Ecuador establishes two mechanisms to set the price of a box of bananas in 2021

On Wednesday, October 28, Ecuador's Ministry of Agriculture and Livestock (MAG) established a new price scheme for a box of bananas for the year 2021 via two modalities: a variable price that goes from 4.50 to 6.90 dollars per box, depending on the season and fruit production peaks; or an annual fixed price of $ 6.25 per box.

The Agreement also establishes that exporting companies must purchase at least 15% of all fruit from associated producers registered with the MAG.

The mechanism is detailed in Agreement 116, issued after producers and exporters failed to reach a consensus on the minimum price, on October 16.

The MAG argued that the proposed scheme for the following year focuses on better facing a scenario of uncertainty, as the possible outbreaks of COVID-19 may continue to affect international markets.

They also said that the differentiated values will allow banana growers to obtain more income when their production is higher, and to better cope with the normal drop in demand from June to October of each year.

Industry reactions
The Banana Marketing and Export Association (Acorbanec) stated that the system provides clarity to negotiate export contracts that are signed between November and December for 2021. They also stated that the options will help the sector to face the volatility of emerging markets and maintain its competitiveness in a scenario of uncertainty due to the pandemic.

In fact, 62% of the fruit shipments go to these markets, including the Middle East, Africa, and Eastern Europe, said Richard Salazar, the director of the union. "Maintaining a high price when most countries have reported a drop in purchasing power was absurd," he said.

However, from the producers' perspective, the two new options aren't good for producers. Segundo Solano, a member of the Board of Directors of the Association of Bananas Producers from el Oro (ABO), said that the increase in costs, such as that of labor, had not been taken into account. "A small producer who obtains 1,000 boxes per month will see his income decrease by more than 200 dollars if he signs a contract in which the price of a box stands at 6.25 dollars," he said. The ABO will promote repealing Agreement 116.

Between January and September, the sector exported 286.9 million boxes, i.e. 6.95% more boxes than in the same period of 2019 and a higher volume than in the last three years.



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