Ecuadorian Banana Exports Expect a Strong Recovery in 2023 with Higher Prices

Ecuador, the world leader in banana exports, had a year to forget, with an estimated loss of over USD 258 million and a 6.5% decrease in exports from January to December 2022 to 350 million boxes. The decrease was driven by numerous factors led by the war in Ukraine and followed by other issues, such as different strikes by political instability that hampered export logistics in ports and national highways, as well as substantial cost increases from agricultural inputs and raw materials.

Supply chain issues during 2021 caused raw materials to increase in price. There were price increases on cartons, freight, and fertilizers. Those incremental increases were not assumed by the value chain of the sector, nor was there a fair response within supermarkets not also paying more, which the producers and exporters had to pay themselves.

The conflict between Ukraine and Russia, which escalated early in 2022, created uncertainty among Ecuadorian banana exporters. This was mainly because of logistic lines that closed the service, which made it really rough weeks when exporters had any other options to replace the volume that normally goes to Russia. After a couple of weeks, some liner services opened services again, but at shipping prices that were really high and hard for the market to achieve. During the peak weeks of the banana season, the war had already begun. Nearly half a million banana boxes were being lost every week because transportation companies cut their services.

For some producers that were focused on the Easter European market without much market diversification, the impact was huge. Most did not have the economic capacity to cover the costs of their plantations, and they were losing huge volumes of bananas. Even worse, during the last quarter of 2022, climate conditions were colder than usual, adding another strain on production levels.

Despite much of last year’s challenges still being present today, Ecuadorian banana exporters and producers are expecting a positive recovery in 2023 based on a recovery production and greater industry unity to increase prices throughout the chain and all the way to consumers. The expectation is that all European supermarkets have a compromise to fair trade and a long-term policy of buying bananas produced only with decent salaries so that the competitive environment can be transversal for all producers.

According to the Ecuadorian Association of Banana Exporters (AEBE), an effort must be placed to allow consumers to know where they are buying from. This can be done through the label placed on the fruit, which shows the origin of the fruit, allowing the consumer to make a conscious decision about what they are buying as exporters ask for less bureaucracy and more agility in exports. They also need less charging costs and more compromise from the certifiers to provide these facilities in a sustainable and competitive way for everyone.

On the other hand, prices for Ecuadorian bananas have supported the positive expectations from producers. According to Douglas Montiel, Tridge’s Origination Manager in Ecuador, by W3, the price of Ecuadorian bananas continues to increase by 7.5% WoW for the 13.5 kg box and by 6% for the 18.14 kg box. “In W3, Ecuadorian spot banana prices continued to increase from USD 10.7/13.5kg box and USD 13.35/18.14kg box to USD 11.45/13.5kg box and 14.35/18.14 kg box, all FOB. The increase corresponds to an early shipment to the Russian market. Vessels usually take an amount of 360K 18.14kg banana boxes, thus putting some pressure on the prices since the banana inventory continues to be low in the Ecuadorian market until early April”, he reported.