Eduardo Ledesma, President of the Association of Banana Exporters of Ecuador

"New banana prices insane"

A 19.5 kilo box of Ecuadorian bananas for export will cost 6.55 dollars in 2015. This increase, higher than 9%, was announced a few days ago by Ecuador's Ministry of Agriculture.

"Banana prices are up and it is insane, as we still don't have the same tariff advantages in Europe as Colombia and Central America. This situation only serves to undermine our competitiveness," affirms Eduardo Ledesma, president of the Association of Banana Exporters of Ecuador (AEBE).

Growing prices could partly be a response to rising production costs, but it is mainly due to the high demand for Ecuadorian fruit registered this year, which would lead, according to estimates by the AEBE, to break the record achieved in 2011, when 283 million boxes were shipped.

"Costs have increased, but not enough to justify a rise of that magnitude, and the circumstances that were taken into account to warrant this price increase are completely different to the current world problems," explains Ledesma.

One factor that greatly influenced the increase in demand for Ecuadorian bananas was Colombia's poor supply, reduced as a result of storms and heavy rains that affected 15,000 hectares of banana plantations in the region of Uraba, where more than 4,000 hectares were totally destroyed, and causing prices in Ecuador to increase between 1.5 and 2 dollars in a few days.

Moreover, the increased tension due to the territorial conflict in the South China Sea between China and the Philippines, the largest supplier of bananas to the Chinese market, brought complications and obstacles to trade between the countries of the region. This situation was also favourable for Ecuador, as it dramatically increased its shipments to China, reaching 300,000 boxes of bananas per week.

"In 2015, Colombia will recover its usual production volumes and, meanwhile, the Philippines is managing to improve its political relations with China; this, combined with lower demand in the Middle East because of conflicts and the Russian crisis, should result in a totally different situation to that of a few months ago," affirms Ledesma.

Russia, Ecuador's main client, accounting for 25% of the country's banana exports, reduced its purchases by 300,000 boxes per week, forced by the depreciation of the Rouble and the economic crisis.



Furthermore, the Russian veto has resulted in a greater supply of various fruits in the European market, in many cases with falling prices, affecting the market share of bananas.

Given this complex situation, large companies already warned that they would reduce their purchases, which brought much concern to Ecuadorian banana producers.

According to Ledesma, the consequences will not be felt as much during the first months of the year, but as soon as Guatemala and other countries in the region start shipping, the large volume of fruit in the market will drive prices down, and the high internal costs generated by this increase will have a negative impact on the sector.

"We, at AEBE, will try to convince producers and the authorities to revise the price adjustment and bring it to a more realistic level, which is not an easy task, but we must try for the good of the industry and the country," concludes Ledesma.


More information:
Eduardo Ledesma
AEBE
eledesma@aebe.com.ec

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