Page 42 - Ecuador's Banana Sector under Climate Change

ecuador’s banana sector under climate change: an economic and biophysical assessment to promote a sustainable and climate-compatible strategy
3.2 Banana exports
The Cavendish banana is produced mostly for export, with the exception of India and China, where the population is significant and bananas are mostly sold to large domestic markets. Demand by member countries of the Organisation for Economic Co-operation and Development influences the price of banana and, hence, the supply. High-income markets broadly correspond to two seasons that represent a high demand and a low demand. These, in turn, reflect higher and lower prices, respectively.
Figure 8 shows the weekly free-on-board (FOB) prices for Ecuador’s exports throughout the year (averaged over five years) and separates the high-demand/ high-price season (first 22 weeks of the year) and the low-demand/low-price season (rest of the year). One of Ecuador’s key sources of comparative advantage is its ability to produce most fruit during the high-demand season (winter) in contrast to Central American counties that produce more fruit during the low-demand/low-price season.
Since the 1960s, Ecuador has become the largest banana exporter in the world. Among its many sources of competitive advantage are a favourable climate year round on its coastal areas, allowing for an uninterrupted supply of bananas, adequate packaging capacities and shipping systems, and relatively low labour costs. Two of Ecuador’s competitors, Colombia and Costa Rica, have recently signed a trade agreement with the European Union (EU) for slightly improved access to EU markets as a result of lower tariffs (€124 per tonne to Europe compared to €132 paid by Ecuador). These countries also now benefit from shorter transit routes compared to Ecuador, which requires four extra days through the Panama Canal (LACENA).
Ecuador exports nearly 95 percent of its banana production, and its share
of world banana trade amounted to 22 percent in 2012 (Figure 9). It exports as much as the combined volume of the next three leading Latin American countries:
Figure 8
12 10 8 6 4 2
Weekly spot market price for banana, 2006-2013 (average)
High price season
Low price season
0 1 3 5 7 9 11131517192123252729313335373941434547495153 Source: Author. Calculations based on data from MAGAP
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