Ecuador: Banana sector's sales slow down

2014 was a record year for Ecuadorian bananas. The country exported 295 million boxes, 15 million more than in 2011, achieving the highest exports in recent years. Improved productivity, reduced production of major competitors, and demand in Asia conjugated the ideal scenario.

However, the situation has changed this year. In 2015, the sector has slowed down and exporters and producers are concerned about 2016 because of several issues: the phenomenon of El Niño, a year of electoral campaign, and the downward trend in the prices of commodities, as is already happening with oil prices.

"2016 will depend on what the Ministry of Agriculture does regarding the establishment of prices, better conditions, and more flexibility in red tape. Rather than seeking new markets, it's important to sell more to the markets we already have," said Eduardo Ledesma, president of the Association of Banana Exporters (Aebe), at the International Banana Forum held between October 12 and 15 in Guayaquil.

Ledesma said that the sector had increased its export volume by 8% in the first half of this year but that this percentage was lower than that recorded in the same period of 2014, when exports increased by 17.9%.

According to the Central Bank, banana exports between January and August this year amount to $1.926 million dollars, i.e. 11% more than in the same period last year. However, as the year advances, a slowdown in sales can be observed. The growth rate in February this year, compared to the same month last year, was 31%, in March and April it was 12%, and by August it was only 1%.

"We are in a crisis, we were mainly affected by the decreased demand in Russia. Having increased exports this year is an achievement," said Carol Chehab, Secretary of Marketing of the Ministry of Agriculture (Magap). Russia accounts for 22% of Ecuador's banana market, but the appreciation of the dollar has also made Ecuadorian exports more expensive.

Fausto Ortiz, who participated in the Forum, said that, additionally, the neighboring countries and competitors, such as Colombia, reduced real wages and production costs by devaluing their currency and thus became more competitive than Ecuador.

Banana exporters believe it is necessary to sign trade agreements to increase sales and attract more foreign currency in a year of recession. "Compared with our neighbors, we are orphans of external agreements. Colombia has agreements with the United States, with the Pacific Alliance, Korea, Costa Rica, Israel, Panama and the European Union," said Mauricio Pozo, a former finance minister, in a conference at the Forum.

Therefore, the country urgently needs for the agreement with the European Union to take effect. While Ecuador sells a ton of bananas at 132 Euro, Colombia sells it for 110. Local banana producers expect the government to negotiate with the most important market for the country: United States.

"We are going through a difficult time, there should be support for the productive sector. We need to finish implementing the agreement with the European Union and start an FTA with the United States. Ideologies are useless, agriculture alone will save us, "said Carlos Falquez, a banana businessman and former mayor of Machala.

Pozo and Ortiz, who were in the same talk, agreed that it was unlikely that the Government would grant more banana producers more flexibility in hiring to reduce production costs or engage in a trade agreement with the US because of its ideologies.


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