Health of the productive chain is going through a bad time, despite record exports and supposed balance surplus

The commercial exchange between Ecuador and its destination markets set a record in this 2022, however, the productive sector clarified this Wednesday that the figures, although they do not lie, must be analyzed with tweezers.

The representatives of the main productive sectors such as bananas, shrimp and cocoa, which together represented $8,697 million, discussed on Wednesday an analysis that indicates that from January to September total imports from Ecuador reached $22,750 million, but, Likewise, exports reached $24.850 million, which resulted in a surplus of $2.150 million.

From January to August, banana exports continue to fall, a trend that would continue with a negative closing of 2022, with at least -8%

José Antonio Camposano, president of the National Chamber of Aquaculture (CNA) and executive director of the Corporation of Exporting Guilds of Ecuador (Cordex), assured that the focus of the information makes it seem that the export sector is going through a good moment and that it is not there are issues to attend to, however, he assured that the real situation is far from what the figures reflect.

“If you take away nothing more than the increase in exports from the shrimp sector, we go from surplus to deficit. So, you can’t talk about the export sector with a surplus when those figures quickly change to a deficit once you remove the performance of one of the chains”, analyzed Camposano, who indicated that it is important to observe the figures within a real context.

Its sector exported $5,676 million from January to September, 54% more than in the same period of 2021.

What is then the real context of the export sector? Camposano, together with José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE); and Iván Ontaneda and Merlyn Casanova, representatives of the National Association of Cocoa Exporters and Industrialists of Ecuador (Anecacao), assured that the health of the production chain is going through a bad time.

The Cordex head listed several factors, between exogenous and internal, that impact the chain. The first is insecurity, pointed out Camposano, who regretted that so far this year “63 people linked to the export and productive sector have been murdered by organized crime that is stopping on highways and river channels and gulfs of this country without the due attention from the ministries that must attend to security.

He added that 1,500 people were injured in these events, which resulted in hospitalization and outpatient care costs that exceeded one million dollars.

“Every year, the sectors represented here spend at least $100 million to provide us with security through technology, armed guards, custody, insurance, satellite equipment, and more, because the State cannot provide us with security,” revealed Camposano, who He explained that even his sector has reached the limit of contracting custody for the transport of bags of balanced food for shrimp.

For his part, Ontaneda pointed out that the cocoa sector spends $16 million a year ($4 per ton) on security services and that in 2022 the cases of contamination of cocoa containers have increased 400% compared to 2021, which which is losing markets, since international clients do not want to be linked to judicial investigations.

Contamination of drug containers in ports

“We are up to our necks in water and I think it is essential to sit down (to talk),” said the head of Anecacao.

Regarding the tax burden, the banana sector revealed that in 2021 the value for this concept exceeded $469,916,000.

Another of the impacts, Camposano continued, is the lack of boost to competitiveness that has affected the performance of exports in 2022 due to the high tax burden, the scarcity and the increase in raw material costs; the non-existent tariff reduction and the drop in prices in the international market.

In this sense, the head of Cordex explained that there are around 100 tariff subheadings that continue to pay tariffs. On the other hand, the primary chain still pays value added tax on capital goods, inputs and raw materials, when the law indicates that these goods must have a zero VAT rate, in order to avoid exporting taxes.

“The last tariff reform that was approved in the previous administration, but was executed in this administration dates from September 2021, that is, we have already gone 13 months without a new tariff reform in which, for example, the aquaculture sector has almost 100 subheadings that pay tariffs for their production,” said the leader.

Finally, the elimination of the diesel subsidy for cartoneros that own properties of more than 30 hectares. The leader assured that he increased the cost of production to 16 cents per pound, affecting 82% of the shrimp area nationwide; Of that percentage, 30% is at risk of bankruptcy, he assured.

Another factor is the drawback automatic, a mechanism used by other countries to motivate exports, but which is not used in Ecuador due to lack of will, a regulation and political decision of the Government, claimed Camposano, who added to these impacts the cost of container scans to avoid the contaminations that will be transferred to the export sector and will cost them about $20 million a year.

“This (the drawback automatic) it is applied by Peru, it is applied by Colombia, it is an export promotion policy recognized by the WTO (World Trade Organization), it is not a subsidy, it is nothing illegal”, explained the manager, who regretted the government’s decision if this tool is not applied, which according to Camposano, it had been calculated could mean the anticipated return of $280 million to the export sector, which is between 1% and 3% of total exports.

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However, despite these disincentives, Camposano highlighted that, for example, the shrimp sector has continued with its investment projects to become more technical and efficient. In 2022, the amount exceeded $700 million and generated 5,500 new jobs in addition to the 15,000 generated in 2020 and 2021.

“We see with concern that this momentum and that our margin to be able to continue generating these investments and jobs are running out because there are no public policies that support that competitiveness,” Camposano warned. (YO)