Brexit, Fine Wine, Garlic, Olive Oil, and a big bunch of Bananas

2 August 2016

The United Kingdom’s main dilemma

As a result of the decision to leave the European Union (EU) the United Kingdom (UK) faces a troubling dilemma in respect of its food supply.

Food prices are almost certain to rise as a result of the falling value of the pound against other currencies, and because of one crucial fact – Britain imports over 50% of the food it eats on an annual basis.

Where does the UK get its imported food from?     

In 2015, twenty-seven percent of all food eaten in the UK was imported from the EU. This compares with just four percent from the United States, and four percent from the African continent.

When it comes to fruit and vegetables the UK was heavily dependent on the EU for over 40% of the fresh produce that it consumed in 2015. A significant concern is that the UK is simply not geared to grow more domestically to bridge the gap, with only a hundred and sixty-four thousand hectares out of 4.7 million hectares of crop growing land being allocated to horticulture.

To survive the UK will need to find new sources of food or strike deals with its former partners in the EU. One thing is almost certain – when the EU subsidies and tariff exemptions are removed as a result of Brexit, the odds are that imported food is going to be much more expensive and more will come from sources external to the EU.  

How membership of the EU changed the UK’s palate

The EU hasn’t just nourished the UK it has fundamentally changed the UK’s eating habits. Forty years ago our Grandparents would not have drunk fine wines, enjoyed a meal prepared with garlic, or used olive oil for anything other than the treatment of a blocked ear. Most dishes would have been spiced with nothing more than a touch of salt and pepper.

Things – at least food wise- have happily changed since then, and a large part of the reason for the change and the refining of the UK’s palate has been membership of the EU.

One of the main reasons behind the formation of the European Economic Community

One of the main reasons the European Economic Community (EEC) was formed (perhaps the second most important reason after the promotion of peace and stability at the end of the Second World War) was to ensure that the countries within Europe had a plentiful supply of food sufficient to feed the whole of its population. Since its formation there has been no repeat of the Hunger Winter of 1944 and 1945 that occurred in Holland (now the Netherlands) that resulted in large scale famine, disease, and death.

So what has this got to do with Bananas? – I’ve never met a Banana I didn’t like

Statistically the UK loves Bananas. On average each citizen consumes over 10kg of Bananas every year. Prior to 1998 a large proportion of these Bananas came to the UK from the Caribbean but before we go further with this blog entry we need to understand why the United States put a stop to the Caribbean import of Bananas into Europe.

The position prior to 1998 and the “Great Banana War”

Since 1975, as a result of the UK lobbying the EU, each Caribbean country had a quota of Bananas that it could sell into Europe. Effectively this meant that a large percentage of the Caribbean’s export of Bananas ended up on European tables. The impact of this arrangement on the small Banana Farmers of the Caribbean was that it gave them a degree of protection from the large scale farms owned by US Multi-Nationals operating at much lower costs per tonne in Latin America.

Prior to 1998, Latin America still dominated the Banana Market with over 75% of Banana imports into the EU coming from that region as opposed to just 7% from the Caribbean. After the Great Banana War, Latin America was to dominate the EU’s Banana Market.

Although the Caribbean enjoyed only a small percentage of the EU’s Banana Market, the percentages are much higher when the UK is viewed in isolation with over 80% of its banana imports coming at that time from the Windward Islands of the Caribbean.

The Great Banana War

The Great Banana War was effectively the culmination of a six-year trade dispute between the United States of America and the EU. The United States (who export no bananas – but see above in respect of the ownership of the multi-nationals producing bananas in Latin America) complained that the EU scheme giving banana producers in the Caribbean special access to the EU broke free trade rules enforced by the World Trade Organisation.

Who are the World Trade Organisation?

The World Trade Organisation (WTO) was formed in 1994 and effectively superseded the General Agreement on Tariffs and Trade (GATT). It is the only international organisation that deals with rules of trade between countries, and its major goal is the promotion of free trade.

The WTO has the power to legislate on disputes and co-ordinate new rounds of talks and negotiations with a view to dismantling barriers to trade throughout the world.

The importance of the Banana Industry to the Caribbean in 1998

In 1998 half of the Caribbean’s population relied on the banana industry to supply their basic needs including food, shelter, and accommodation. The resolution of the Banana War in 1998 plunged many of these people into economic poverty on a mass scale.

The resolution of the Banana War – bad news for the Caribbean

In June 1998, the EU Agricultural Ministry voted to abolish the Caribbean’s guaranteed access to the European Banana Market at the prompting of the WTO.

For over 25 years the ACP (African, Caribbean, and Pacific) countries had enjoyed preferential trading agreements with the EU. Prior to the resolution of the Banana War, each of the traditional banana exporting countries within that grouping had their own individual quotas dictating how much they could import into the EU.

After the ruling one single block quota was imposed on the sum of all of the ACP countries. This effectively pushed out the Caribbean farmers who were unable to compete with the large farm operations run by Del Monte in Cameroon and the Ivory Coast.

Between 1988 and 2000 the Ivory Coast tripled its exports of Bananas to the EU while in the same period Cameroon doubled theirs.

Does Brexit provide an opportunity for the Caribbean Banana Farmer?

Arguably yes. Because the UK is extricating itself from the EU, the rules and conditions that applied to it as a member of the EU will fall by the wayside. Further, as a result of its dependence on food imports, the UK will have to look for fresh sources of supply to feed its people against the backdrop of a falling pound. The opportunity is there and perhaps the Caribbean, with its historical ties to the UK, can seize it.

An interesting fact about the Banana

Whichever way you look at it the Banana is a profitable commodity. Looking at the large supermarkets in isolation the product that has the highest mark-up in the UK, and is by extension the most profitable product by individual unit sold, is the Banana.


As I said before – in the UK people have never met a banana they didn’t like…


Closing thoughts – time to consider your investing strategies

Firstline Securities Limited offers comprehensive coverage of local and international markets with a bias for the energy sector. Firstline offers a number of unique opportunities to put surplus cash to work either as your asset manager or investment advisor. Please contact us for more details at or at 868.628.1175, we can discuss your investment needs in detail and craft a portfolio that makes sense for you. We look forward to hearing from you.


Comments are closed.