Fairtrade Africa has urged the government of Ghana and the United Kingdom to finalize a trade agreement to save fruit exporting companies.
Ghana and UK failed to finalize a trade agreement before the end of the BREXIT transition on December 31, 2020.
It said although it welcomed the 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 the delay was impacting negatively on players in the industry.
“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 finalizing an agreement,” it said in a statement.
Established in 2005, Fairtrade Africa is the independent non-profit umbrella organization representing all Fairtrade certified producers in Africa.
“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,” it said.
These requests according to Fair Trade Africa would collectively ensure that jobs were 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 bottlenecks in a trade that impact negatively on livelihoods. Working together with all stakeholders across different sectors both in the public and private sector, we ensure that our member organizations thrive in order to support their workers and communities,” it said.
It is estimated 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 that allows Ghanaian fruit producers’ tariff-free access to the UK market as exists under the Economic Partnership Agreement (EPA).
Mr. George Kporye, Golden Exotics’ Corporate Affairs Manager in an interview expressed worry over the high tariffs being paid to add that “the tariffs should be waived in the interim and the deal concluded in days, rather than weeks.”
He said, “We had to reduce the volumes because of the uncertainties of reaching a deal on time.”
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 a 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.
These Fairtrade Certified Producer organizations together employ over 5,000 direct workers and create more than 10,000 indirect jobs.
The banana producers’ association of Ghana is made up of 3 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 Mr. Kporye said 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 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 percent of exports going to the UK market.
The 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 January 1, 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 paid 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.
Anthony Blay, Director of Agric, VREL said “Volta River Estates exports about 85 percent of its volume to the UK, having developed long-term trade relations 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,” he said.
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 were therefore not subject to duty payment.