Pivotal Moment for the Ecuadorian Banana Industry
Ecuador’s banana exports are off to a slow start in 2023, with shipments of 62.99 million 18.14-kilogram boxes in January and February.
While this total is only 0.3% less compared to the same period last year, it’s a decrease of 10.6% compared to the same period in 2021, according to data provided by the Banana Statistical Observatory of the Association of Banana Exporters of Ecuador.
Bananas are still in the shadow of COVID
Some of this drop in export numbers is attributed to the ongoing war between Russia and Ukraine, as Russia is the largest importer of Ecuadorian bananas.
However, lingering effects from the coronavirus pandemic still impact the global banana trade.
An FAO report revealed that world banana exports fell by 7% in 2021, compared to 2020, mainly due to the shortage of refrigerated containers, which led to a substantial increase in shipping costs.
Additionally, the price of inputs such as fertilizers, pesticides and packaging (a problem that worsened with the start of the war) increased, and there was also a decrease in demand for bananas in the US market as inflation drove down America’s purchasing power.
Factors facing the industry
There is no doubt that adverse global events have affected Ecuador’s banana industry, but internal factors are also preventing an expansion of production and exports.
A lack of qualified labor has decreased productivity and profits, with many skilled workers migrating to Colombia and Brazil, which also have thriving banana industries.
Rising temperatures driven by climate change have also impacted overall production volumes, and issues in the shipping sector have prevented operations from normalizing.
2023 is expected to be similar to 2022
Data shows that between January and February 2022, 16.83 million boxes were exported to Russia, while in the same months in 2023, the volume was only 15.48 million boxes, an 8% decrease.
Despite this, the 2023 volume remains similar to 2022 ( but still far from the 2021 volume) because the European Union has increased its imports of Ecuadorian bananas. During January and February 2022, exports to this region were 16.61 million boxes, while for the same period in 2023, they were 19.71 million boxes, an 18.7% increase.
Shipments to the European Union even offset the drop in exports to the Middle East, which fell from 8.76 million to 7.63 million cases during the same period.
Main destinations in the European Union
At a country level, the leading destination for Ecuadorian banana exports to the EU was the Netherlands, with a 24.3% share of total exports during January and February 2023, a 53.4% increase compared to the same period in 2022.
Germany had the second largest share, with 14.3% of total exports and year-over-year growth of 52.2% compared to 2022, followed by Italy, with a share of 14.3%, a drop of 3.8% compared to the same period in 2022.
What does all this mean for Ecuador?
There is no doubt that Ecuador’s banana industry faces significant challenges in maintaining its place as the world’s leading banana-exporting nation.
The good news is that given the events in Eastern Europe, Ecuadorian agro-exporters have been able to find alternative buyers in the European Union, and a slow but steady recovery of shipments to Russia should help Ecuador maintain their market share for banana exports.
Sources: AEBE, AEBE Reporte Estadístico, AEBE Banana Weekly Market Sense