Ecuador banana growers in crisis from Ukraine invasion; Some have lost 25% of business
The Ecuadorian banana industry is feeling the impact of disruptions related to Russia’s invasion of Ukraine, with already more than a million boxes of unshipped fruit as a result. To bring attention to their plight, dozens of growers blocked highways in El Oro and Los Rio Provinces this week, demanding support from the government.
According to growers, the impact comes from the complete closure of Ukrainian and Russian ports, the disruption of trade routes to Russia, the devaluation of Russia’s Ruble, with loses already amounting to $2.5 million a week.
The Ecuadorian Federation of Exporters (Fedexpor) said that the impact being felt not just for bananas, but also in the shipments of other major exports, including flowers and shrimp. “As a consequence of these impacts, the liquidity of exporting companies that have relations in the Euro-Asian zone will be compromised, and it puts at risk the sustainability of these companies which concentrate the majority of their shipments to this region at this time of year”, a Fedexpor report said.
The banana sector is driven by some 2,500 midsize and small growers, Fedexpor says, which employ around 25,000 people.
Furthermore, phytosanitary requirements are different for fruit heading to Russia and Ukraine, and according to growers, insecticide restrictions for the E.U., U.S. South Korea and Japan are more stringent, curtailing options to ship surplus fruit to other countries.
Juan José Pons, a coordinator of a local banana growers cluster and government advisor, said that around 25 percent of Ecuador’s production cannot go to the EU and U.S. due to insecticide limits. He added that even if other markets are found, the war in Ukraine has reduced international shipping capacity. “There is an economic ripple effect from the invasion, that is beginning to effect the entire world, not just Ecuador.”
Pons said that the most affected companies in the Ecuadorian banana industry are smaller growers which don’t have the same certification or quality seals in place as larger operations and have more difficulty finding space on ships.
Reybanpac, an Ecuadorian banana exporter, said ithat Russian and Ukraine alone account for 25 percent of its exports, and that “it’s important to mention that it is not possible to replace the Russia and Ukrainian markets in the short term due to the lack of shipping space. We need help from the government to help us through the crisis, and we need help now”.
Fedexpor has called on the government to help safeguard liquidity of export companies through flexible financing options and by reducing the tax liability of the supply chain for foreign exports as well as for materials, which have also been rising in price.