2024 did not start off right for the banana sector. It is the second half of January, and the producers and exporters have not yet complied with the agreements on the registration of this year’s fruit exports, as prescribed by the Banana Law, and they are far from reaching 100% of the hectares reported to the Ministry. Agriculture and Animal Husbandry (MAG). The head of this state department, Danilo Palacios, reveals the current situation and how to face the problem caused by the price place and the new dynamics of the global market that characterized the sector in the last three years.

How is the signing of the contract for the export of bananas going in 2024?

Based on the number of hectares we have registered in MAG, the signatures we received represent 58% of the registered hectares. From the beginning, we invited manufacturers to contact companies. Now we are in the season of highest demand, because of the cold, but the summer season is coming, which starts in June, July and August, when bananas are consumed less and we would not want people who are currently in that doubt caused by the price issue place, Tomorrow I want to come to the ministry to tell them that they should help ensure compliance with the minimum support price when there is no contract.

What is the problem with prices?

I think it is setting contract prices based on minimum production. In Ecuador, to estimate the official price, we take 2,000 boxes per hectare as a reference, while other countries like Colombia are for the production of 2,500 boxes per hectare, Costa Rica is for 2,850 boxes per hectare, Guatemala is over 3,500. So from there, when we want to form a price by taking the lowest production, it is logical that we are not competitive and suddenly trying to protect some amount of boxes that are not efficient, we lose space for our country, this is what has been happening in recent years. In Europe, 25 years ago Ecuador sold 40% of its production to the European Economic Community, today we are between 27% and 30%.

Banana: 2024 contracts reach only 54%, minister asks producers to sign remaining amount to ease price controls

Are these countries also governed by minimum prices?

They have reference prices, it’s a different story in those countries. Here in Ecuador, we have about 6,000 producers, and in countries like Guatemala, they don’t exceed 40 producers to exaggerate, Costa Rica, the same, they don’t reach 100 producers. Ecuador is more democratized in banana production. In Central America, those who set the reference price are the largest companies and they all start from there, there is no official price or authority to ensure compliance, it does not exist; and they are more competitive due to the distance of the most important markets.

We have to analyze other markets where Ecuador is positioned with a larger volume: Russia, Asia and the Middle East, countries that unfortunately have their own socioeconomic problems, we are facing this problem in the Middle East (the Israel-Palestine war) and you don’t know what will happen tomorrow. God willing, the situation doesn’t get complicated, but it can also affect us. When I was in a private company, a family business…, I had the opportunity to meet clients from the Middle East and people are very clear and say: look, I can’t offer you a fixed price all year round. This happens to most of them because we ask for fixed contract prices, but in those markets they don’t know what will happen tomorrow.

Is that why the export sector is asking for the price to be included? place in the Banana Law?

I think we should assume very maturely and try to provide a scenario that is in line with the reality of the market. It should sit down, first of all the producers and exporters who decide and make a decision by consensus: do you want to continue with a fixed price or an official price or do you want to give space to a volume price? place?, So we don’t play cat and mouse.

By law, only fruit under contract can leave the country. What about the law when those 42% leave the country? place?

This is our insistence today, the request that they come to sign the contract. On the other hand, you can’t stop a product from coming out when there’s demand. What do we do in practice? Are we not letting that 42% come out? What will happen? What kind of economic crisis can we create? You cannot stay, no, because you will lose the market, there is density, there is demand; on the other hand, you create an economic problem, thank God a lot of people depend on the banana business… (but) we can’t continue like this, we have to be honest.

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

What will you do to make it happen?

We have to call them because I really believe that one of the things we’ve done wrong is trying to create laws without knowing the reality. Laws must be as realistic as possible in accordance with the conditions of each market. There are markets that provide guarantees such as the United States, the European Economic Community and Japan; and the market also which does not provide security because of the conflicts that exist, because of the economic situations, because of the distance.

When will that happen, to be honest in the banana business? place?

Coincidentally, I have a meeting with the Association of Producers (Friday), I’m also going to talk about that topic, I’ll tell them what percentage we are, invite them again to sign the contract and touch on that topic of reality. do we have Let’s define, you are the actors, you are the ones who are in this situation, let’s create the right scenario so that we are not in this situation because tomorrow, later what always happens is that you will want to point to the government.

Why was this not done?

I understand that there is fear, mistrust, which is another factor preventing our country from moving forward. If we analyze the last three years place was higher than the official price, ultimately the dynamics of the product, which is supply and demand, it is difficult to find the correct formula that would be as close as possible to reality. I will insist on this issue to see if we can get everyone together, sit down and try to come to a more reasonable solution… but I also want to be clear… we will execute the contracts. which are signed between the manufacturer and the exporter, the current 58%.

And the remaining 42%?

The other 42 percent, which is the decision of producers and exporters to be in that scheme, we cannot take that responsibility, maybe I am going beyond what the law says, but I think we have to be realistic with what we have today. scenario. At the moment, unfortunately, we cannot prevent the release of our products because that would be worse. Imagine if we make a decision not to release that 42%, we will have a big crisis. I think it’s important that all players make a decision to be honest about this here.