Ecuadorian banana industry troubled by spot pricing - FreshFruitPortal.com

Ecuadorian banana industry troubled by spot market price collapse

Poor spot market pricing for Ecuadorian bananas amid rising production and the Covid-19 pandemic is causing problems for the sector, local media reports.

The average spot market per-box price for the fruit of US$3.50 is almost half of the government-implemented minimum price that exporters must pay to growers.

"During 2019, banana producers planted an estimated 4,000 hectares of new bananas and, additionally, replanted another 4,000 hectares," banana export unions stated.

"These plantations began to produce starting November and December 2019, generating greater exportable production in 2020."

Producers who signed a contract with their exporters are being paid the minimum support price, which was set at $6.40, at an annual average (under previous agreements) or at a weekly average according to regulations to face this crisis, the unions said.

The Ecuadorian Banana Cluster, which is made up of the Exporters Association (AEBE), the Marketing and Export Association (Acorbanec), Agroban and the Chamber of Agriculture of the Second Zone, said they were concerned about the current situation, the effects of the pandemic, and the protests of a group of farmers.

According to the statement, an estimated 70% of this year's contracts were signed with clients from abroad and there were also signed contracts with local producers.

"However, nearly 40% of local producers did not agree to sign contracts and preferred to sell the fruit in the spot market, even though regulations require the formality of the business," they said.

The year started favorably, but banana exports to China were practically paralyzed in January because of the Covid-19 outbreak and mandatory quarantine there.

In mid-February, Turkey closed its borders with Iran, Iraq, and Syria because of the increase in cases in Iran, which affected banana exports to the Middle East as they enter Turkish ports to be forwarded to their neighboring countries by land.

“In March, Covid-19 expanded worldwide and affected important destination markets for banana exports such as Russia, Poland, England, Germany, France, the Netherlands, Italy, Greece, Belgium, Spain, Eastern Europe (with Ukraine and Georgia), and the Middle East, among others," they said.