On September 27, the Wheat Chain Advisory Council, made up of producers and industrialists in the sector, agreed on a new price per quintal of grass, which rose from $22 to $24 after more than ten years of no change. Diego Córdoba, president of the Ecuadorian Association of Millers (Asemol), reveals the details of the negotiations and the current situation in the sector until the announcement of the ministerial agreement on the new price that will be applied.

Since when has the price of $22 per quintal of wheat been in effect?

This price was in effect from October 7, 2019 by Ministerial Agreement 191 of the Ministry of Agriculture and Livestock, which ratified the minimum support price of $22 that was in effect from 2012 by Ministerial Agreement 460.

What positions did industrialists and producers represent in the Advisory Council?

The producers presented their point of view on the increase in the price of a quintal of domestic wheat, based on the increase in production costs, stating that the minimum price has not been changed in the last eleven years. In view of this, the industrial sector agreed to this increase in order to support the manufacturing sector and the national farmer. Therefore, the minimum support price has been agreed at USD 24 and will be applied from the entry into force of the corresponding ministerial agreement.

$24 will be the new minimum support price per quintal of wheat following a consensus between producers and industrialists

What impact will this new floor price have on the industry?

Although this means a larger investment, given that the price of national wheat is higher than the price of imported wheat, all mills associated with Asemol have fulfilled and will fulfill their obligation to take all national wheat, at a price agreed by the party, provided that it is in accordance with the technical specifications defined in the contract. The proposal is to guarantee that no producer is left with unsold wheat in the field, and that the industry absorbs all that production.

How much wheat is produced annually in Ecuador, is it enough to cover demand?

No, wheat is a grain that is rarely produced here in the country and there is not enough of it. National production is at most 1% of what is required here in Ecuador in terms of wheat. The milling industry must import 99% of wheat to meet consumer demand. At scale, the industry absorbs an average of 4,000 tons of domestic wheat, and imports an average of 1.2 million tons of wheat.

In which provinces is wheat production concentrated in Ecuador?

Mainly in Pichincha, Bolívar, Carchi, Chimborazo and Imbabura.

What is the per capita consumption of wheat by Ecuadorians?

About 39 kg per inhabitant per year.

How much wheat has been imported so far and from where?

In 2022, the food sector imported approximately 650,000 tons, and by September of this year, approximately 394,000 metric tons of food wheat had been imported. The main countries from which wheat is imported are: 88% from Canada, 5% from the United States, 6% from Argentina. However, due to quality issues, the largest volume comes from Canada.

What is the international price of wheat?

The international price of wheat is unstable, as it depends on various climatic factors, shipping costs and even war conflicts between countries, as happened after the conflict between Ukraine and Russia; and remains volatile in the market.

What industry uses wheat the most, what are the products that are consumed the most in the country?

The two strongest markets for wheat in Ecuador are milling for human consumption and balanced for animal feed. As millers, we produce flour, by-products and basic products such as bread and pasta, which are part of the basic family basket. They also produce cookies, pastries in general, snacks, sausages, and multipurpose flour for the Horeca segment.

When this new price per quintal of wheat comes into effect, will it affect, for example, the bakery sector due to the price of wheat flour?

The new price implies an additional investment in the working capital of each mill for the procurement of domestic wheat, because the price of a quintal of domestic wheat has a higher price than wheat, which has not yet reached all its quality specifications. However, only 1% of total wheat demand in Ecuador comes from domestic wheat. Therefore, the price that could really affect the industry is the price of imported wheat, because that means 99% of the total demand.