Bottom Line: Banana glut sends Geest skidding

YES, we have too many bananas - but only in Europe. In Costa Rica we have up to a third too few, but their skins were yesterday piled up underneath Geest's profits and share price. Perhaps the most serious part of the company's profits warning, however, was the unexpected wrinkle on bananas in the final Gatt deal, whose effect is still unquantifiable.

The oversupply in the European market in the last few months of 1992 was already evident from the 30p-a-pound bananas readily available in every supermarket.

But such bargain prices were largely the result of the delayed introduction of the new European regime. If this year's quota of 2 million tonnes is adhered to, the position should improve.

The pounds 8.9m charge for dealing with the outbreak of the dreaded Black Sigatoka disease looks large but, on the assumption that every cloud must have a silver lining, the group has provided for the expected impact on profits in the current year as well as last.

In the medium term, this upset should not undermine the group's strategy of expanding its production to Latin America from its traditional areas in former European colonies.

Much will depend, however, on what happens to the Gatt amendment. Discussions are continuing, but that is because the Latin Americans want more than the 200,000 tonnes offered by 1995. The Germans, who are used to cheap supplies from dollar-exporters, are likely to put pressure on the European Union to agree.

David Sugden, Geest's chief executive, points out that the aim of the European reforms was to ensure that the colonial producers could make an adequate return - and the Gatt proposals make that unlikely. But shareholders may not share his faith that the politicians will have to sort it out.