There are less than fifteen days left before the December 31 deadline to register contracts between Ecuadorian banana producers and exporters. However, despite the previous commitment to ensuring that the fruit leaves the country with signed contracts -as established by the Banana Law-, the subscription of these is progressing slowly.
José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE), acknowledged that some producers still haven't signed contracts. Last year, despite the consensus on the price of US$6.50 for 2023, only 40% of the fruit was sold with contracts. The remaining was sold under the spot modality.
Richard Salazar, executive director of the Banana Marketing and Export Association (Acorbanec), stated that not all producers are willing to sign by 2024 and estimates that, to date, no more than 15% of the exportable supply has been contracted. Contracts with US importers are already being signed. However, the process with EU and Russian importers is slower as there is resistance to the new price.
According to data from Acorbanec, from January to October 2023, 29.12% of exports went to the EU and 21.09% to Russia.
From the producers' side, Franklin Torres, president of the National Federation of Banana Growers (Fenabe), said there was some skepticism towards the signing of contracts because of past issues, such as non-compliance, illegal discounts, and the Ecuadorian Ministry of Agriculture's loss of institutionality.
Despite the reluctance of some producers, Torres hopes that the contracts will be adequate and reflect a 'win-win' scenario. He stressed the importance of formalization to avoid the risks of an unregulated market and hoped that the Ministry of Agriculture would stop being misused.
Salazar noted that the basis for the negotiation is the Minimum Support Price (PMS) of US$6.85 per box and highlighted the need for willingness on both sides to achieve beneficial contracts. Hopefully, the contracts that are signed in this process will be adequate for both parties and the Ministry of Agriculture will act as an impartial arbitrator.
Source: americaeconomia.com