Banana fraud forces plant closures

Fyffes distributes more than 165 million cases of produce a year under a range of brands

By BBC News Online's Mike Verdin

A profits slump exacerbated by banana smuggling has prompted Europe's biggest fresh foods firm to axe one quarter of its UK workforce.

Fyffes, which sells fruit under brands including Cape, Carmel and Outspan, on Wednesday ordered the closure of three UK sites and the axing of 200 jobs.

The closures, at operations run by Fyffes and its part-owned daughter company Geest Bananas, are part of a restructuring of banana operations prompted by falling profits.

The Dublin-based company has blamed the division's poor performance on the weakness of the euro, and a banana smuggling scam initiated by fraudsters who have been selling fake import certificates.

About one-in-17 bananas sold in the EU has been imported under a fraudulent licence, Fyffes believes.

Market flooded

Company secretary Philip Halpenny told BBC News Online that it suffered because there were more bananas on the European market as a result of fraudsters manufacturing counterfeit licences.

Philip Halpenny: angry at counterfeiters

"This has depressed the price we get for our bananas," he said.

Most of the imports have come from Ecuador, the world's biggest banana producers, via Italy, Mr Halpenny said.

"But it is not necessarily the shippers who are at fault, because they may have bought the licences in good faith," he said.

Arrests

EU trade investigators are thought to have ordered arrests in Spain and France in connection with the fraud.

Profits have been further hit by the weakness of the euro, the currency in which Fyffes takes the bulk of its earnings.

As the firm generally buys bananas in dollars, from Central American and Caribbean countries, producers' bills have become increasingly difficult to pay.

"I do not think anybody forecast the decline we have had in the euro, and sterling, against the dollar," Mr Halpenny said.

UK closures

Geest ripening centres in Lanarkshire and Chippenham, and a Fyffes site in Leicestershire, are to close.

Geest Bananas, which Geest plc sold in 1996, is jointly owned by Fyffes and Windward Island Banana Development Company.

Fyffes, which employs 800 staff in the UK, traces its history back more to operations started in London in 1888, and Ireland in the 1890s.