Official account of situation in Ecuador
22.01.2010All the companies of JFC Group strictly abide the law of the countries in which they operate. Bonanza Fruit Co. which represents the Group in Ecuador and is today the third greatest banana exporter from this country is by no means an exception. Throughout 2009, as well as in all the previous years, Bonanza Fruit Co. did a legal and social responsible business, fulfilling all its obligations to the producers, clients, Ecuador state and society.
Banana market in Ecuador is subject to strict regulation aimed to protect the producers. For instance, the law stimulates the exporters to sign long-term contracts with the producers and sets the minimal price of the standard banana box (43 lb). Currently this price is set at USD 5,4/box. Some additional measures were introduced in 2009, namely:
- Banana purchases must be settled using the state bank;
- Quality screening in the port (i.e. in the absence of the producer representative) is forbidden;
- All the contracts must be registered with the Ministry of Agriculture.
All these requirements are also fulfilled by Bonanza Fruit Co. which is confirmed by the absence of any complaints from producers or official bodies.
However, the second half of 2009, which is a traditional low season for banana trade, saw the emergency of the tendency of the growing volume of unofficial banana export from Ecuador. Bananas purchased from the producers below the official price were exported without notification of government officials. Similar incidents took place in the previous years, but in 2009 the situation was worsened by banana overproduction in Costa Rica.
The situation demanded the attention from the society and government and being one of the market leaders JFC drawing this attention to the market as an obligation. On December 17, 2009 Bonanza Fruit Co. director Dmitry Martines published a letter to the Minister of Agriculture and all the banana producers in the largest Ecuador daily newspaper El Universo. The letter contained the description of the situation as seen by the law-abiding exporter and the formal statement that Bonanza Fruit Co. is planning to suspend banana exports from the country for two weeks as a matter of protest against the illegal activities by some of its competitors.
Ecuador law obliges an exporter to compensate the possible producer losses in case the export operations are suspended. And the Minister of Agriculture immediately reminded Dmitry Martines of this obligation. We are proud to say that this reminder was not needed as all the compensation measures were already discussed and agreed upon by all the producers holding contract with Bonanza Fruit Co. (numbering around 300).
Some other large Ecuador banana exporters and the association of banana producers publicly stated their agreement with Bonanza Fruit.
Ecuador officials did respond to the public voice: on December 26 the President Rafael Correa mentioned the problem of illegal export in his weekly address to the nation on TV. He confirmed the existence of this problem and informed the people that his government is preparing a set of measures to solve it. He promised that the legal action against the wrongdoers will be intensified and the law-abiding exporters will be encouraged.
On December 28, the Minister of Agriculture Ramon Espinel held a meeting with representatives of large producers and exporters. Dmitry Martines took part in it and ws assured by the Minister that the government is eager to stop illegal exports and thus help the market.
In order to compensate for suspension of banana purchases by the large exporters the government introduced a program of purchasing bananas and using them to help the regions affected by drought. Noteworthy is that some fruit was already purchased from Bonanza Fruit Co., which is not only an exporting company, but also one of the large producers controlling about 3000 hectares of banana plantations.
In accordance with the promise given in El Universo, Bonanza Fruit Co. suspended its shipping from Ecuador on the 53 week of 2009 and the 1st week of 2010. Starting from the 2nd week of 2010 the shipping continued and currently the company is fulfilling its contract obligations to the producers completely, purchasing about 300.000 boxes weekly.
Association of banana exporters from Ecuador (AEBE) became the only organization that publicly confronted Bonanza Fruit Co, which was its member from 2005. This can be explained by the fact that today AEBE incorporates many of the companies involved in illegal exports. This is why on December 28, 2009 Bonanza Fruit Co. announced its withdrawal from the Association.
