Without white smoke for the banana sector, this is how the first meeting of the Advisory Council for Bananas ended, which brought together representatives of producers and exporters on Tuesday, October 17, to agree on a new minimum support price (MSP) for the fruit for 2024.

The sectors that came with their proposals and technical arguments for the new price could not come to an agreement and convened for the second and final meeting next Tuesday, October 24. This, after the export sector presented its proposal to maintain the fruit MSP at the current value of USD 6.50 per box, claiming a loss of competitiveness in international markets if the new price is set higher, is only a proposal by the manufacturing sector that sought to raise the price of a box for the next year to $8.01.

The technical table for the determination of the minimum support price for bananas for 2024 was placed with the third proposal

Added to this was an interim proposal, that of the Regional Corporation of Ecuadorian Banana Growers (Agroban), which proposed a price of $7.25 for a 43-pound box. And also an increase in the minimum FOB reference price to be reported by the export sector, from the current $2.16 to $2.75.

Richard Salazar, executive director of the Ecuador Banana Marketing and Export Association (Acorbanec), reiterated the export sector’s position to leave the price as it is. He asserted that international markets are very sensitive to price increases due to the global economic situation, such as high inflation in the European Union, the United States, Russia, Turkey, Argentina, among other markets. “A price increase can affect purchase volumes because the value for consumers would become more expensive and volumes would likely decrease,” Salazar explained.

Manufacturers: A price increase would fade competitive advantages

He revealed that the idea of ​​his sector is to take advantage of the current situation in 2024, especially in Europe, where Ecuador has a differentiation with the payment of a living wage, but warned that if the price of bananas rises, that competitive advantage would disappear. “Moreover, exports to the European Union and the United Kingdom increased in 2023, which could fall in 2024 if there are large increases in fruit prices,” the leader warned.

He added that in the case of China, another important market for Ecuador, deflation has affected its foreign trade and unemployment has increased, and that the Asian giant has stopped buying large quantities due to the high price of fruit in place (without contract and at market price). Salazar analyzed that in 2024, the increase in prices will undoubtedly affect the purchase of larger quantities.

Russia, the country that buys the most bananas from Ecuador in the world, has big problems. According to Salazar, the country’s supermarkets announced at World Food Moscow last September that price increases will cause contract volumes to fall by 2024 because consumers cannot pay more for fruit.

Banana price in 2024: producers ask for an increase to $8 a box, and exporters to stay at $6.50

Another advantage Ecuador is currently enjoying is the drop in transportation costs that has boosted exports, but Salazar warned that if the price of a box goes up, that advantage will disappear as well.

While from the producer’s side, this advantage that Salazar cites is one of the arguments for asking for an increase in the price of a box of bananas. Franklin Torres, president of the Federation of Banana Growers of Ecuador (Fenabe), believes that the export sector can share these discounts with producers through a better box price. The producers came before the Advisory Council with the idea that the box should rise to $8.01 by 2024.

“The export cost of a box of bananas has gone down, 70 cents a carton and more than a dollar in shipping,” Torres said.

The producer sector is ready to accept a price of up to $7.50 per box of bananas

The leader indicated that his sector came to the technical table with a request for the price to rise to $8.01, but revealed that during the negotiations they proposed that they could accept up to $7.50, which is a price closer to Agroban’s proposal. “That will be our request that we will consider as a support price for the banana box that allows small (banana farmers) to be viable,” Torres said of next Tuesday’s meeting.

“We hope that the export sector will understand that the current situation in the banana production sector does not allow it to survive with a lower price than that,” said the head of Fenabe.

In eight months, banana exports increased by 7.17%, with Russia as the first country receiving the fruit and the EU as the first bloc

For Salazar, this proposal distances the country from competition in the market, stating that this level of contract prices does not exist in the world market.

In any case, Salazar hopes that the meetings are conducted objectively and that the banana country wins. “I invite you to think. We have competitive differences compared to the Latin American competition, which we would lose if we went up to those price levels, which seem extremely high to us,” the head of exports asserted.

With the proposals on the table, if exporters and producers do not agree on a new price for a box of bananas for 2024, the Ministry of Agriculture and Livestock (MAG) will decide on the new value.