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Ecuador's banana sector is under pressure from oversupply and lack of liquidity

Producers and authorities continue to define a short-term solution for the fruit that hasn't been sold since the war conflict between Russia and Ukraine broke out, and whose value would amount to more than $45 million, according to Acorbanec.

This week, representatives of the Ministry of Agriculture held an online meeting with members of the National Federation of Banana Producers of Ecuador (Fenabe) to set the mechanisms to start some measures agreed on last Friday. In exchange, they have asked the sector protests to stop their protests on the country's roads. The deadline would be Friday.

According to Franklin Torres, the president of Fenabe, the most urgent thing is to approve the proposed mechanism (a trust) to sell the fruit internally and prohibit the continued sowing of crops for export. "There are more than 40,000 hectares planted illegally and the government hasn't collected the fines on these illegal plantations. We request they collect those fines and that they don't allow exports of that fruit."

The producers and the exporting guild support the regularization of supply. Richard Salazar, president of the Banana Marketing and Export Association (Acorbanec), said they have been doing it for three weeks now. In the last week alone, his guild managed to evacuate 450,000 clusters, with a payout ranging from $1 to $2 per unit. However, he said, this policy must be accompanied by control to prevent the farms that have phytosanitary problems from exporting low export quality fruit.

According to Salazar, if the Government has decided to intervene to help alleviate this crisis, they should implement more comprehensive policies. The purchase of bunches, he said, is solving an internal issue, but it's not dealing with a core problem. The closure of Russia has generated a logistical problem, as only 2 shipping lines go to that market, and financial problems: not only have prices fallen, but not all payments are arriving on time, which has the sector dealing with a great lack of liquidity. If there is no money, there is no way to pay producers and they would also have no way to pay their workers.

Vicente Wong, president of the exporter Reybanpac, believes that a solution that would allow them to reduce illiquidity would be the drawback (tax refund) that is dictated by the Tax Simplification Law. "It is not a handout, the government just has to regulate what is already there."

Another solution is to approve a tax moratorium. The request has already been made to the Internal Revenue Service (SRI) and the Ministry of Finance.



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