Page 57 - Ecuador's Banana Sector under Climate Change

chapter 2: economic and policy analysis of the banana sector in ecuador and implications for social and environmental sustainability
derives its economic livelihood. Its economic stability, vitality and sustainability are of strategic importance. This section discusses the sustainability challenges facing Ecuador’s banana industry and the complex challenges of climate change.
Economic sustainability is gained through the optimal management of supply, a continuous ability to meet global demand, and the fair distribution of benefits to key stakeholders, especially with regard to small-scale producers and workers, all of which affect income stability. It also derives from the constant ability to make the investments that are required to enhance yields and productivity.
Since 2011, the Government of Ecuador has embarked on a major restructure of its banana industry, putting into place a policy that not only addresses supply and demand challenges, but also establishes a fairer distribution of returns by key value chain stakeholders (workers, plantations owners (growers) and exporters). Since the banana sector is tightly integrated into the global value chain, the banana policy is only applicable within Ecuador. Outside its borders, Ecuador
has pursued ways in which to tackle the dynamics of changing demands, competition, oversupply and growing requirements for standards and norms by buyers on behalf of consumers. As trade is critical for the economy of the banana sector, Ecuador has followed various initiatives to diversify its export markets and maintain its current markets through trade agreements, such as with the EU, and other mechanisms. The economic sustainability of the banana sector in Ecuador hinges on meeting the following four challenges:
1. Stabilize incomes for small-scale producers and workers through
a fairer distribution of benefits along the value chain. This is being pursued through the enactment of the minimum price for bananas that is enforced through contracts. It is an important element of banana policy and a challenging one, since it hinges on reconciling the opposing economic interests of exporters and producers on the one hand and producers and workers on the other. In both cases, the Government is forced to play the arbiter role and ensure a social outcome by intervening in a considerably competitive market with uneven bargaining/negotiating power among stakeholders (small-scale producers may be more inadequate vis-à-vis exporters, but stronger vis-à-vis workers). In this case, the Government will go beyond its power to deploy a variety of incentives (e.g. lines of credits, stabilization funds) to motivate maximum collaboration by stakeholders, in order to stabilize and maintain incomes over time.
2. Rationalize banana land use and regulate new banana plantations. To prevent unwarranted land expansion, the Government of Ecuador should ensure improved supply management (avoiding the over-supply of bananas). The strategy should also make it easier to identify the plantations that are suitable for productivity-enhanced measures and those that can be converted to alternative use. These measures are part of an overall strategy that includes a survey and the registration of all banana plantations, in order to facilitate social and environmental regulations and enable better management of the requirements relating to minimum price and contract enforcement.
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