“When money talks, quality walks”

Ecuadorian bananas struggle with difficult market

The year 2015 can be considered one of the worst in the history of Ecuadorian Bananas. According to Ad Wehlburg, Assistant General Manager of Exportaciones Durexporta, S.A., grower and exporter of exotic fruits in Ecuador, “Ecuador has been struggling this year with a difficult international market as a result of the Russian crisis, the situation in Ukraine, the fast growing local Chinese banana production, more competition from Central American countries, and an excess global supply of bananas.”

Wehlburg explains the benefits of Ecuadorian bananas. “Ecuadorian bananas are healthy. Much less pesticides are used during the cultivation and processing of our conventionally grown bananas than in China, the Philippines, Colombia and the Central American countries. Our bananas are bigger, have better pulp firmness, have an excellent taste, and last but not least, a longer shelf life (meaning less waste). These benefits are unique to the Ecuadorian banana, because we are right on the equator which gives us the highest solar radiation having a positive effect on photosynthesis. Besides, we are blessed with rich volcanic soils.”

Last year, 2014, was great for Ecuadorian bananas because of non-typical circumstances. Wehlburg is referring to the storm in Colombia that ruined banana plantations, political issues between China and the Philippines (at the same time the Philippines suffered badly from the Panama disease, which lowered exports) and last but not least, the southern Chinese island Hainan had been hit by a typhoon. This resulted in an enormous increase of the demand for Ecuadorian bananas in China and other regions from June until the end of the year. In contrast with a normal season, the demand didn't drop during the summer months.

Unfortunately, this didn't last long according to Wehlburg. “China planted too many new banana trees after being hit by the typhoon. This gave rise to an oversupply in their own market and subsequently fomented low prices in 2015. The Chinese bananas look better than before, they are bigger and cleaner and they are being sold in improved Ecuadorian style packaging. Even the Chinese banana buyers in the Northern regions of China are surprised by this cosmetic change of their local banana and suspect either the usage of hormones during cultivation or perhaps the use of GMO´s. Still, the quality and taste cannot be compared with Ecuadorian bananas,” explains Wehlburg. “We had hoped that we had established a firm foothold in the Chinese market with our premium quality bananas, especially in the colder North-east of China. However, 2015 has shown the opposite since this market for our bananas in China has collapsed. The Chinese consumers buy the cheaper local bananas which look good enough, even though the bananas are of a considerably lower quality. When money talks, quality walks.”

“The oversupply of Chinese bananas affected the export of Philippine bananas to China, the traditional number one imported banana in China. Therefore, the Philippines diverted part of their production to the Middle East. Hence, the much cheaper Philippine banana pushed the Ecuadorian banana out of this region. The Russian crisis and the complicated situation in Ukraine, traditionally the number one and number three destinations for Ecuadorian bananas, did not help either. Finally, we see that the large multinational companies opt more and more for the cheaper bananas from Guatemala, Nicaragua and Mexico” adds Wehlburg. “In Ecuador we pay a sustainable price to the banana farmers, making our banana relatively expensive compared to those countries that do not uphold such a social sustainability system.”

“Meanwhile, we are experiencing a global oversupply of bananas pushing down prices in traditionally strong markets for Ecuadorian bananas like the Mediterranean (Turkey being the most important destination, for their local market as well as for the the re-export via Turkey to the Middle East) and Eastern European countries.”

Wehlburg doesn't expect 2016 to be much better. He believes the oversupply of Chinese bananas will not change. “Having said that, we will have to wait and see what effect a possible El Niño phenomena 2015/2016 will have on the banana production in Ecuador, Colombia and the Central American countries.”

For more information:
Ad Wehlburg
Guayaquil – Ecuador
T: (+593 4) 501 - 2200 / 2201
E: wehlburg@durexporta.com

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