Banana troubles in Ecuador - The Packer

Banana troubles in Ecuador

09/07/2011 05:07:00 AM
Tom Karst

There is trouble in banana exporting countries, and the USDA FAS shines a spotlight on developments in Ecuador. By the way, here is a link to statistics on U.S. imports of bananas.

From the report:

Ecuador’s banana sales have dropped more than 50 percent due a drop in worldwide demand, mainly in North Africa and the Middle East, combined with overproduction in Ecuador and favorable weather conditions in major banana exporting countries. Ecuador is planning to decrease its foreign banana sales between 30 and 40 percent in the coming weeks as the Government of Ecuador (GOE) has accepted a request from producers to start a domestic purchasing program of excess supply. On August 18, 2011, Ecuador’s Agriculture Minister Stanley Vera signed a decree declaring Ecuador’s banana sector to be in a state of emergency which will expire in 5 weeks. In the meantime, the GOE has committed to taking immediate steps to mitigate the effect of the crisis.

On August 18, 2011, Ecuador’s Agriculture Minister Stanley Vera signed a decree declaring Ecuador’s banana sector to be in a state of emergency which will expire in 5 weeks. In the meantime, the GOE has committed to taking immediate steps to mitigate the effect of the crisis.

 One of those steps is a MAGAP Resolution signed on August 24, 2011, which allows the GOE to purchase bunches of bananas at $2 each from producers. A total of $15 million will be used will be used for the program, with the resources coming from a 0.7 percent tax applied to fruit exports. Exporters lament that this money will not be used for valuable investments but will instead be going to short-term emergency relief. MAGAP has agreed to buy the equivalent of at least 1 million boxes per week during a period of up to five weeks. There is no confidence in the GOE’s ability to carry out the program.

MAGAP’s National Development Bank will be responsible for processing payments to producers. The Resolution determines that bananas will not be bought in boxes but in bunches. Bananas will then be sold domestically for human and animal consumption or other purposes. The beneficiaries of the program will be small producers with up to 25 hectares of banana crops. Large producers or exporters will not benefit from the program.


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