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Ecuador: 2017 was their worst year for banana exports to the US

2017 was the lowest year in banana exports to the United States. In 2010, Ecuador sent 21.17% of its production to that country, but in 2017 sales to that market only accounted for 9.75% of its production. 

The US market share had never been so low for bananas, according to a report by the Association of Banana Exporters of Ecuador (AEBE). 

While its true that banana exports increased by 2.29% last year, when compared to 2016, the configuration of their markets underwent a change because productivity increased to almost 2 000 boxes per hectare/year. 

In the last five years the European Union (EU), Russia, and the USA had been the main destinations for Ecuadorian fruit and accounted for 70% of the total exported. In 2017, however, the first three markets were the EU, Russia, and the Middle East, which accounted for 69.95% of Ecuador's total sales. 

The collapse of shipments to the US market was felt most strongly in the last year. In 2016, the country shipped 850,849 tons of bananas to the US. In 2017, the country only shipped 584,201 tons to that market, which means shipments decreased by 31.33% in just one year. Meanwhile, competing countries such as Guatemala and Costa Rica increased their sales to that destination by 17.2% and 18.2%, respectively. 

Eduardo Ledesma, the director of AEBE, stated that Ecuador had "the most expensive banana in the region." A box of Ecuadorian fruit placed in the USA costs USD 1.20 to 1.50 more than one of the competitors. This higher price is a consequence of the local farms' low productivity, the cost of freight, which can take up to 18 days, and the payment in the Panama Canal. 

Meanwhile, Guatemala, the main seller to the United States, offers cheaper fruit, has a productivity of 4,000 boxes per hectare a year, pays lower wages, and the freight times last only three days. Ledesma also said that Mexico increased exports to the US market because it had aggressively increased plantations in recent years. In 2017 it increased its sales to that country by 30% over 2016. 

The export leader said that the US was a traditional Ecuadorian market. The three US companies (Del Monte, Dole, and Chiquita) used to buy bananas in Ecuador to export them, something that has been changing, as they now have better markets in Central America and have planted their interests there. 

Richard Salazar, the administrator of the Banana Marketing and Export Association (Acorbanec), criticized Ecuador for letting other nations take away the market, among other things, thanks to a regulation that limits sowing while its competitors plant more areas. 

He also said the validity of a support price of the box that was not being respected was harmful. Up until week eight of the year, the box cost USD 17, when the official was 6.20. Salazar insists that, since the reality of the banana sector had changed and each market should have its own strategy, the Banana Law should be reformed. This rule obliges producers and exporters to sign contracts of sale. According to Ledesma, the country encourages producers who are not efficient but speculative. 

They sell the box of bananas in the 'spot' market (without a contract) for US 12 to 15 dollars, and then at USD 3 and 4. "They don't worry about productivity, they're interested in prices." 

Cecilio Jalil, the administrator of the Association of the Banana Industry of Ecuador (Asisbane), stated that there should be a free supply and demand market. "The US market is stable, the fruit is sold at the same price all year, but in Ecuador there is a drastic fluctuation." 

Asisbane brings together 40 companies in the production chain (producers, exporters and supplies) that export to the US, EU, Asia, and the Middle East. It started in 2006 by selling 15,000 boxes per week and today it sells 300,000 boxes a week. The productivity of the Los Rios haciendas ranges from 2,500 to 3,000 boxes per hectare. 

Agroaereo Fruit Export, one of the partners of the association, exports 12 containers of bananas to the USA. It has nine haciendas with the technology to conduct all the processes, from harvesting to packaging, that produce 2,500 boxes / ha / year. The first week of March the harvest was destined for Dole. 

According to Ledesma, the Ministry of Agriculture should boost productivity to lower the fruit's costs to better compete, not only in the United States, but also in other markets. In addition, this year they hope to boost sales to Brazil to compensate the losses in the US market. 

The Minister of Agriculture, Ruben Flores, said that nobody had complied with the law that prohibits planting more bananas. From 2000 to 2018 the country increased its planted area by 10,000 additional hectares of banana, and one has to wonder who allowed this to happen? That's why he proposes an integrated reform of the current 20 year old law and discussing the changes with the sector.

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