The 2012 proceeds with risks for Ecuador's banana exports. Market buyers are not waking up from the financial crisis and competitors like Colombia are becoming stronger.
From January to May of this year, two of the seven major suppliers to the United States fell in value of export: Ecuador and Costa Rica. Colombia went from fourth to second vendor of that market, according to the statistical portal Trade Map.
The Colombian banana is gaining ground in the European Union (EU) market. Although all Latin countries fell in sales to the EU market in the first four months of the year, Ecuador was the most affected.
Jorge Alex Serrano, president of Oro Banana S.A. exporting company (OBSA), noted that the high productivity of Colombia allowed the country to compete at the same level as Ecuador. Per hectare Colombia can harvest 2,500 boxes, while in the country 1,600.
"Unfortunately, here it is believed that to buy more land, means to be more competitive," said the executive of OBSA, the third largest exporter, according to the Association of Banana Exporters of Ecuador (AEBE).
Colombia has 44,000 ha of banana, Ecuador, however, has more than 200,000.
Hence, Serrano believes that trade agreements are necessary. The European Parliament will debate next month, the final approval of a treaty with Colombia and Peru.
Serrano doubts that the country will lose its lead as the largest exporter of bananas, because its biggest production is in the months that other countries do not harvest. But without agreements the risk is that the shipments will be more expensive due to tax.
In this Cecilio Jalil, chairman of the Banana Industry Association of Ecuador (Asisbane) agrees completely. "From January to June we can always sell our fruit better than other countries, but in the second half of the year, when we have off-season, there the risk of competitiveness."
Colombia and Peru could gain market share by low prices, because they will not pay fees to the EU.
In the country, after a meeting on August 2nd, the government and entrepreneurs made a big announcement about the decision to resume those talks with the Community block.
But a diplomatic issue arose between Ecuador and the United Kingdom, because of the asylum given by the Embassy of Ecuador to the founder of Wikileaks in London. "This is unpredictable. The humanitarian issue of Mr. Assange is at stake, but also that of banana producers and employees of the sector," said Serrano.
The alternative markets such as Russia, are also in financial trouble. This country, which has become the second destination after EU, registers unprecedented drop in prices even in cheap fruit like bananas.
The CIF price (cost, insurance and freight) is between USD 7 and USD 8, when in the same period last year was USD 11, according to Jalil.
Source: El Comercio