The war between Russia and Ukraine has put extra pressure on already strained global logistics with a lack of containers and high input prices being amongst some of the factors affecting the fruit industry.

Richard Salazar, Executive Director of ACORBANEC, an Ecuadorian banana marketing association, spoke about the impacts of the war between Russia and Ukraine on Ecuador’s banana exports and the challenges the industry faces.

“The war between Russia and Ukraine (markets which represent 25 percent of total banana exports) which started on February 24, deepened the crisis that the sector was already going through,” he said, referring to the already existing global logistics crisis.

Economic sanctions were imposed on Russia by the U.S., EU, UK, Japan, Canada and Australia, damaging the country’s economy and delaying payment systems.

In addition, the economic sanctions affected logistics. In January, February and March, a shortage of spaces on export ships and containers was exposed, with increases in freight prices affecting spot fruit purchases above all. 

As a result, “due to the economic crisis Russia found itself in, Russian importers asked exporters in Ecuador to reduce the price of banana boxes, as well as weekly purchases, with some even canceling contracts made with certain exporters or changing from contracts to spot purchases,” Salazar detailed.

For Ecuador, by the end of June 2022, an 8 percent decrease in banana exports was recorded, in comparison to the same period in 2021. Comparatively, at the end of 2021, the decrease in banana exports recorded had stood at 3 percent year-on-year. These figures clearly evidence the damaging impact the war has had on Ecuadorian banana exports.

According to Salazar, the fall in exports occurred as a result of different factors, including, but not limited to the cold weather, a decrease in production and an increase in the price of banana production inputs.

Furthermore, high inflation and the energy crisis caused by the war meant that there was a 6.53 percent decrease in demand in the EU from January to May 2022.

The increase in export costs seen during 2021 have continued into 2022, especially with regards to cardboard, plastic and security costs. Additionally, the contamination of cargo with narcotics has affected Ecuador’s reputation and caused a decrease in purchases of Ecuadorian bananas. 

With these challenges in mind, Salazar concluded: “The trend is clear at both production and market level and we predict an 8 percent decrease in exports at the end of 2022, in comparison to 2021 exports.”