OIL & FLOWERS

Ecuador 2014 | AGRICULTURE | B2B: GROWERS

TBY talks to two executives on the importance of growers for Ecuador's economy and the possibilities for exporters.

Francisco Naranjo
FRANCISCO NARANJO
Executive Director
National Association of Palm Oil Cultivators
Alejandro Martinez
ALEJANDRO MARTINEZ
Executive President
EXPOFLORES

What is the importance of your sector for Ecuador's economy?

FRANCISCO NARANJO The palm oil industry is one of Ecuador's new agricultural segments. In the past, bananas, cocoa, and coffee production boomed, and now, some 50 years on, the palm industry has seen an incredible increase of palm oil tree plantations. Often people associate Ecuador with bananas, but actually the palm oil industry today is the larger of the two. We have 280,000 hectares of palm oil, versus 240,000 hectares of bananas. In 2013, we produced over 500,000 tons of palm oil, with 45% consumed locally and 55% exported generating around $300 million for the Ecuadorean economy, rendering it one of key agricultural export products. It also represents about 5% of agricultural GDP and about 0.5% of Ecuador's total GDP. In terms of labor, the sector employs about 50,000 people directly and a further 100,000 indirectly in related sectors, whereby around 150,000 people work in the palm industry. One important aspect is that in Ecuador, almost 87% of palm growers are small producers.

ALEJANDRO MARTINEZ The flower industry in Ecuador began around 35 years ago. It is still the main crop in the highlands and at 98% is almost entirely dedicated to export. There is no other crop beside broccoli that is such a large employer, with approximately 120,000 people. Therefore, it is an important business both in terms of employment and for certain local economies. The flower business has also helped to develop other tangential sectors such as airfreight, for example. The market here is different from in Colombia, which has large fields with a narrow range of flowers. Here we have small farms of an average of about 7.12 hectares per estate, with a diversity of varieties that on average numbers over 50 species. The Ecuadorean industry has focused on breeding roses with larger buds and stems, and high production with reduced costs, and fewer people working per hectare.

Do you think that Ecuador has the potential to become a more substantial palm oil exporter competing with the better-known palm oil exporting nations of Asia?

FN No. Malaysia and Indonesia represent about 85% of the global output of palm oil. Ecuador is the prime exporter in the region, ahead of Colombia, but we consume our oil domestically, with a marginal surplus for export. In Ecuador, the volume of oil available for export is increasing annually, as the industry is growing at a rate of 7% per year. We forecast the industry doubling again over the next 10 years. Local consumption of palm oil is stable, as our population grows by around 2% per year. Meanwhile, we are working with the government to launch a biodiesel program, and in fact President Correa has already signed a presidential decree aimed at reaching a nationwide bio diesel consumption level of 5%. This would account for 500,000 tons of palm oil per year, creating a new local market for our oil.

Ecuador has negotiated a trade agreement with the EU, but it seems the agreement with the US has been placed on hold for a while. How do these markets compare in importance for the floriculture sector?

AM Ecuador does not focus on one market, typically preferring the diversified route. About 38% of production goes to the US, with 25% to Russia, and 25% to Europe. The remainder goes to 108 other destinations. About 10% of long-stem roses are destined for Russia. The medium stems go to Europe, and the short stems go to the US. We are working with a couple of supermarkets in the US to introduce mixed bouquets.