Banana sector leaves behind a 2022 with approximate losses of $258 million

A new year begins for the banana sector that leaves behind a difficult and complex 2022 in which approximately 12.5% ​​less volume was exported than in 2021, according to preliminary figures at the end of week 51 – the banana year has 52 weeks – from the Banana Export and Marketing Association of Ecuador (Acorbanec).

Richard Salazar, executive director of Acorbanec, shows figures that reflect that from week 1 to 51 (from which information is still being processed) 315’215,650 boxes of bananas were exported, 53’769,679 less than those exported in 2021; however, he clarified that the difference at the end, when the missing information from weeks 51 and 52 is processed, will have variations.

José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE), also has his projections, although they differ from those of Acorbanec, when calculating an estimated loss of 20 million boxes (-5.53% in volume). , which translates into $258 million less than in 2021 when $3,381 million was generated. This is an unprecedented drop in the banana sector, which in 2021 had already registered lower percentages than the previous year, but 3.2%.

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

According to AEBE, that of 2022 is the largest decrease rate in the last nine years, only surpassed by 2012 when a drop of -8.03% was registered.

As the fall in exports was unprecedented, the factors that contributed to it had not been seen before either.

Salazar lists a few. The reduction in the exportable supply caused by various factors, such as the fact that producers stopped fertilizing due to the increase in the price of fertilizers. The lengthening of the cycle frequencies, to every 6 weeks or 8 weeks, the impact of the MRL’s of the European Union by eliminating chemical molecules such as chlorpyrifos, which generated an increase in loss due to the use of the Biflex cover (change necessary to comply with of the EU). In addition to climatic factors, with ups and downs in temperatures that affected the sheaths.

“Since June, the cold has been accentuated and, according to NOAA (National Office of Oceanic and Atmospheric Administration) forecasts, La Niña will last until February 2023 with a 57% probability, which means that the weather will continue with ups and downs. and there will be no rebounds that occur from mid-November. In August and September there was more solar radiation, which helped to stabilize the sheaths, and there were no collapses in calvings, but it should go hand in hand with the agricultural push on the farms”, explains Salazar.

To this is added that the markets stopped buying. According to Acorbanec figures, imports from the European Union, from January to September 2022, fell by 3%, compared to the same period in 2021, due to the fact that most of the origins show reductions in shipments, except Colombia, Guatemala, Cameroon, and Angola.

Salazar explains that the supply from Latin America fell by 2.83%, mainly due to climatic factors; on the side of the ACP block countries (Africa, Caribbean and Pacific) the drop is less severe, with a setback that mainly affects Ghana, Belize, Cote d Ivoire and the Dominican Republic.

The European offer shows the worst results with a fall of 9.2%, mainly due to the Canary Islands, whose offer has already suffered the ravages caused by the eruption of the volcano on the island of La Palma at the end of 2021.

Regarding the United States, according to figures from the USITC (United States International Trade Commission), imports from that market, from January to September 2022, fell by 0.85%. Origins such as Costa Rica, Ecuador, Mexico, Colombia, Peru, Panama and Nicaragua showed reductions in shipments due to climatic factors, except for Guatemala and Honduras, which recovered their banana plantations affected by hurricanes.

https://www.eluniverso.com/noticias/economia/de-enero-a-agosto-las-exportaciones-bananeras-siguen-a-la-baja-tendencia-que-se-mantendria-con-un-cierre- negative-of-2022-with-at-least-8-note/

“In addition, the Russian-Ukrainian conflict, which began in February 2022, has contributed to exacerbating a historic inflationary crisis that began in 2020, which has led to a general explosion in energy costs and therefore agricultural inputs, of transportation, etc. Even reducing the purchasing power of consumers, which has also made them buy less in supermarkets”, adds the head of Acorbanec.

Hidalgo, for his part, points out that the sector dragged down situations that began to occur in 2021 and had a greater impact in 2022. In principle, the logistics crisis was one of the main factors, and details that the increase in different raw materials and the non-recognition of these increases by end customers, that is, supermarkets, deepened the crisis in the sector.

“This marked the end of 2021, which was a fairly complex year, the crisis between Russia and Ukraine is added, in the most critical weeks of the crisis there was an oversupply, by closing logistics services that we had with Russia through different shipping companies, it was a private decision of these shipping companies, that caused our decrease to accelerate and from there the climatic factor is added, it has been colder this year, which has caused us to have less production, ”says Hidalgo.

The impacts also came from the lack of competitiveness due to the strengthening of the dollar. “Our neighbors have better conditions abroad, and our cost structure has not changed, we have a very great pressure on the tax side, the tax burdens, which do not decrease, rather now it is increasing and the bill is being passed around to the security part”, he adds.

And he assures that the sector has invested, apart from the care of container contamination, around $200 per container, which represents around $75.8 million annually, in private security expenses.

Salazar, who also cites the negative impact of security costs on competitiveness, in addition to the contamination of the cargo with narcotics, adds to the equation the increase in export costs during 2021 and that was maintained in 2022, especially in cardboard, plastics and others.

And another shock is coming, says Hidalgo. “Besides, with that provision of the Senae that will apply when we have the non-intrusive teams to bill the productive sector $34 for each container scan, which is an impact of about $13 million, this will deepen much more the problem because they are billing us for the cost of security that belongs to the State, because we pay taxes for this”.

A 10% drop in volume is projected in the first quarter of 2023

The director of the Ecuadorian Banana Export and Marketing Association, Richard Salazar, foresees falls of 8.10% to 10.47% in the first three months of the year, resulting in 9.2 million fewer boxes, in comparison with the first quarter of 2022. However, with the weather conditions that would occur in January and February, there would already be a rebound by March, but it will not be significant, he projects; however, he points out that this rebound will not exceed the previous three years.

“The first three months of the year we are going to have a reduction in production of around 10%, that is why the producers do not want to sign contracts for next year, however the markets look promising, with Europe we are closing negotiations and They are going to pay much more for the fruit compared to 2022, the United States too, Russia is very interested in closing the contracts for contracted fruit, I think it will be a better year than this, I think the second half of 2023 will have something more fruit as well, which will stabilize the markets”, analyzes the executive director of Acorbanec.

Two days before the deadline to sign contracts for the export of bananas by 2023, producers and exporters still have not reached agreements

From the Association of Banana Exporters of Ecuador, José Antonio Hidalgo, on the other hand, sees a complex year as well, although he hopes there will be a recovery, as long as work is done on the competitiveness agenda. “We have made proposals around schemes to reduce the pressure of tax burdens, but also proposals for regulatory changes to reduce red tape in different ministries.” He believes that another factor that can help the competitiveness of the sector is the application of the drawback. (YO)