Signing of banana contracts: The banana law is showing that it is not valid at this time

Despite the fact that the formal term indicated by the Banana Law to sign the contracts for the export of the fruit for this 2023, which expired on December 29 of last year; The Minister of Agriculture and Livestock, Bernardo Manzano, assured that there is still time to get the parties to agree and sign the contracts. The Minister spoke with EL UNIVERSO newspaper about this process, which has an extension until January 15.

How is the process of signing contracts currently?

We are not going to leave any fruit here in Ecuador, forget it, we are going to fight, to fight for it to happen (the signing of contracts), just as we acted as facilitators for the official price, which for the first time in their lives Okay, we just lend them the facilities, we were there as mediators to correct everything and get a document so they can review and sign, basically that was our job. At this moment it is the same, to sit down the parties to talk and to be able to reach an understanding so that they can work together and that this value does not remain, we are not going to allow it and we are going to exhaust all the instances to achieve that objective. .

And what about the time that the Banana Law says?

The banana law is showing that it is not valid at this time, if we put the issue of prices, costs and others that are not within the law in context, it would be interesting if there were four modalities so that these types of schemes can also enter and the producer can choose together with the exporter which scheme goes, if it is 100% in spots or it is 100% contracts.

Banana export contracts remain uncertain. MAG would have given an extension until January 15

That is what the export sector has been asking for, to reform the law.

I also think the producing sector has an interest, because if you don’t want to sign a contract because the price isn’t right, you don’t want to submit. I think we have to sit down again and kill two birds with one stone, on the one hand at this time the commercial issue and on the other hand a regulation that must be improved, which has been around for a long time and is still in force, but is always important for the Ministry that everyone agrees.

Exporters say that 25% of contracts have been signed, producers that do not even reach 10%. How many contracts have actually been signed?

The truth is that at this moment there are many contracts that are still in force from last year and that expire in three or four weeks, plus the new contracts, they are like 5.7 million boxes, production has been around more or less, obviously we are still a bit far from the production peaks, which have been 7 million, but for this moment there are still contracts for the following week. The new ones do not even reach 20% or 25% more or less.

So if there is an extension?

We are going to sit down and we are going to do everything possible so that the parties reach an agreement and there are no problems in the conversation, yes, we are going to agree that the fruit does not remain here.

Producers ask exporters for an additional $1 per box of bananas to sign contracts. Is that feasible?

That is a private issue. If you analyze the markets, North America, Northern Europe are more stable markets where contracts are signed, the most rising markets, such as North Africa, are markets spots, they move a lot because of the volume that arrives or if it is missing, if there is fruit or there is no fruit. Lately the country has been producing more towards those growing markets, in the last ten years Ecuador has grown 50% in its production of its exportable supply, so obviously it has grown above all in certain markets where prices are not fixed. The field has to do, depending on how you are going to locate your fruit, if it is a permanent contract if it is a mixture with spot.

Does most of the fruit then go spots, no contracts?

It is not the majority, but it is a good percentage, 30 or 40% and it goes up

So that’s where the future of the country’s banana exports goes?

I think it has to do with everything, if I want 100% fixed, I go with a fixed price, if I want 100% spots no problem we go with 100% spots, if you want a mix, ‘I want 20% of my fruit in spots and 80% fixed’, perfect; If they agree, it would be good for an analysis to be done year after year and find out if next year is going to be a year of high prices and they can choose.

Would the changes to the Banana Law be made through the National Assembly?

Yes, through the Assembly.

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

If producers and exporters do not agree, what will happen?

We still have a window to be able to do it, I can tell you that we are in talks right now and next week we will have more meetings. We will do everything possible so that all exports go away, we are not going to harm our producers. They have to come to an agreement (producers and exporters), depending on the markets, but not everyone sells to all markets, there are opportunities for producers with different prices and different opportunities and each producer must take advantage of and maximize them.

But the producers say that they do not sign contracts because they maintain the same vices of illegality as those of past years.

If there is this problem, let’s sit down to discuss, if there is this problem in the legal part… at this moment the two parties do want to sit down and if that is the inconvenience it can be fixed. (YO)