The Banana Industry Trust

The Banana Industry Trust was established by Cabinet Conclusion No. 691 of 10 June 1999. The establishment of the Trust was endorsed by the Delegation of the European Union Commission in Barbados and the Eastern Caribbean. Though the objectives of the Trust were many and all relate to the betterment of the Banana Industry, one of the primary objectives was to encourage, assist and support the development of sound farm practice in the production of bananas and in particular to restore confidence in the banana industry.

The office of the Trust was established in June 2001 with the appointment of the Executive Officer. An Administrative Assistant was recruited in April 2002 and the staff complement of the Trust has remained unchanged. The Role of the Trust has been focused on the following:

1. The administration of the PRP Loans to the Banana Companies;
2. The management of the funds provided by the Government of St. Lucia for the Inputs Credit Scheme for farmers;
3. The administration of the funds and projects under the SFA99 Grant Contract;
4. The administration of the funds and projects under the SFA2000 Grant Contract;
5. Support to the Banana Industry as needed within the available resources of the Trust

The Trust is administered by a Board of ten (10) Trustees made up of representatives from each of the three banana companies, two (2) from the Ministry of Agriculture, Forestry & Fisheries, one from the Ministry of Finance, a representative from the private sector, a representative from the Bank of St. Lucia, a representative from BERU and a representative from the office of the NAO. The Chairman is Mr. Brian Louisy who is the Executive Director of the Chamber of Commerce. The BIT is managed by Mr. Bertram C. Clarke, who is the Executive Officer and is supported by Mrs. Donasha Alcindor Wells, who is the Administrative Assistant. The office of the Trust is located in the American Drywall Building, Vide Boutielle, Castries.

Funds for the administration of the Trust were supposed to have been transfered by the National Authorizing Office to the Trust from the remaining balances of the STABEX Funds for 1993, 1994 or 1995 for use in the banana industry. These funds were never transfered to the BIT and the operations of the Trust have been funded primarily from the EU SFA99 and SFA2000 Programmes.

The following outlines the function that the Banana Industry Trust has embarked upon from its inception:

PRLOANS

These loans which were originally managed by the PRP Credit Team, were transferred to the Trust in 2001 on the exit of the Deloitte Touche PRP Credit Team. These loans were delinquent prior to the take over by the Trust and $8,964,757.40 is due from the SLBC ($7,297,020.31) and TQFC ($1,667,737.09). The Trust has held discussions with both companies with a view to arriving at an arrangement to reduce the outstandings but neither company is in a position to make a commitment towards the repayment. In addition most of the farmers who originally accessed the funds are no longer in banana production. The recovery of the outstandings at this time seems doubtful and a provision has been made in the financial statement of the BIT for the past due balances.

An amount of $67,641.09 is due from Troumassee Estate (originally $150,377.00) for the installation of "On Farm" Irrigation infrastructure, payments of which have been sporadic. An amount of $132,530 was loaned to the Mabouya Valley Development for the reinstatement of irrigation infrastructural works, the balance is still outstanding as no payments have been made to date. A request has been made to the Ministry of Agriculture regarding the repayment of the amount.

Under the PRP Prgramme funds were provided during 2000/01 for the installation of "Off-Farm" irrigation on 94 acres in the Mabouya Valley ($733,410.90) and 57 acres in Troumassee ($384,577.97). These funds were to be reimbursed on the implementation of the SFA99 Grant Contract but has not materialized to date, as the EU Guidelines do not allow for retroactive reimbursements.

Input Credit Scheme & Other Financial Assistance

One of the early interventions by the Trust on behalf of the banana farmers came in the form of a credit facility for the purchase of inputs and the rehabilitation and replanting of fields, after the severe drought in 2001. The Government of St. Lucia provided $2.45 million in June 2001 and a further $0.5 million in November 2001 to assist the farmers. The funds were targeted at certified farmers operating in specified banana producing areas where irrigation was in place or areas targeted for irrigation and farms had potential to produce 12 tons per acre. A total of about 1,000 farmers were eligible to access the available funds. An additional sum of $3.0 million was provided by the Government in late 2005 for the programme making a total of $5,950,000. The funds have been recycled through the banana companies to the eligible farmers over the years and a total of $5,879,966 has been disbursed. An additional $1,603,654 has been spent to purchase fungicide and oil to support Leafspot Control and purchase fertilizer and blue diothene to avoid shortages on the island.

