The Ecuadorian Government has vowed to pay banana growers US$2 per bunch in a bid to pull the industry out of crisis with global oversupply and low international prices, website Telegrafo.com.ec reported.

The country's Ministry of Agriculture will buy up to one million bunches per week with a total investment of US$15 million, following a declaration of 'emergency' in the sector as exporters struggle to meet the official price of US$5.50 per 43lbs (19.5kg) box.

Guabo Banana Association (Asoguabo) president Jhovanny Coronel, told the website that growers were subject to a long chain of commercialization with minimal gains.

"Most small producers sell fruit to a trader who has their own costs of export, and then comes transport for which shipping space has to be considered and that also has a value, then the license, the importer," he was quoted as saying.

"It is a chain where the producer has the lowest gains and where the supermarket obtains the biggest profits from the final sale to the consumer."

Agricultural expert Sergio Seminario lamented that exporters and farmers had little strength in the international market, the story reported.

"Exporters and producers depend a lot on large market chains, which has had a big change in business over the last 30 years. The big chains in the U.S., France and England, among others, dominate the market and place prices and conditions," Seminario was quoted as saying.

While some in the industry have made calls for productivity improvement by following the example of Costa Rica, Seminario points to other policies that have benefitted the Central American country.

"We have to imitate what's been done in Costa Rica, to reach a consensus between exporters and producers to set prices; one for the high season and one for the low. The exporter should also sign long term contracts and that would help alleviate the seasonal problem."

Ecuador Association of Banana Exporters (AEBE) executive director Eduardo Ledesma, said there was a 'myth' in the industry that the volumes sold in supermarkets represented the gains for exporters and just hurt growers.

AEBE preliminary statistics show volumes this year are likely to be up on 2010 figures of 265.5 million boxes. Until week 29 (Jul. 30) the country's year-on-year shipments were up 9.64% to 172.76 million boxes.

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Photo: Think Progress

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