Exporters say that the rise in the price of the box affected contracts in Europe, in addition to the low production, which producers endorse due to lack of resources.
With -12% less fruit in all its destinations, last January, banana exports in Ecuador did not get off to a good start and there is more than one reading to explain the decline. On the export side, the fall in production and the lack of signing contracts with clients abroad are blamed.
With 4.5 million fewer boxes of bananas exported in the first month of the year compared to January 2023, exporters are concerned that Ecuador is losing the market in Europe compared to other producing countries such as Colombia and Costa Rica, which were preferred by their minors. prices and the lack of contracts signed by Ecuador, according to Richard Salazar, executive director of the Banana Marketing and Export Association of Ecuador (Acorbanec).
He explained that the preference for bananas from Colombia and Costa Rica centers on the fact that they do not have to go through the Panama Canal and that they offer between 30 and 60 cents less per box than Ecuador.
"The drop in exports in January, more than 12%, was fundamentally due to a reduction in production, but also to a reduction in purchases in the European Union, which only bought 100% of what it generally buys in the year 70% and 30% did not buy under contract or did not sign a contract,” Salazar revealed.
In the case of Russia, its second best market after the EU, there was also a significant reduction of 30% fewer contracts. "In the case of Europe, it preferred to buy from other origins such as Costa Rica and Colombia and in the case of Russia it simply reduced the purchase," the leader explained.
Salazar indicated that they hoped to close a few more contracts in February, but that did not happen. “It seems that this part is finally being bought more in Colombia and Costa Rica,” the leader reiterated. In addition, he recalled that Ecuador raised the minimum support price for a box of bananas for 2024, from US$6.50 to US$6.85, which also impacts negotiations with its clients, supermarkets, which according to Salazar, Now they are putting pressure again to pay less for fruit, which is why the export sector began a campaign on its networks this Monday, March 4.
In the account of Acorbanec, as well as that of the Banana Cluster of Ecuador, and the Association of Banana Exporters of Ecuador (AEBE), it was posted: “Will European retailers continue not paying the fair price for Latin American bananas? From March 11 to 14, during the Fourth Global Conference of the World Banana Forum, we expect action!”
At home, on the other hand, the signing of contracts between exporters and producers continues without major changes. Salazar assured that they continue with a figure close to between 55% and 60% of signed contracts, which are necessary for the fruit to be exported. However, he acknowledged that in Ecuador it is clear that 55% of destinations buy fruit on spot , that is, at an international price at the time of cutting and without contracts, while 45% buy through contracts. Until week 9, the spot price reached an average of US$8.49 and currently, in week 10, it stands at US$10, versus the PMS which is US$6.85.
“The banana producer does not have money to invest in farms”
On the producer side, Franklin Torres, president of the National Federation of Banana Growers (Fenabe), dismissed the reasons that exporters put forward to explain the cut in exports, although he did recognize that there is low production in banana farms, however he argued that they are the result of the lack of investment in the farms, after an economic crisis in the producing sector where it received prices below the PMS for more than three years.
“It's simple, the agricultural producer in general and the banana producer in particular does not have money for investment. Added to the security crisis that still exists in the rural sector, it does not allow investing in the sector,” Torres explained. He stated that the majority of contracts signed so far by exporters have been above the PSM, that is, more than US$6.85. “We were not crazy when we producers asked for at least US$7 as the minimum support price for this year.
“They only worry about what happens outside and do not give importance to the base of the value chain, which is the banana producer, without banana producers there is no value chain. Using pretexts to pay less internally is a common practice in the export sector, they did it in 2020 with the pandemic, 2021 with the post-pandemic and 2022 with the war between Russia and Ukraine. Today the consequences of these low prices are paid with low production, small bunches and backward farm infrastructure,” lamented the head of Fenabe.
Furthermore, he criticized that despite the fact that the country's banana production occupies more than 35% worldwide, both the Government and the export sector, which are responsible for positioning bananas as a country brand, have not been able to confirm that dominant position. in international markets.
Internally, Torres also does not believe that the signing of contracts between producers and exporters will grow any more. “Both European importers who always give us moral classes, as well as exporters, must realize that the sector is in crisis,” he expressed.
The leader indicated that the Government must initiate a contingency plan to reactivate the agricultural production sector and warned that failure to do so would mean lower production for the coming years.
