A look at small banana producers in Ecuador
The Ecuadorian banana industry experienced a news-filled month, caught up between a government announcement to replace plantations with tree crops and price negotiations.
In an interview with www.freshfruitportal.com, Marco Oviedo, general manager of "El Guabo" Small Banana Producers Association, commented on such issues in depth.
Do you think it's a wise decision to replace banana plantations with tree crops?
I think this should be analyzed from the context of the minister's explanation. I think it's more of an opinion than a plan from the Ministry of Agriculture (MAGAP).
Taking that into account, I think the conversion plan should be analyzed to distinguish between different aspects, for example, necessity. It might be appropriate for a country that lacks the natural conditions required to produce at a reasonable cost and producers who cannot stop earning a weekly income, which bananas provide. And agroforestry crops cannot give that.
On the other hand, we have to think about the return investment. An agroforestry crop has to wait at least five years for semi-hard wood species, but up to 25 years or more for hardwoods. There's also the pre-existing debt for producers to access credits to change crops and considering land that allows formal credit.
I think if the government wants to help, it should be sincere about direct production costs, identify the most important items and take action on this basis. It should fulfill its obligation to pay the official or minimum support price, and develop a true banana policy based on promotion, which is that each producer must step up to his or her role to produce more and better.
Do you think that will affect the industry? How?
We have to first think about labeling the industry, if the industry is national or global. Naturally, the measure will have an effect, but the impact I think will vary depending of what we're speaking of. Bananas are very globalized and while we talk about internal crop regulation, other countries are talking about and acting on banana incentives, for example, Peru, Colombia, Venezuela and other banana producing countries.
And for conventional bananas, which is the majority of Ecuadorian bananas, they are very competitive, which is a disadvantage for us. I think if the measure is designed to regulate output and Ecuadorian domestic demand, it won't produce very good results because it will make opportunities for other banana producing countries.
There's an important social impact too since banana production requires a lot of manual labor. There are 70,000 people working directly in the field, in addition to the worker in packing and let's not forget the indirect labor.
What do you think the motivation behind the measure is?
I think one motivator is to give an answer to the Ecuadorian banana problem, but like I've said, the minister's analysis is just a starting opinion and the problem needs to be explored more before deciding. In fact, while the minister has made statements, on the other end of MAGAP and almost with the same consultants, we have analyzed and discussed a plan proposal that looks to break the banana problem from the perspective of productivity and high costs.
These topics are more complex, so the proposal the consultants have discussed with us now takes our opinion into account about effective flow, the debt level, little flexibility for the crop change and finally and the personal opinion of producers.
How have banana producers taken the plan to transition plantations to another crop?
I've seen a few opinions, some that ask for the government to analyze who should convert and others that see it as an "export mafia" that wants to destroy small producers.
Others say the government really should generate an incentive policy for the sector and stop the problem in a creative way. I think for the majority, they have haven't seriously considered it.
In Ecuador, they're in negotiations about the price of a box. In your opinion, what should the final price be? What would happen if the price fell below US$5.50?
I think the price should be maintained because first, there's the cruel reality that in the market there's the law of supply and demand, so three scenarios might happen. The world economy doesn't recover and consumers prioritize their savings. Supermarkets respond by looking to give more competitive prices. Otherwise, they lose interest.
Second, for the above scenario, we can't increase prices and this is absorbed by the rest of the chain.
Third, the shipping industry has said that it is going to increase container prices to US$1,500, which means more than a dollar extra a box. The card board industry has also said it will increase prices because it can't handle costs. Finally, we haven't achieved preferential trade agreements with importing countries, which means our fruit has higher prices than other countries with a commercial agreement.
On the other hand, our producers indicate that they have had big changes in production costs. My opinion is that yes, there have been changes, especially in the business and labor inputs, but really producers don't know how much a box costs and those that present costs have created a bias for their interests but not for the national interest.