Ecuador’s international banana prices fall

Source: Fresh Plaza

Banana prices have experienced a considerable decline in international markets due to the excess of fruit shipped from Central America and Ecuador. “There are still ships waiting to enter Russia and Turkey especially, where production peaks have been directed, causing them to be oversupplied,” stated Richard Salazar Veloz, the executive president of the Banana Marketing and Export Association (Acorbanec).

This year, the price of a box in Russia is well below the weekly average achieved last year. Russia is the most important consumer of Ecuadorian bananas, as it accounts for almost 20% of all exports, and the devaluation of the ruble continues affecting imports.

The price in Turkey in August, the third most important market for this fruit, fell from 7.31 dollars in 2019 to 6.97 dollars in CIF values (cost of fruit, export expenses, freight, and insurance).

Prices in the European Union, where some countries have returned to confinement, have also decreased significantly. In week 42, prices fell by 10.4%.

This situation is taking place in many markets around the world: consumers do not have the same buying power as before the pandemic.

Greater order in the sector
The Ministry of Agriculture (MAG) is looking for a solution; helping the sector to be more organized and improving its commercial policy so that it is more in line with the realities and changes in the markets. “Having greater order in the sector will improve its marketing structure and enable producers to access specialized credit and other benefits, such as the Good Agricultural Practices (GAP) certification,” official sources stated.

The GAP certification allows producers to receive a 50% reduction in the Single Banana Tax through the Tax Simplification Law. “This would guarantee productivity and improve our marketing conditions, based on a clear and real scenario in the sector. We are working to establish a 5% point interest rate subsidy trust (between 11% to 6%) for irrigation, fumigation, and genetic material loans. This would allow producers to access credit to cover the costs of these elements, which are essential for the activity.”

The authorities also consider that associativity is essential, thanks to the impact it has on market articulation and the ability to negotiate by promoting economies of scale.

The ministry is also interested in having a pricing model based on natural fluctuations in the supply and demand of fruit in the world. This model seeks to incorporate a mechanism to reign in the country’s supply in the most critical weeks to have a stable trade that adjusts to world markets.