Ecuador’s Agriculture Grapples With El Niño Challenges

Fresh Banana
Published Dec 22, 2023
Ecuador confronts diverse challenges across key agricultural sectors due to the persistent influence of El Niño. Global disruptions, including El Niño-induced drought in the Panama Canal, hindered Ecuador's crucial banana exports. Despite rising costs, exports increased by 6.35% YoY, with the EU being a major market. Furthermore, El Niño poses imminent threats, risking over 50% of shrimp farms in flood-prone areas. The CNA urges preventive measures, emphasizing the need to protect facilities and workers. El Niño's weather fluctuations in the Coffee Belt, vital for coffee cultivation, pose risks. Elevated temperatures and excessive rainfall adversely affect coffee growth. Projections for 2023 indicate significant YoY decreases in Arabica and Robusta exports. El Niño's influence varies across regions of Ecuador, bringing widespread rainfall to some areas and prolonged droughts to others. While the Amazon sees hydroelectric improvements, other regions face ongoing energy challenges.

With notable climate effects, El Niño, disrupts weather patterns and influences global agriculture. The National Oceanic and Atmospheric Administration (NOAA) announced its emergence in Jun-23. As the warming intensifies into the Northern Hemisphere winter, it brings various impacts to Latin America, contributing to economic losses estimated at USD 28 billion over two decades.

El Niño is forecasted to have a moderate to strong intensity in Ecuador, with its impact varying across regions, bringing constant and widespread rainfall to large areas, particularly along the coast. The southern region, known as the Austro Region may not experience rains soon, and the phenomenon's effects differ across the country, with drought continuing in the south. Experts' outlook suggests improvements in hydroelectric plants in the Amazon but highlights ongoing energy challenges in various regions. As of December 21, Ecuador's President Daniel Noboa has presented a law to the national assembly aimed at luring private investments and modernizing the country's electricity sector amid power shortages caused by a drought linked to the El Niño climate phenomenon. The drought has impacted hydroelectric dams, the primary source of Ecuador's electricity, prompting planned power cuts and the need for energy imports from Colombia. Designated as urgent, the proposed law faces a 30-day timeline for approval by legislators.

Banana Industry Navigates Global Challenges Impacting Exports, Showing Resilience in 2023

Global events, including the Covid-19 pandemic, the Russia-Ukraine conflict, and drought in the Panama Canal caused by El Niño, have significantly disrupted Ecuador's crucial banana export industry. Rising sea freight rates and input prices, particularly for fertilizers, have escalated production costs and hindered 2023 exports. However, according to the Association of Banana Exporters of Ecuador (AEBE), banana exports have been slightly above those of previous years. The country exported 292.37 million boxes of 18.14 kilograms (kg) from Jan-23 to Oct-23, marking a 6.35% year-on-year (YoY) increase, compared to 274.90 million boxes (18.14/kg each) from Jan-22 to Oct-22.

Source: AEBE

The European Union (EU) has become a substantial market, accounting for 29.30% of exports and showing a YoY increase of 18.42%. Russia, the second-largest destination, experienced a marginal 0.9% YoY decline in banana imports from Ecuador. Despite a decrease in shipments in 2022, Ecuador managed to sustain export levels in 2023.

Furthermore, the Panama Canal Authority (ACP) has announced additional cuts to ship transits due to the worst drought in over 70 years, prompted by the El Niño weather phenomenon. With Gatun Lake's water levels at unprecedented lows, the ACP reduced booking slots from 31 to 25 per day starting November 3, further decreasing to 18 slots per day by Feb-24, impacting global shipping costs.

Ecuador’s Shrimp Industry Faces Imminent Risk as El Niño Persists

Impacting the fishing sectors of Peru and Latin American countries, the El Niño weather pattern is expected to persist until at least Apr-24, according to the World Meteorological Organization (WMO). The El Niño event, characterized by ocean surface warming in the central and eastern Pacific, developed rapidly in Jul-23 and Aug-23, reaching moderate strength by Sep-23.

Ecuador's shrimp industry faces imminent risk due to El Niño, with around 110 thousand hectares (ha) at stake. The National Chamber of Aquaculture (CNA) highlighted the vulnerability of more than 50% of shrimp farms, particularly in flood-prone areas of provinces like Guayas, Santa Elena, Manabí, El Oro, and Esmeraldas. The CNA urges shrimp producers to implement preventive measures, including building retaining walls, ensuring proper material storage, and maintaining pest control. With a high probability of strong El Niño intensity, protecting facilities and workers is crucial, as the industry, a key economic driver, braces for potential serious impacts on the economy and employment.

Source: CNA

Ecuador's monthly shrimp exports decreased by 8.62% month-on-month (MoM) in Oct-23 to 216.28 million pounds (lbs), compared to 236.69 lbs in Sep-23. However, exports increased 5.17% YoY, from 205.64 million lbs in Oct-22. October's exports bring the year-to-date total close to the 2022 annual record of 2.34 billion pounds, with two months left in 2023 to record.

El Niño Threatens Ecuador’s Coffee Belt

A crucial region for coffee cultivation, the Coffee Belt faces vulnerability to El Niño's weather fluctuations. This belt, spanning the Tropics of Cancer and Capricorn, is significantly impacted by El Niño, which can induce extreme weather changes such as prolonged droughts or excessive rainfall.

The delicate nature of coffee plants makes them highly responsive to environmental shifts. El Niño's influence can lead to unfavorable conditions for coffee growth. Elevated temperatures may accelerate the maturation of coffee beans, resulting in premature harvesting and adversely affecting the quality and growth. Another consequence of El Niño, excessive rainfall can create a breeding ground for pests like the coffee berry borer and diseases such as coffee leaf rust, known as "la roya" in Spanish.

Ecuador's coffee growers are anticipating consequences on current production and future harvests. According to the Ecuadorian National Coffee Association (Anecafé), in 2022, Ecuador's coffee exports amounted to 40.37 thousand 60-kilogram (kg) bags of Arabica, 37.11 thousand 60-kg bags of Robusta, and 461.17 thousand 60-kg bags of Industrialized coffee. For 2023, Arabica exports are expected to reach 7.25 thousand 60-kg bags, an 82.04% YoY decrease. Robusta exports are forecasted at 15.84 thousand 60-kg bags, a 57.31% YoY drop and Industrialized coffee is expected to reach 455.79 thousand 60-kg bags, a 1.16% YoY decrease. The global coffee market anticipates to remain in deficit for the third consecutive season in 2023/24.


Strategies for Stability in Ecuador's Banana, Shrimp, and Coffee Industries

As Ecuador contends with the persistent impact of El Niño, the banana export industry may experience continued disruptions, necessitating adaptive strategies to mitigate rising costs and logistic challenges. In addition, shrimp producers face a critical period, requiring swift implementation of preventive measures to safeguard farms and workers against El Niño-induced risks. Coffee growers must closely monitor weather patterns as El Niño's influence persists. Proactive measures are crucial to mitigate adverse effects on crop yields, quality, and production.

Collaboration between government bodies, industry stakeholders, and environmental experts becomes imperative to navigate these challenges. Implementing sustainable practices, diversifying strategies, and fostering resilience will be key to Ecuador's ability to adapt to the evolving climate patterns and maintain stability across sectors.

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