An amount of $1,076,046.81 is outstanding as at 31 January 2007.

The Credit Programme entails providing the funding to the farmers through their respective banana companies. The banana companies provided the inputs directly to the eligible farmers and forwards the relative invoices (dockets) with the farmers' receipts to the Trust for reimbursement. By prior agreements, the banana companies authorizes WIBDECO to make weekly deductions on behalf of the Trust. This arrangement has worked exceedingly well, as the losses have been limited to $34,392.74, less that 1/2% of the total disbursed. The losses were due to the liquidation of the two banana companies ACTCO and BSML.

The Trust in 2001 and 2002 advanced $1.2 million to the Ministry of Agriculture to enable it to continue providing services to the farmers by way of aerial spraying of bananas against Leafspot disease. The funds were to be reimbursed to the Trust under the EU sponsored Leafspot Programme, however due to some deficiency in the late submission of reports to the EU the amount was not processed and the BIT not reimbursed. The amount is still due by the Ministry of Agriculture to the Trust.

In 2003 the Trust advanced $5000,000.00 to the St. Lucia Banana Corporation to meet payments to banana farmers who had suffered damage to their banana crops due to high winds. The advance was repaid as arranged.

IRRIGATION AND DRAINAGE PROGRAMME

The Trust was given the mandate to implement the Banana Commercialization Programme with funding provided under the EU Special Framework of Assistance (SFA) 1999 and 2000 Grant Contracts, which entailed the installation of Off Farm Irrigation Infrastructure and Drainage in the major banana growing areas.

SFA99

The funding under the SFA99 Grant Contract totaled $10.2 million and the works included the following:

1. The installation of 440 acres “Off-Farm” irrigation infrastructure in Cul-de-Sac;
2. The installation of 180 acres “Off-Farm” irrigation infrastructure in Roseau;
3. The installation of 57 acres “Off-Farm” irrigation infrastructure in Canelles;
4. The construction of a 54,000 m3 Reservoir in Cul-de-Sac;
5. The drainage of 200 acres of banana lands in the Mabouya Valley.

The projects were all put out to Tender both locally and internationally and the three irrigation contracts were awarded to the French Company, Farmex Technologies SARL and the Reservoir construction and drainage projects were each awarded to local contractors.

The works on the various projects commenced in earnest in April 2002 and all the works were successfully completed by November 2003 and within the Budgets allocated under the programme. The irrigation systems will provide services to 70 farms in Cul-de-Sac, 28 farms in Roseau and 13 farms in Canelles. The Drainage works in Mabouya Valley entailed the widening and deepening of drains, the sloping and building of embanking and the replacement of box and pipe culverts on the Dennery Main Drain, the Grand Ravine Drain and the Baire Morne Drains.

Additional works under the programme included improvement of the facilities at the Cul-de-Sac Reservoir site and security at the Intake Dam, the fencing of the facilities at Canelles and the reinstatement of the weir and irrigation infrastructure in the Mabouya Development area.

An allocation of $1.6 million was made under the Programme to facilitate the Operations and Management of the irrigation system by the Irrigation Management Unit of the Ministry of Agriculture. The Programme was for one year the first instance until 25 May 2005 but this was subsequently extended to September 2006. It was expected that by that time the farmers in the three irrigated areas would be in a position to take over the operations and management of the systems, however this has not materialized and the IMU continues to provide the service and the BIT fund the operations.

It was the understanding with the EU that the Government of St. Lucia would take over the operations of the irrigation system when the EU support ceased, but this has not been done to date.

The above SFA Programme officially expired at the end of October 2006 and the closure report submitted to the NAO/EU Delegation as of 31 December 2006.

