Since the early 1950s, Ecuador has been the world’s preferred choice for bananas. The South American country has achieved huge success in the wake of the “banana wars,” in which Ecuador and other Latin American countries challenged the EU’s restrictive banana import regime. The dispute ended with the signing of an agreement in December 2009 that removed discriminatory restrictions on banana imports and stipulated that bound tariffs on bananas would be reduced to €114 per ton by 2017.
In the meantime, Ecuador has developed a highly independent banana industry that currently employs 14% of the population and produces almost 40% of traded bananas worldwide. In 2012, the Ecuadorean Association of Banana Exporters (AEBE) reported that over 250,000 hectares in Ecuador were dedicated to banana cultivation across 12 provinces. Guayas, Los Ríos, and El Oro are the most important regions for production, and they contributed heavily to the total 280 million boxes of bananas that were exported in 2011. These exports were valued at $2 billion, with the majority destined for the US, Russia, and the EU. With fully integrated infrastructure and over 12,000 producers, Ecuadorean companies have specialized in offering value-added banana goods while maintaining a distinct consideration for environmental and community needs.
One such company is Reybanpac, Ecuador’s largest sustainable banana producer in terms of hectares. The enterprise has implemented a strategy of diversification and reinvestment to meet the needs of the banana industry and differentiate itself from the competition. To highlight the company’s strengths, Reybanpac is committed to minimizing environmental effects and supporting local communities. To promote its sustainable banana crops, the company works directly with local retailers abroad. “In England, for example, we sell directly to Tesco Supermarkets,” Vicente O. Wong, Deputy Director of Reybanpac, told TBY. “The current policy is to deal directly between the producer and the supermarket, and we have a high percentage of that.” This also contributes to the value of Reybanpac’s bananas, as they carry the ethical beliefs of the company across borders.
Leading the banana industry in terms of technology, international fruit company Dole lauds Ecuador as an excellent place to grow high-quality bananas. The advantageous climate provides plenty of sun and rain and there is an absence of storms, hurricanes, or wind to damage the crops. Moreover, the agreements in place with the local community have also contributed to Dole’s success. “We’d like to have the same standards in the other countries that we operate in. It all comes back to our relationships with growers and the quality of the workforce,” Peter Gilmore, General Manager of Dole told TBY. In addition, Dole prides itself on other corporate social responsibility projects such as distributing free bananas to school children and offering education programs about the health benefits of the fruit. At the same time, Dole’s exported bananas are handled carefully in containers that maintain freshness.
However, the explosion of the banana business has led to an increasing amount of oversupply, and the portion of the crop that is not sold early enough to meet international standards for export is generally distributed to the local population. Although the excess bananas do not go to waste, farmers and banana companies are forced to sell the crop at a lower price, often incurring a loss.
With the potential to begin exporting to prime markets such as Brazil, Turkey, and Iran, Ecuador’s dominance of the industry shows no signs of waning. The AEBE has demonstrated interest in capturing a larger portion of world banana trade, with the potential to boost its market share to 70%. “We need to reduce production costs and increase our annual production in order to offer cheaper products than our competitors,” Eduardo Ledesma, Executive Director of the AEBE, explained to TBY. With such possibilities on the horizon, the oversupply of bananas will be channeled to new markets and the number of jobs in the industry will continue to grow, reinforcing Ecuador’s position as the largest banana producer in the world.
© The Business Year