Eight days after the expiration of the deadline set by the Banana Law for the registration of signed contracts between producers and exporters for the fruit that began to be exported to all international destinations, the Minister of Agriculture and Livestock (MAG) Danilo Palacios revealed that contracts were signed for only 54% of export supplies countries with bananas for this year.

He did so during an interview on the morning of this Monday, January 8 at Ecuavisa, where he asked producers to sign contracts with exporters. “I want to invite the producers… to sign the contracts. We have 54% of signed contracts and in order to quality control the price of fruit, it is necessary to sign contracts. Please, I want to reach all of you, we are ready with all our officials to wait for the signing of your contracts,” asked Minister Palacios.

The consensus of producers and exporters on the price of bananas in 2023 was not reflected in the signing of the contract for 2024.

The signing of the contract is the only legal figure that the Banana Law foresees for the fruit leaving the country. In 2023, according to the figures of the Association for the Marketing and Export of Bananas of Ecuador (Acorbanec), only 40% of the fruit was contracted from Ecuador, the rest was exported by modality place, that is, without a contract and at the market price at the time of negotiations, which is a figure that is not allowed by law in Ecuador, but which other countries’ producers and exporters normally use, so much so that Acorbanec recognized that 55% of the markets where Ecuadorian bananas arrive are managed according to this modality, which ended 2023 with an average price of $7.20, higher than the 2023 minimum support price (MSP) ($6.50) and the 2024 MSP effective ($6.85).

For Richard Salazar, CEO of Acorbanec, the lack of signing of the contract is worrying because it means that the fruit could remain in the country and not be exported. Because of this, he convinced that the position of Minister Palacios was correct. “I think the minister’s message is good, it is the right thing. We have the will of the company, but unfortunately the vast majority of manufacturers do not want to sign, do not want to sign sales contracts in “place”.

Exporters: 55% of the destination markets for Ecuadorian bananas are ‘spot’, the market eventually imposes itself

For his part, Franklin Torres, president of the Federation of Banana Growers of Ecuador (Fenabe), indicated that the production sector agrees to sign contracts, as long as they are beneficial to both parties. “We agree with control, but not only towards manufacturers but also towards export companies that in many cases offer illegal contracts, discounts that are not provided for by law, clauses that violate the applicable law, and in many cases without the necessary guarantees that we can conclude these contracts “, revealed Torres.

The producer leader announced that he plans to meet with Minister Palacios this Monday, January 8, to request an extended meeting with all unions to find solutions for the benefit of the banana production chain.

The budget of MAG is 78 million dollars for 2024

In the meantime, Minister Palacios also revealed the budget MAG has for 2024, which amounts to 78 million dollars.

“In our work plan, we jointly allocated the budget with the Ministry of Finance, for 2024 we have 78 million dollars”, the minister pointed out and explained the figure with the current situation in the country’s economy.

The figure revealed by the minister is 65% less than the budget that the state portfolio received in 2017, which was $223 million and 49% less than in 2018 ($158 million).

The reduction of MAG by 30.6% affected 22 agricultural projects

“I think that in the reality we are in, the economic situation in which we know there is a deficit, we have to be proactive,” he pointed out.

What can you do with $78 million?

Palacios assured “a lot can be done” with $78 million, revealing that $40 million of that budget is earmarked for technology transfer, know-how, technical assistance, delivery sets. Additionally, $5.5 million will be allocated for land allocation, an additional $4.4 million for the Campo Seguro program that will be provided as a subsidy to insure farmers to face the effects of the El Niño phenomenon. “Depending on the size of the farmer, we subsidize 60% and the farmer gives 40%,” explained Palacios.