The warlike beginning of the conflict between Russia and Ukraine turned two weeks old and in Ecuador the first economic impacts are already evident, causing concern to the Ecuadorian banana producing and exporting sector.
The Ecuadorian Federation of Exporters (Fedexpor) divides the affectation into three levels. In the commercial area, it establishes that the losses of exports to Ukraine are already at 2.5 million dollars per week and that there is a reduction in the forecast of shipments to the Eurasian economies that can reach 90% in products such as bananas, flowers and shrimp.
In terms of logistics, with the complete closure of access ports to Ukraine together with delays and announcements of the suspension of transport operations to Russia, plus the loss of value of the Russian ruble, Fedexpor mentions that this makes the products of the exportable supply more expensive of Ecuador and that the economic sanctions in force for Russia put at risk the collection transactions through the international payment system.
“As a consequence of these impacts, the liquidity of exporting companies that have relations with the Eurasian zone will be compromised and puts at risk the sustainability of those companies that concentrate most of their shipments at this time of year,” explains the federation. in a recent report.
“That the rich don’t come crying to me because their profits from Russia’s war with Ukraine have dropped, that’s their problem… that they adjust, that they understand that this is the risk of doing business and if the war it hits them, so let them see how they assimilate the blow, but the people’s money is for the people, it’s not for four friends of the government,” President Guillermo Lasso said days ago on the banana issue.
However, Juan José Pons, coordinator of the Ecuadorian Banana and Plantain Cluster and government advisor ad honorem For the sector, he describes what the Ecuadorian banana market is experiencing as extraordinary and says that the crisis of the war does not allow exports to those countries under any circumstances.
He mentions that since last week 400,000 boxes of bananas began to stay in the country and this week there will be 750,000 that come from 25,000 hectares that employ some 25,000 people and that they are produced by 2,500 medium and small producers, which translates into a social crisis. A total of 1,150,000 boxes of bananas are those that have remained in the country.
Pons mentioned in an interview with Ecuavisa that the search for other markets to place the product is somewhat complex since each country has different regulations and phytosanitary regulations. He explains that only in the case of Russia, the product that goes to that country does not comply with the standards established by the European Union, the United States, South Korea and Japan, which restrict certain insecticides.
“Given this, it turns out that all this production, 25% of Ecuador’s production cannot go to those markets, there is also the limitation of shipping space and that if more product is taken to markets that are established, that already have their chains of distribution, it is going to destroy that value chain”,
The counselor says that last week the impact on producers is already 4 million dollars and that this week it will be 7 or 8 million dollars more, and that it will continue to get worse because the shipping companies are not taking the fruit to those destinations.
Pons reiterates that small producers are the most affected, since unlike large producers, their bananas come from a simpler production that does not have quality seals and so many certifications, and mentions that at the moment the debt to Ecuadorian exporters by the obstacles generated by the conflict amounts to $70 million, since there was a lot of fruit, at least one million boxes, that was already in transit or had just arrived at the destinations.
The exporter Reybanpac issued a statement in which it mentions that in the case of Ecuador, and specifically in relation to the banana sector, Russia and Ukraine together represent 25% of its exports.
“Russia is the second destination with approximately 1,800,000 boxes per week. Although there is still fruit being exported, there is already a reduction of 760,000 boxes of bananas per week as a result of logistical and financial complications, as well as the decrease in demand due to the devaluation of the ruble”, explains the company.
He adds that “as for Ukraine, it is a market of 180,000 boxes per week. Since the previous week and given the impossibility of access, the fruit had to be diverted and sold in the Mediterranean area.”
Reybanpac agrees with Pons in his publication that “it is important to mention that it is not possible to replace the Russian and Ukrainian markets in the short term due to the lack of shipping spaces” and that the problem directly affects a large number of small and medium banana producers.
Given what is happening, the company asks that the public and private sectors work hand in hand to mitigate the impact of a force majeure conflict.
“We trust that through a joint effort it will be possible to avoid the loss of employment of thousands of Ecuadorians in rural areas,” he says.
On Monday, at 2:30 p.m., Pons will participate in a meeting together with the heads of the Agriculture and Foreign Trade portfolios, with whom he hopes to define measures to deal with this crisis.
For its part, Fedexpor proposes to define urgent joint actions for the Government, such as safeguarding the liquidity of companies with portfolio pending collection in these markets through flexible financing lines to maintain the operation; also with the application of a simplified tax refund scheme for exporting companies and reducing tax surcharges to the logistics chain of foreign trade, as well as to the inputs used by the export sector that, as a result of the conflict, register increases in their costs. (I)
Source: Eluniverso
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