The disbursements on the projects and other areas up to 31 January 2007 were as follows: Project

	Projects	Budget	Allocated/Contracted Amounts	Disbursements to Date
1	Cul-de-Sac - Irrigation	$3,375,000.00	$2,864,000.00	$1,747,067.16
2	Cul-de-Sac - Reservoir	3,850,000.00	3,850,000.00	3,830,036.24
3	Roseau - Irrigation	942,000.00	939,000.00	586,552.61
4	Canelles - Irrigation	560,000.00	543,000.00	439,842.78
5	Mabouya - Drainage	950,000.00	950,000.00	778,758.89
5A	IMU Advances	-	-	1,419,290.61
	SUB TOTAL	$9,677,000.00	$9146000.00	$8,801,548.29
6	Administration BIT - Staff Fees	$168,000.00	$168,000.00	$158,306.34
7	Administration BIT - Office Expenses	48,500.00	48,500.00	47,824.84
8	Administration BIT - Capital Items	12,000.00	12,000.00	11,848.65
9	IMU - Capital Items/Administration	100,000.00	100,000.00	98,248.87
10	IMU - Staff Fees	144,000.00	144,000.00	125,996.95
11	Fees Technical Assistance Team	0.00	506,052.00	495,022.86
12	Contingencies	9,925.00	9,925.00	8,792.11
	TOTAL	$10,159,425.00	$10,134,477.00	$9,747,588.91

The Cul de Sac resevoir has not been used by the farmers in that area. The BIT has commissioned a feasibility study on the use of the reservoir for aquaculture in order to find an alternative use for the facility.

SFA2000

The funding under the SFA2000 Grant Contract totaled $11.5 million and the works included the following:

1. The drainage of 500 acres in the Roseau Valley;
2. The installation of 200 acres “Off-Farm” irrigation infrastructure in Roseau;
3. The construction of a 75,000 m3 Reservoir in Roseau;
4. The drainage of 200 acres in the Cul-de-Sac Valley.

The Drainage in Roseau commenced in August 2003 and included the widening and desilting of 34km of drains and the replacement of eleven and repairs to ten culverts were completed December 2003.

The Drainage works in the Cul-de-Sac Valley commenced in October 2003 and were completed by December 2003.

The installation of the Off-Farm Irrigation infrastructure commenced in September 2003 and was eventually completed in March 2006. The delay in completion was due to the late start of the works on the Roseau Reservoir and the subsequent delays in the completion of that reservoir. This phase provided irrigation for thirty-eight farms in the Roseau Valley.

As a result of the late acquisition of the reservoir lands, these works did not commence until early January 2004. However due to adverse weather conditions and other factors during the construction period, the project was finally completed in March 2006. This project comprised an Intake Damm on the Roseaur River, a 2.8 km gravity pipeline to the reservoir and the actual reservoir.

As with SFA99 Programme the projects were put out to Tender both locally and internationally. The irrigation project was again won by the French company Farmex and the three remaining projects were all won by a joint bid from local companies Hippolyte Equipment Services Ltd. And Phoenix Construction Co. Ltd.

With savings from the two drainage projects, approval was sought and received to utilize $1.0 million to install in Marquis Valley, Off-Farm Irrigation infrastructure on about 100 acres. The contract for the project following a short listing of contractors was awarded to the French company Farmex for $963,904.48. The works commenced in October 2006 and were substantially completed by 31 December 2006. The company has a few minor matters to be completed and will hand over the project by the middle of March 2007.

All the projects were successfully completed within the budget allocations of the EU.

The disbursement on the projects and other areas up to 31 January 2007 were as follows:

