The minimum support price (MSP) of a box of bananas for 2024 is still unknown. Ecuador’s second-best non-oil and mining export, which generated $2.572 million for the country as of last August, still cannot begin signing contracts with its clients in international markets for next year.

The setting up of three technical tables, the last extraordinary one on the afternoon of October 30, was not enough for producers and exporters to reach a consensus on the fruit price. On the producer side, they asked for the price to rise to $8.01, and their best proposal was to drop it to $7.50, while the export sector proposed that the price remain at $6.50, and their last offer was that the price rise to $6.85. Now the determination of the price was in the hands of the Ministry of Agriculture and Livestock (MAG).

The last attempt to determine the price of a box of bananas between producers and exporters for 2024 failed and the definition was left in the hands of the Ministry of Agriculture

However, the struggle between producers and exporters goes back a long way. In the last eight years, only one agreed price was given, that of 2023, which was set at $6.50. However, after that agreement, everything was a disagreement. This year’s tone was focused on producers’ resistance to signing contracts and their tendency to sell fruit in place (at market price and without contract). Former ministers of agriculture and animal husbandry, as well as leaders of the agricultural sector and representatives of entities that cooperate on both sides, analyze the problem and what would be the best decision for the sector.

Xavier Lazo: The Banana Law needs to be reformed

Former Minister of Agriculture and Livestock Ksaver Lazo (2018-2021) stated that both positions are understandable. He indicated that producers have been affected by liquidity since last year as a result of the start of the war in Ukraine, which has increased costs, plus other countervailing factors, leading them to think that prices may remain high and thus be used to restore liquidity.. Meanwhile, exporters they are looking for a competitive price that allows them to conclude contracts and maintain profitable business.

However, he pointed out that there is something that is needed and where most agree, the Banana Law needs to be reformed for the new global reality. He explained that Ecuador has a strong influence on the market price in the first 16 weeks of the year, while in the rest of the period there are other countries that have very competitive offers. He recognized that any influence on the production of other countries generates an internal effect of price increases, but he clarified that this is not necessarily the market reality.

“Our trade policy must be more practical. Our business problem is actually ten to twelve weeks a year in the summer. It’s like when the small store next to the school reduces sales during the holidays. We have to be more creative and put on the table a national position that benefits the sector, production and trade in this strategic sector”, suggested the former minister.

Eduardo Egas: The real price is determined by the international market, not the state

For Eduardo Egas, executive chairman of the Corporation for the Promotion of Exports and Investments (Corpei) and former Minister of Industry and Production (2015-2016), the state should determine the price of goods that, almost the entire production, are sold in international markets, seems irrational . He believes that the international market should be the one that determines the right price, not the state.

“Determining the price by the state is commercial nonsense, although it may have its justification in the interest of the state to ‘share the pie’. If the latter would be the state’s goal, there are other mechanisms for achieving that goal without “dirtying” the foreign trade policy,” said Egas.

Banana growers highlight progress at international convention, mulling 2024 box price to be set by MAG

He added that it must be remembered that buyers are paying attention to the establishment of PMS in Ecuador so that they can establish a procurement and payment strategy for Ecuadorian exporters. “That is, we provide tools to weaken our sales strategies,” he complained.

The executive president of Corpei cited as an example of success the shrimp sector, whose export almost tripled that of bananas with 6.133 million dollars, stating that “one of the success factors of the shrimp sector is that they managed to get rid of the absurdity that “the State determines the selling prices”. According to Egas, this has enabled them to have a more robust and automatic commercial strategy to respond to constant changes in international markets.

Alfredo Saltos Guale: Minimum prices make this and the upcoming regime unpleasant

Meanwhile, the two-time Minister of Agriculture and Livestock Alfredo Saltos Guale (1990-1992 and 1997-1998) believes that the current minister, Eduardo Izaguirre, “will make a wise decision to use the activities”, while indicating that this situation is the product of the current Banana Law establishing the mechanism.

“They must go through all the steps established in it. “If, after enough attempts, there is no agreement, it will be up to the minister to define it with an exchange of opinions with an appointed expert in both areas, production and marketing, as well as a permanent researcher of the problems that concern them. “, explained the former minister.

However, he pointed out that the current situation is unusual. “This issue of minimum prices bothers this and the coming regime, now there is a situation that its principals, from the (elected) president -Daniel Nobo- to the (appointed) minister -Danil Palacios-, are connected with fruit”, observed Saltos Guale.

Kléber Sigüenza: There will always be controversy as long as there is a Banana Law

For Kléber Sigüenza, president of the Agricultural Chamber of the Second Zone, producers and exporters have much more things that unite them than divide them, but like former minister Xavier Laz, he also points to a comprehensive reform of the current banana law. “As long as the banana law is there, there will always be controversy in pricing,” he said.

No agreement, second meeting of producers and exporters to determine the price of bananas for 2024 ended, MAG has 7 days to announce the new value

He justified these controversies by classifying them as normal. He pointed out that while the exporter is facing markets that, with the power of supermarket chains, demand the lowest possible price, the manufacturer is looking for a better price to compensate for the increase in the cost of producing the box and is additionally motivated by the price. place through which more than half of the national production is sold, and which is without a doubt, according to Sigüenza, the market benchmark, which will end at about 7 USD on average in 2023.

Until last October, according to figures from the Regional Corporation of Ecuadorian Banana Growers (Agroban), the price place It averaged $6.96 per case, but there were months where the price skyrocketed and reached above $11 as in week 40, while the lowest price was $3.30 in week 18. Meanwhile, this week, the 43rd week, the average spot price was $7.08.