“Skepticism" among Banana Growers in Ecuador to Sign Contracts for 2024
2023-12-22
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Less than ten days before the deadline for the registration of contracts between producers and exporters for 2024, only a reduced number of agreements have been signed between the parts.
The deadline is December 31, as stipulated in the Ley del Banano or Banana Law, which regulates the fruit trade.
This, even though in November - when they reached a consensus to set the price of the banana box at $ 6.85 for 2024 - it was indicated that there was a commitment that the fruit would leave the country with signed contracts and comply with Article 1 of the Banana Law which states that "all producers, traders and exporters shall be obliged to sign contracts of sale of the fruit and the clauses that freely and voluntarily agreed by the parties shall be respected, provided they do not contravene this law and its regulations".
José Antonio Hidalgo, executive director of the Association of Banana Exporters of Ecuador (AEBE), recognised last week that producers are not signing contracts. "There are producers who have signed, others who are still taking time to sign, and we hope that 100% of the fruit is contracted as indicated in the regulations." He affirms that the agreement reached at the negotiation table must be signed and complied with. "We hope that the process culminates and that formality prevails."
The role of the new Minister of Agriculture and Livestock weighed in the decision of producers to agree on the price of bananas at $ 6.85.
Last year, there was also consensus for the 2023 price, which was set at $ 6.50, but throughout the year, the signing of contracts needed to be fully complied with, and some producers preferred to sell their fruit at spot price (without contracts and at market price). According to figures from the Banana Marketing and Export Association (Acorbanec), this year, only 40% of the fruit was sold under contracts; the rest was spot.
Richard Salazar, executive director of this association, says that the export sector is willing to sign contracts for 2024 but regrets that not all producers are eager to do so. He estimates that at most 15% of the total exportable supply has been signed. "Producers do not want to sign contracts. That is a reality. Unfortunately, as last year, we see that producers do not want to sign contracts for 2024, most of them, not all, but we hope that this will change by December 31".
Regarding international contracts, Salazar says that they are already starting to be signed with importers in the United States, which traditionally are signed since this time, with Europe - the first destination of the national fruit - the process is slow due to the resistance of customers in that market to the new price of the fruit for 2024, while in Russia, the second largest destination of Ecuadorian bananas, "they are wanting to sign contracts, but producers do not want to sign (in Ecuador)".
The 2023 will close with an average spot price of up to $ 7.20 for the box of bananas of around 18.50 kg more than the minimum that will apply in 2024, mentioned Salazar.