Four months after the geopolitical incident that affected shipments of tropical fruit to Russia, Ecuador is still the Kremlin's main trading partner in an area marked by a mix of traditions and practical reasons.
Ecuadorian bananas, the main agricultural export of the Andean country and known for its attractive properties, close a notable first half of the year. The tropical fruit has consolidated its shipments to important markets such as the European Union, China and Russia. This last destination is particularly controversial, due to recent geopolitical tensions between Quito and Moscow.
It all began when in January 2024, Daniel Noboa's government announced its intention to send old Soviet weapons to the United States to support the Western war effort in the Ukrainian War. In exchange, Ecuador would receive modern American weapons that would benefit its Armed Forces.
Weeks later, Russia took a drastic measure: on February 5, the Russian veterinary and phytosanitary surveillance service revoked the permission of five Ecuadorian exporters to send bananas and flowers to the Eurasian power. Although the official justification was the alleged appearance of “humpback flies” in banana shipments destined for Russia. It is a common pest that affects these fruits, although only under certain conditions.
According to José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE) , the Russian regulator's accusations were unlikely. “We declare together with our phytosanitary authority that this fly is not linked to the banana production processes. Because we export the fruit in a green state and generally, the humpback fly occurs in shipping processes of already ripe fruit. In addition, we have protocols with Russia, which include the fencing of packing plants, to enable the entry of containers into that country. So we are sure that these processes did not have any problems,” declared Hidalgo for AméricaEconomía .
For the representative of the AEBE, the commercial relationship between Ecuador and Russia should not be compromised, because Moscow represents about 25% of banana exports, having about 25,000 hectares that depend on the Russian market. “There are 25,000 jobs at stake and if something happens to this market it would cause a serious social crisis that would affect small and medium-sized local producers,” he warns.
After the suspension of the Russian phytosanitary authority, a diplomatic and technical tug-of-war followed, led by Ecuadorian producers and the main exporter unions to have the measure revoked. This objective was finally achieved on February 16, although in the previous days, the export of Ecuadorian bananas to Russia continued, excluding the five aforementioned actors. Above all, pragmatism had to prevail, because even the Russian press admitted that nine out of every 10 imported bananas came from Ecuador.
Although shipments of the coveted fruit were far from being suspended, export figures were affected in the long term. Richard Salazar, executive director of the Ecuadorian Banana Marketing and Export Association (Acorbanec), says that between January and May 2024, Ecuador exported more than 160 million boxes of bananas.
Although on this occasion, a presence was obtained in more markets, the reality is that this number implies a reduction of 1.46% compared to 2023.
“The most important reductions have occurred in the Russian market, where we have around 17% less. But the impact is still not that high and it should also be noted that we have exported less fruit due to the climate factor,” Salazar declared for AméricaEconomía .
The influence of the El Niño Phenomenon caused excess rain in Ecuador and, in parallel, generated droughts in other latitudes such as the Panama Canal, which was partially disabled for trade. The director of Acorbanec recognizes that this phenomenon caused the freight transporting the bananas to have to skirt South America through the Strait of Magellan to only reach the Atlantic Ocean. This incident increased logistics and therefore import costs for Russian customers.
THE ADDED VALUE
Likewise, the director of Acorbanec agrees with the data from the Russian press: the Eurasian country imported around 1,460,000 tons of bananas in 2023 and 96% came from Ecuador. Aware of this dependency, in recent years, the Kremlin has tried to turn to other trading partners, but together they do not reach 2% in contributions.
“There are fundamental reasons for this preference. We can mention the quality of our banana, since its organoleptic conditions are quite different. Furthermore, the most important thing is that there is no other supplier that can meet Russia's particular demand. And, likewise, there is no market in the world that can replace what Russia currently buys from Ecuador. Because there is already a balance of supply and demand in bananas. The markets and actors are already given,” says Salazar.
The leader of the export union presents several examples of this system: to begin with, Colombia and the Central American countries, Ecuador's main competitors in banana exports, direct 95% of their shipments to the United States and the European Union (EU). In contrast, for Ecuador, both markets only represent approximately 42%. These business decisions prevent the Andean country's rivals from being able to cover a considerable share of Russian demand for the yellow fruit.
The same happens with the Philippines, another important banana player, which directs its exports towards China, Japan and South Korea. For its part, India, the largest producer in the world, opts for the Middle East markets and China itself directs its enormous production to domestic consumption. When bananas are not enough for Beijing, they resort to importing, but mainly from Vietnam and the Philippines.
In addition to the properties of the fruit and the commercial traditions of its rivals, the Ecuadorian banana has another current advantage: it has not yet been attacked by the most harmful pest in recent years. We are talking about Fusarium Race 4, a lethal fungus that progressively withers banana plants and degrades soil quality. The biological evil has spread through China and Southeast Asia, while in Latin America, it was present in Costa Rica, Panama and more recently, Peru. In fact, reports of the plague in the departments of Tumbes and Piura, bordering Ecuador, raised alarm bells in November 2023. To such an extent that 260,000 hectares in Peru, Colombia and Ecuador were placed under active surveillance.
“The absence of the fungus is advantageous, but it still does not guarantee that at the production level we can guarantee volumes to our buyers. Because obviously, the weather conditions this year have been totally different. Of course, another differentiating factor is that, according to the Ecuadorian soil and climate conditions, the green life of the banana is much more extensive than that present in other countries. This allows us to cover transit periods of 38 or 42 days to Russia,” explains José Antonio Hidalgo.
Given the expectation that the eventual opening of the Peruvian mega port of Chancay has generated at a regional level, due to the potential it would have in sending agricultural exports to the Asian continent, Hidalgo maintains that its impact on banana exports does not depend on the producers. “First of all, 90% of our fruits are sold pre-on-board . And it is the importer, who determines, together with the shipping company, in which port the fruit is shipped. If suddenly next year's contracts tell us that the shipping companies got a better contract to that port, we will have to embark," he says.
From his perspective, the director of the AEBE also maintains that at a competitive level, Ecuadorian exporters should analyze the costs of transportation distance to Peru. At the same time, the opening of a port in the neighboring country could drive improvements in rates and services in Ecuadorian ports such as Guayaquil, Posorja and Puerto Bolívar in the presence of a new competitor. But it is still too early to make predictions.
