Fruit distributor Fyffes said yesterday that proposed changes to EU banana regulations would add €40 million to its duty costs each year.

The fruit importer said it was disappointed at the EU Commission's proposal to introduce a tariff of €176 per tonne on imports of third-country bananas from the start of next year. The company said: "Fyffes regrets this decision, believing it is not in the best interest of the industry."

Fyffes said the EU's latest plan had already been rejected by a majority of stakeholders in the global banana trade. It said it would cause banana importers to seek higher selling prices from customers with a significant potential knock-on effect for consumers.

Fyffes, the second largest banana importer in the EU and the largest distributor, believes it will result in the end of the banana industry in several Caribbean countries, while also placing enormous pressure on Latin American banana producers.

Analysts said yesterday that, while the company had calculated the effect on duty costs, the impact of regime change on Fyffes' earnings remained difficult to quantify and the outlook for its banana business unclear.

"The real key is what ends up being the margin structure within the industry for Fyffes," said Robert Brisbourne, food analyst at Merrion Stockbrokers.

Although Fyffes has said its duty costs will increase by €40 million, it remains unclear how much of this it can pass back to its banana suppliers and how much can be passed on to customers.

However, the company said it remained on track to deliver "significantly increased profits and earnings" in the current year. It said its balance sheet was the strongest in the industry and that it had a property portfolio which should generate value for shareholders "in the near to medium term". Analysts said such factors were supporting the Fyffes share price, which steadied yesterday, closing three cent or 1.4 per cent higher at €2.13.

"Fyffes are better positioned than most to change with the new system, as they do not own plantations or ships, and will be able to source bananas from the most competitively priced regions," NCB analyst Paul Meade said in a research note.

"In addition, we may see the group change the way they purchase bananas. They may move to a brokerage system rather than actually purchasing the bananas as currently happens."