East Asia, which has more than 1,600 million inhabitants and imports nearly 5.8 million tons of bananas a year, is a strategic market for the Ecuadorian banana industry. However, exports to this market have presented a downward trend in the last period.
In 2019, the East Asian market accounted for 8.8% of Ecuadorian banana exports; in 2020, that share fell to 6.9%; and up until week 30 of this year, that share fell to 5%.
"This means there's been a 30% drop in volume in 2021, i.e. 4.5 million fewer boxes," highlighted Marianela Ubilla, the president of the Association of Banana Exporters of Ecuador (AEBE).
This downward trend is due to several factors. One of these factors is the increase in the banana supply in countries that are geographically close to China, especially in Cambodia, which last year increased its banana production by 1,200%, stated Marianela.
Another factor is the cost of transportation. Currently, shipping a container from Ecuador to East Asia costs about $ 4,000, while shipping it from the Philippines costs $ 1,200.
In addition, the Ecuadorian bananas pay tariffs to enter the Chinese, Japanese, and Korean markets, while the fruit from some Latin American and Asian competitors pays zero tariffs.
Faced with this scenario, Ubilla highlighted the urgency of reaching trade agreements with the countries in that region, starting with China. "We can't waste any more time because the other exporting countries have already overtaken us and are gaining ground in those markets," she added.
The Ecuadorian Government, in tune with the banana sector and other sectors, announced its intention to begin negotiations as soon as possible to sign a trade agreement with the Asian giant, hopefully by 2022.
The time is now, Ubilla stressed. We must be able to take advantage of the current situations that give Ecuador an advantage. For example, the effects of Fusarium race 4 in the Philippines, the second biggest exporter of bananas in the world, has caused a drop in production and increased costs for banana producers in that country.
In addition, the expert highlighted, Ecuador can guarantee a regular supply because of its climate, a situation that contrasts with the Asian production that constantly faces natural threats.
"If we achieve a zero tariff for bananas, we could be more competitive in those markets," Marianela Ubilla stated.