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Ecuador: Banana Growers Disagree with Price Fixed by MAG

6.11.2020

The Ministry of Agriculture of Ecuador -MAG- through ministerial agreement 116 set a weekly price table, with which the banana export sector does not agree. 

The Ministry of Agriculture and Livestock (MAG) recently set a table of weeks for the application of the minimum support price of the banana box for 2021. 

For this, the State portfolio issued ministerial agreement 116, which was approved on Tuesday, October 27. The table establishes prices by periods, that is, from week 1 to 16, the price of the box of 41.5 or 43 pounds will be 6.60 dollars. In the period from week 12 to 32, the price will be $ 6.20. 

While from week 33 to 42, the price will be $ 4.50; and in the last part of the year (from week 32 to 52) it will be $ 6.40. 

The prices fixed , and other provisions did not satisfy the banana exporting unions, which made several requests by letter to Minister of Agriculture, Xavier Lazo Guerrero. 

In the document, the Ecuadorian Banana Exporters Association (AEBE) and the Banana Marketing and Export Association (ACORBANEC) immediately requested clarification of ministerial agreement number 116 that was recently approved. They demand that the price of US$ 6.25 applies to the 43-pound box only. 

They also ask that article 4 of ministerial agreement 116 of October 27 be eliminated and that article 6 be clarified. Another requirement is that the entity controls the activity of exporters who do not actually carry out the export activity. 

"We urge the MAG to safeguard the future and the competitiveness of the banana activity in our country, as well as to ensure informality and compliance with regulations and finally to strictly apply all procedures and regulations necessary to combat any informal practice that affects the production and export of bananas from Ecuador", the letter states. 

The letter signed by José Antonio Hidalgo from AEBE; Richard Salazar, executive director of ACORBANEC and Juan José Pons, coordinator of the inter-union group indicate that the minimum support price must be consistent to sell the Musaceae. Otherwise, the only result is that formal actors will pay a higher price. Still, each time there will be fewer international buyers interested in Ecuadorian bananas, which causes significant losses for the entire production and export chain. 

"It is the duty of the Ministry of Agriculture and Livestock to safeguard the viability of the banana activity and in that sense make decisions that reflect this objective," the letter highlights. 

José Antonio Hidalgo, executive director of AEBE, indicated that the banana sector had faced a serious economic crisis due to the pandemic. International importers with contracts have demanded a price reduction, and it has been impossible to receive some payments from buyers. 

He asserted that these factors have caused the liquidity of this sector to be seriously affected, causing some exporters to approach unfeasibility in their businesses. 

There are European supermarkets that pressure them to decrease one dollar in the price per box. With the prices in the table, Hidalgo believes that it will cause a market loss immediately in 2021. This will prevent locally produced bananas from being sold abroad. 

"The minimum fixed price for the box of bananas must be consistent to market the fruit. There will be fewer international buyers interested in bananas. The decision that should have been made was to set the real market price of the box, that is, a reduction to 6 dollars," said Hidalgo. 

Hidalgo said that the price should have been fixed technically according to the situation they are experiencing now. He asserted that next year there would be an oversupply and they must sell the fruit at competitive prices. 

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