Ecuador planning to institute system to limit banana exports
Ecuador planning to institute system to limit banana exports
Ecuador, the world's largest producer and exporter of bananas, is planning to institute a new commission that will legally regulate banana exports in an effort to stabilize the global banana market.
A report detailing this effort appeared in Reefer Trends, an independent news and information service for the global reefer shipping business.
Tim Debus of the U.S.-based International Banana Association said that Reefer Trends is a reliable source of information and does have a good handle on the South American banana trade. Mr. Debus had heard of the proposal independently, but had not talked directly to the major banana companies about the new commission. He said the effort probably would not have a major impact in the short term, but it was a good sign for the long-term stability of the banana market.
With about 33 percent of the world's production, Ecuador is the leading producer of bananas, but that crop apparently is the cause of much controversy within that country. Reefer Trends reported that Ecuador's banana growers have called for production strikes 15 times in the past eight years because of low prices. Ecuadorian producers are apparently looking for a guaranteed minimum payment of US$3 per box of fruit.
Mr. Debus said that there is a general oversupply of bananas in the world, though that fluctuates based mostly on weather conditions. He said that flooding in recent months in Costa Rica and Panama resulted in a dip in regular contracted supplies and caused the banana companies to compete on the open market for new supplies to fill their needs. The IBA executive said it is a testimony to the banana industry and the major companies that dominate distribution that they are able to keep a consistent supply of top-quality bananas coming to the market regardless of weather and other factors outside their control.
He suspects that the companies will also be able to continue filling all orders regardless of the limits Ecuador places on its own exports.
Reefer Trends reported that the new Ecuadorian government has come to an agreement with banana growers to establish an 11-member commission that will regulate volume, limit exports to registered plantations and complete a full census of supplies.
The publication said that the system appears to be similar to the quota system used by the EU to regulate imports. It speculates that Ecuador will try to reduce export volume by about 20 percent, or 1 million cartons per week.
The publication also predicted that markets in the Mediterranean and Russia would be most affected by the drop in production.
Again, Mr. Debus does not expect the Ecuadorian action to have an immediate impact on U.S. supplies. However, he said that there could obviously be a long-term effect on the market if Ecuador is successful in reducing exports and ultimately reducing production.
There does seem to be considerable doubt whether Ecuador will carry out this latest effort. Apparently the country has failed before in its effort to limit exports. In fact, Reefer Trends concluded its article stating, "There is well-educated skepticism that the system may not last a fortnight!"
Mr. Debus also indicated that such agreements have not been very successful in the past.
Reefer Trends was reporting on the effort with regard to ocean cargo trends and said that a 1 million-box reduction in exports per week would have an impact on the shipping business. "Reefer owners and operators stand to lose out if the decree is successful -- [1 million] boxes per week is equivalent to four big ships per week.
Reefer Trends continued: "In the short to medium term, Ecuador's producers and exporters will benefit, as competition "will shrink and those that remain will be buying more expensive fruit f.o.b.
The publication also speculated that other countries, such as Mexico and Colombia, might take advantage of the reduction in competitive volumes by increasing their own exports.
Mr. Debus, however, said that Ecuador has a dominant position in the marketplace, and he does not believe the country will cut its production to the point where it is losing profitable business.
A report detailing this effort appeared in Reefer Trends, an independent news and information service for the global reefer shipping business.
Tim Debus of the U.S.-based International Banana Association said that Reefer Trends is a reliable source of information and does have a good handle on the South American banana trade. Mr. Debus had heard of the proposal independently, but had not talked directly to the major banana companies about the new commission. He said the effort probably would not have a major impact in the short term, but it was a good sign for the long-term stability of the banana market.
With about 33 percent of the world's production, Ecuador is the leading producer of bananas, but that crop apparently is the cause of much controversy within that country. Reefer Trends reported that Ecuador's banana growers have called for production strikes 15 times in the past eight years because of low prices. Ecuadorian producers are apparently looking for a guaranteed minimum payment of US$3 per box of fruit.
Mr. Debus said that there is a general oversupply of bananas in the world, though that fluctuates based mostly on weather conditions. He said that flooding in recent months in Costa Rica and Panama resulted in a dip in regular contracted supplies and caused the banana companies to compete on the open market for new supplies to fill their needs. The IBA executive said it is a testimony to the banana industry and the major companies that dominate distribution that they are able to keep a consistent supply of top-quality bananas coming to the market regardless of weather and other factors outside their control.
He suspects that the companies will also be able to continue filling all orders regardless of the limits Ecuador places on its own exports.
Reefer Trends reported that the new Ecuadorian government has come to an agreement with banana growers to establish an 11-member commission that will regulate volume, limit exports to registered plantations and complete a full census of supplies.
The publication said that the system appears to be similar to the quota system used by the EU to regulate imports. It speculates that Ecuador will try to reduce export volume by about 20 percent, or 1 million cartons per week.
The publication also predicted that markets in the Mediterranean and Russia would be most affected by the drop in production.
Again, Mr. Debus does not expect the Ecuadorian action to have an immediate impact on U.S. supplies. However, he said that there could obviously be a long-term effect on the market if Ecuador is successful in reducing exports and ultimately reducing production.
There does seem to be considerable doubt whether Ecuador will carry out this latest effort. Apparently the country has failed before in its effort to limit exports. In fact, Reefer Trends concluded its article stating, "There is well-educated skepticism that the system may not last a fortnight!"
Mr. Debus also indicated that such agreements have not been very successful in the past.
Reefer Trends was reporting on the effort with regard to ocean cargo trends and said that a 1 million-box reduction in exports per week would have an impact on the shipping business. "Reefer owners and operators stand to lose out if the decree is successful -- [1 million] boxes per week is equivalent to four big ships per week.
Reefer Trends continued: "In the short to medium term, Ecuador's producers and exporters will benefit, as competition "will shrink and those that remain will be buying more expensive fruit f.o.b.
The publication also speculated that other countries, such as Mexico and Colombia, might take advantage of the reduction in competitive volumes by increasing their own exports.
Mr. Debus, however, said that Ecuador has a dominant position in the marketplace, and he does not believe the country will cut its production to the point where it is losing profitable business.
