There are less than fifteen days left until the deadline for the application of contracts between producers and exporters for the export of bananas until 2024, and their registration is going at a slow pace, and the deadline for this is December 31, according to the Banana Law.

This, despite the fact that in November – when they reached a consensus to set the price of a box of bananas at $6.85 for 2024 – it was indicated that there is an obligation for the fruit to leave the country with signed contracts and in accordance with Article 1 of the Banana Law, which says that “all producers, traders and exporters will be obliged to sign contracts for the sale of fruit and the clauses freely and voluntarily agreed upon by the parties will be respected, as long as this does not conflict with this law and its regulations”.

José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE), admits that there are currently producers who do not sign contracts. “There are producers who have signed, there are those who are still waiting for the signature, and we hope that 100% of the fruit will be contracted as prescribed by the regulations.” He confirmed that the agreement reached at the negotiating table must be signed and fulfilled. “We hope that the process is complete and that formality prevails.”

The role of the new Minister of Agriculture and Livestock influenced the producers’ decision to agree on a banana price of $6.85

Last year, there was also a consensus for the 2023 price, which was set at $6.50, but throughout the year, contract signings were not fully met and some producers preferred to sell their fruit at a lower price. place (without contract and at market prices). According to data from the Association for Marketing and Export of Bananas (Acorbanec), this year only 40 percent of the fruit came out with contracts, the rest according to modalities. place.

Richard Salazar, executive director of that union, assures that the export sector is willing to sign contracts for 2024, but regrets that not all producers are willing. He estimates that more than 15 percent of the entire export offer has not been signed to date. “Producers don’t want to sign contracts, that’s a reality. Unfortunately, we see, like last year, that the manufacturers do not want to sign contracts for 2024, most of them, not all, but let’s hope that will change by December 31.”

Contracts are already being concluded with the USA, things are slow with the European Union and Russia

As for international contracts, Salazar predicts that they are already beginning to be signed with markets such as the United States, which have traditionally been signed since this time, with Europe – the first destination for the national fruit – the process being slow due to customer resistance. of that market at the new fruit price for 2024, while in Russia, the second largest destination for Ecuadorian bananas, “they want to make contracts, but the producers don’t want to (in Ecuador)”.

According to Acorbanec’s latest report, of the 300.89 million boxes exported from January to October 2023, 29.12% were destined for the European Union (EU) and 21.09% of the fruit was destined for Russia.

Resistance to the new banana price for 2024 puts the signing of the contract with the main destination, Europe, on hold

The manufacturer’s refusal to sign the contract was confirmed. Franklin Torres, president of the National Federation of Banana Growers (Fenabe), assures that “there is skepticism among producers when signing the contract, if we take into account the problems of the last three years: non-compliance with the contract, non-payment of the minimum PMS-price support – illegal and excessive discounts every year which reduced the final price, weeks without delivery of the contracted fruit without any valid argument other than the Creole vivacity of cheap buying, so there are several reasons why we producers were terrified to sign the contracts.”

He analyzes that all these problems are summed up in one cause: the loss of institutionality of the Ministry of Agriculture. He assures that the ministry “was used illegally and abusively as an entity assigned to the export sector”.

However, he clarifies that there are producers who sign contracts and estimates that by this date there are more than those who were signed last year, although he does not provide figures, but predicts that the signing of contracts will not reach such a percentage until next December 31.

The producers are waiting for the signing of “adequate” contracts

“We are waiting for the contracts presented to us to be adequate and to start signing them. Yes, the contracts are signed, but obviously we have doubts about MAG’s impartiality and that the contracts are win-win”, says the head of Fenabe. However, he admits that somehow this year the exporters, whom he describes as “more serious”, have realized that formalization is best for business “and not the risk of a wild market that has bankrupted most producers and the rest of us” Those in debt as happened in the last three years .”

For the benefit of the production chain, he says that they hope “that appropriate contracts will be signed for both parties, that MAG will stop being prey for bad exporters and be an impartial arbiter”.

2023 will end with a spot price of up to $7.20 for bananas, higher than the minimum price that will be in place in 2024.

Regarding the terms of the contract and the “win win” indicated by Torres, Acorbanec owner Richard Salazar remembers that there is a base that is PMS: $6.85 per case. “So, everything that is agreed is between the parties, but there must be a will to sign the contracts, everyone must win of course, that is the idea, but there is a base which is the minimum support price… we have the will to sign the contracts, we want and we hope that manufacturers will do the same.”