Ecuador: Banana producers don't always get paid the set price
"The Ministry of Agriculture, Livestock, Aquaculture and Fisheries (Magap), through Ministerial Agreement 265, set the minimum support price of a 22XU box of bananas, weighing 41.5 to 43-pounds, at $6.26. This price is valid between January 1 and December 31, 2017. However, it is not the price that Ecuadorian producers are paid. It depends on whether they sign a contract with the exporters or if they do not (SPOT price). If we check all of the SPOT prices this year, the best producers were paid for a box of bananas was $11.50 in week 16," stated Daniel Pinargote Gomez, from Ecuador.
However, the lowest price that producers had to work with was $2.10 in week 31. The price for contracted producers ranged from $4 to $ 4.6 with a quota restriction every week.
"Producing a box of bananas costs around $5.50, so it's easy to imagine the losses faced by producers when prices are so low. Luckily, we only had a period of 11 weeks with very low prices. Prices are improving, for example, in week 44 they stood at around $8 to 8.50. At the moment, they are $9 and we hope they'll be close to $10 by the end the year."
Daniel has worked for years in the banana sector, but has been working as an independent consultant for the past 2 years. "I work with different producers and it is terrible to see them in such complicated situations. It's all due to the minimum support price that the Government set for the banana sector."
The country benefits from having the US dollar as its currency since 2000. "Ecuador is the only country in Latin America that has the dollar as its currency. That's good for business because it's a stable currency. Often, countries suffer from a bad exchange rate. However, producers can have large losses if they don't work with contracts and programs. For example, I am working with a producer who lost about $ 70,000 last year."
"The country was affected by heavy rains from January to May. It was too much water for the plants, about 150 mm in a short period of time," stated Daniel. "In Ecuador, temperatures are very high in winter and there are more sun hours. Summer, which takes place from May to October, has low temperatures and few hours of sun, so production is low. This changed only three weeks ago, which is positive for banana production," he added.
For more information: Daniel Pinargote Gomez
Publication date: 11/10/2017
Author: Carlos P Poggio
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