanaian fruit exporters to pay higher tariffs

Fairtrade Africa (FTA), an international non-governmental organisation (NGO) committed to improving the lot of farmers in 33 countries on the continent, has expressed grave concern over the delay in the signing of an agreement between Ghana and the UK that allows Ghanaian fruit producers tariff-free access to the UK market, as exists under the Economic Partnership Agreement (EPA).

The NGO, currently operating in eight countries in West Africa – Ghana, La Cote d’Ivoire, Burkina Faso, Mali, Togo, Benin, Senegal and Cameroon – with its West African Network (FTA-WAN) Regional Office in Accra, Ghana, has noted that more than 15,000 direct and indirect jobs are currently being affected negatively due to the failure of Ghana and the UK to sign a post-Brexit trade agreement.

The current delay of the Ghanaian and UK governments in concluding and signing an agreement to allow tariff-free access of these produce to the UK market, means an increase in the cost of their businesses resulting from significantly high tariffs they have been required to pay since 1st January, 2021.

Ghana and UK failed to finalise a trade agreement before the end of the Brexit transition on December 31, 2020, meaning Ghanaian banana, cocoa and other fruit exporters, who are now trading under the Generalised Scheme of Preferences (GSP), would experience exorbitant tariffs.

According to a statement by the communication team, exporters of bananas, who were previously trading under the Economic Partnership Agreement (EPA) with the EU without payment of tariffs, now have to pay 95GBP tariff per tonne 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.

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 wages to workers in the next three to five years.

The Banana Producers’ Association of Ghana comprises 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 from January 1, this year.

Two of these companies are Fairtrade certified and altogether, the three companies export about 85,000 metric tonnes of bananas annually, with about 60% 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.

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.

Ghanaian banana exporters risk losing their market to other African exporters, who were able to broker some transitional 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.

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.

Following this, Fairtrade Africa, which has since 2016 impacted on 120,000 Ghanaian farmers and committed to supporting its members by advocating to remove bottlenecks in trade that impact negatively on livelihoods, as well as working together with all stakeholders across different sectors both in public and private sectors to ensure that member organisations thrive in order to support their workers and communities, has called on both the UK and Ghanaian governments to immediately sign an agreement following a joint announcement by the Ghanaian Ministry of Trade and the UK Department of Trade earlier this month that an agreement had been reached to allow tariff-free access.

Fairtrade Africa also requested 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.

FTA further requested that the government of Ghana involve all key stakeholders, especially the producers, in the negotiation process and ensure they are fully and speedily informed on the 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.

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