As 2023 starts, there's still uncertainty regarding the signing of contracts for the export of bananas for this year. The deadline for the signing of these contracts under the Banana Law is December 29 of the previous year, i.e. last Thursday. According to the export sector, two days before that deadline only 25% of the contracts for 2023 had been signed. According to the production sector, less than 10% was signed.
Nothing has changed, stated Richard Salazar, executive director of the Banana Marketing and Export Association of Ecuador (Acorbanec), as the Ministry of Agriculture and Livestock (MAG) issued a 15-day extension (until January 15) for a sector that in 2022 had losses of $258 million and that expects to export about 10% less fruit in the first quarter of 2023.
However, Salazar stated, they expect only 30% of the contracts will be signed by January 15 and; and the remaining 70% of the fruit will be sold spot, i.e. without a contract and at the international market price, according to supply and demand, even though the minimum support price of the fruit for this year set by the MAG in agreement with producers and exporters is $6.50.
Producers resist signing contracts to take advantage of the spot price, which averaged $6.43 from week 1 to week 51 of 2022, i.e. a higher price than the $6.25 minimum support price of that year.
“This shows that the banana law doesn't fit the reality of the business. I think that selling under the spot price is a natural way to adapt to the market,” Salazar stated, adding that 30% of the markets were buying the fruit this way. These markets include the European Union, the United States, the United Kingdom, and Russia.
The spot fruit would reach the Middle East, Eastern Europe, Africa, East Asia, Central Asia, and part of Russia markets.
Jose Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE), said the export sector had pressured the MAG so that the contracts that are entering are registered as soon as possible. The Mag's responsibility is to enforce the legislation, he added.
Franklin Torres, the president of the National Federation of Banana Growers of Ecuador (Fenabe), confirmed that there are no changes in the conditions that the fruit was bought.