	Projects	Budgeted Amounts	Revised Budget Amounts	Allocated/Contracted Amounts	Disbursed to Date
1	Roseau Valley - Drainage	$1,621,008.00	$1,201,008.00	$1,191,751.00	$1,193,429.72
2	Roseau Phase 2 - Irrigation	1,345,798.00	1,345,798.00	1,220,428.00	1,330,655.15
3	Roseau - Reservoir	5,738,005.00	5,888,005.00	5,787,133.00	5,775,521.78
4	Cul-de-Sac - Drainage	1,236,898.00	506,898.00	501,007.00	502,844.97
5	Marquis Valley - Irrigation	-	1,000,000.00	963,904.00	963,904.48
	SUB-TOTAL	$9,941,709.00	$9,941,709.00	$9,664,223.00	$9,766,356.10
6	BIT - Staff Fees, Office Expenses	787,903.00	1,045,303.00	1,045,303.00	1,032,317.60
7	IMU - Staff Fees, Tech Support	693,704.00	436,304.00	436,304.00	421,041.79
8	Audit - Audit Fees	29,420.00	29,420.00	29,420.00	NIL
	TOTALS	$11,452,736.00	$11,452,736.00	$11,175,250.00	$11,219,715.49

The above SFA 2000 Programme also expired at the end of October 2006 but the Marquis Valley Project was allowed to continue as the contract for the project was signed prior to the expiry. The closure report as of 31 December 2006 was completed and forwarded to the NAO/EU Delegation.

THE WAY FORWARD

The Banana Industry Trust has bid and has successfully been awarded the contract to manage the EU SFA2003, Environment Management Fund (EMF). This entails the Administration of an EUR 4.0 million (EC $14 million) facility over a three year period to December 2009.

The BIT will have to work closely with the Ministry of Economic Affairs and Economic Planning. National Development and the Public Service under whose authority the SFA2003 Programme has been placed.

The overall objective of the programme is to provide continued support to banana commercialization, agriculture and general economic diversification efforts through Integrated Natural Resource Management (INRM).

The overall objectives of the programme fit into the Saint Lucia – European Community Country Strategy Paper and National Indicative Programme for the period 2001 – 2007. The programme's contribution will fall within the following areas:

1. provide institutional strengthening to the various stakeholders, and to lend support to State and Non-State Actors to execute works
2. strengthen mechanisms for Integrated Natural Resource Management (INRM) in St. Lucia.

The purpose of the programme is to improve the management of Saint Lucia's natural resources by building capacity and developing consensus on a collective vision for the efficient, sustainable and equitable use of the resources. The Programme will consist of activities at the national level, as well as several projects at the community level.

The areas to be funded under the EMF are quite broad and include:

1. Reforestation Programmes to Stabilize vulnerable areas;
2. Watershed improvement interventions derived from watershed management plans;
3. Alternative cropping;
4. Riverbank stabilization and interventions to reduce flood risk;
5. Operationalization of a land bank, including compensation mechanisms for lands acquired in trust;
6. Water supply systems for both potable water and hillside irrigation;
7. Systems for solid and liquid waste management in rural communities especially in upland areas;
8. Coastal zone interventions in near shore marine areas;
9. Eco/heritage Tourism interventions
10. Technical innovations including; inter alia, the exploitation of renewable energy sources, group water exploitation etc.

The proposals from prospective beneficiaries for access to the funds will have to be quite detailed to comply with the EU Practical Guidelines. The BIT will have to review the proposals and if approved will have to put the projects out to Tender as funds will not be given directly to the beneficiaries. This will entail the constant monitoring and evaluation of all phases of the proposals/projects on an ongoing basis, and this will keep the BIT staff and its support team fully occupied during the entire programme.

The BIT will continue to utilize the current resources to provide the credit for farmers to purchase the necessary inputs to increase their banana production and yields. The support will continue to be given in any way possible to achieve the production goal of 60,000 tonnes but maintain the integrity of the loan programme.

In the By-Laws of the Banana Industry Trust, the objectives focused primarily on support for the banana industry. It would be prudent if the objectives of the Trust could be expanded to include agriculture as a whole, so other areas in the sector can be supported by the Trust. A request was submitted to the Ministry of Agriculture, Forestry & Fisheries to expand the objective of the Trust Deed and to make other amendments so the wider agriculture sector can be supported, however a decision is still awaited.

The Trust has operated over the past five years without direct support from the Government of St. Lucia due to the funding support from the EU Programme. This trend will continue for the next three years as a result of the SFA 2003 Programme. Since, the interest from the loan to farmers at 2% per annum does not generate the income to cover the administration costs of the Banana Industry Trust, the Government support will be needed when the EU programme ceases.