Ecuador is a dollarized economy and the current strength of the U.S. dollar has hurt local exporters. This is making it cheaper to import fruits and vegetables from third countries, such as Chile, Peru or Colombia, who have suffered major devaluations in their currencies.
"A couple of weeks ago, our Government implemented some safeguards, or extra tariffs on the import of fruit, to prevent our market from being flooded with products from third countries and protect the domestic production. This has caused fruit exporters from other countries in the region to complain, and Chile is demanding the same measures to be taken against Ecuadorian products," explains Roberto Castillo, sales manager of Terra Sol.
Import duties on Ecuador's fruit imports reach 45%. This could lead to retaliation from Chile, which is the main market for Ecuadorian pineapples.
This could threaten the continuity of shipments to the Chilean market, the main market for Ecuadorian pineapples and, ironically, these safeguards would then cause problems to local producers that the measure taken by the government sought to prevent.
"Those who exported to Chile will have to sell their produce in the local market, and the vast majority do not have certifications for access to more demanding markets. It could easily lead to oversupply and prices would fall, which would be a shame, because the Ecuadorian market pays well, with prices almost on par with those of the export market."
Market diversification
Terra Sol, founded in the 60's by Edward M. Evans, is a pioneer in the year-round cultivation of pineapples in Ecuador and has a long tradition as an exporter, also for products such as abaca and papaya.
The company has 650 hectares devoted to pineapples and is committed to producing fruit that meets the quality standards of the most demanding markets; as a result, unlike most other local producers, the company has a really diversified customer base, with the main destinations for its pineapples being Europe, the U.S. and Chile.
"Today, as a company, we are not as concerned about the measures Chile may take as we are about the depreciation of the Euro. We are trying to open new markets, and since last year we are already exporting to New Zealand, which is a market that pays well and is gradually getting used to importing higher quality fruit and larger calibres," he explains.
As a long time professional in the cultivation of pineapples, Roberto prefers to refrain from offering short-term analyses when asked about the sector's future, focusing on the wider picture.
"Unlike what it may seem, since production grows every year, I believe that demand is saturated worldwide and may even be dropping. Poor quality fruit and the ups and downs of prices do not encourage frequent pineapple consumption. At a given time, consumers will get tired and start seeking more stable alternatives, such as Ecuador, but margins will remain small until the end of this pineapple oversupply; a situation which I believe will continue for at least the next five years," he concludes.
More information:
Roberto Castillo
TERRASOL-ASOPIÑA
T: +593 999 599 899
robertocastillo@terra-sol.com
www.sistematerrasol.com