Camilo Thame, Business Reporter

Dr. Marshall Hall, head of the Jamaica Producers group of companies. - FILE

Jamaica Producers (JP) will decided next Monday whether it will sell its stake in its banana ripening and food distribution business in the U.K. to its minority partner, Dole Food Company, or buy the 35 per cent shareholding held by the American firm.

In a notification to the Jamaica Stock Exchange (JSE) yesterday, the JP group said it had "received an offer from Dole Food Company for the purchase of JPG's 65 per cent shareholding in JP Fruit Distributors Limited (JPFD)."

Added the statement: "JPG must either accept this offer or reacquire Dole's 35 per cent shareholding in JPFD."

Dole had acquired the 35 per cent stake in the U.K. operations in 1994 through a joint venture agreement, which, at the time, gave the fruit distributor access to 20 per cent of the U.K. banana market.

"The offer is as per the terms of the joint venture agreement," said Producers' group company secretary, Kermitt McGann. "It was a time triggered event."

In its statement to the JSE, Jamaica Producers, headed by Dr. Marshall Hall, said its board of directors would meet on October 2 "to consider the offer and explore strategic options."

Last night, Dole said it had real interest in acquiring the operation at the right price: "At the pricee offered, we would be very wiling to buy," Dole's chief financial officer Joe Tesoriero told Wednesday Business.

But both entities have felt the squeeze of the new tariff regime for banana imports to the European Union (EU), which was implemented in January 2006. Under the new regime, volume restrictions on banana imports from Latin American were removed while a cap of 775,000 tonnes was placed on the amount of bananas imported from African Caribbean and Pacific (ACP) countries free of duty. Over that amount, a duty of 176 euros per tonne is applied.

Dole's fresh fruit revenues in the quarter ended June 17 increased to US$1 billion, or by two per cent over the comparative three months last year. The increase in fresh fruit revenues was primarily due to higher banana volumes sold in Europe, from Latin America, alongside higher prices on fruits sold in North America.

However, the American firm saw its fresh fruit earnings before interest and taxation in the quarter ended June 17, 2006 decrease to US$52.5 million from US$95 million in the comparative period last year, primarily as a result of higher product costs that impacted worldwide banana operations and "higher costs in the European banana business related to the new tariff fees imposed by the EU in connection with the new import regime."

Producers' banana division, which includes the banana ripening and distribution aspect of JPFD and the operations of JP's shipping operations, saw a decline in revenue, from $3.6 billion to $2.96 billion, and pre-tax profit, from $151 million to $7 million, during the quarter when compared to the three months to June 18 2005.

On the other hand, Producers fresh and processed foods division, which involves the distribution of fresh produce other than bananas along with the manufacturing and distribution of juices, saw its profit before tax increase from $28 million during the three months to june 18 ,2005 to $141 million during the comparative period this year.

- camilo.thame@gleanerjm.com