Useful Links

• Asociación de Exportadores de banano del Ecuador. AEBE.


• CORBANA: Corporación Bananera nacional de Costa Rica


• Caribbean Banana Exporters Association

THERE WILL BE BLOOD

Tuesday, July 01, 2008

The story of this movie depicting the hardships and cruelty of the oil diggers of early 20th century in the USA maybe reproduced in the current times of early 21st century when the price of the barrel of oil has reached the US$150 dollar mark and many experts predict that it may even reach the US$170 and even US$200 before the end of the year.

All kinds of explanation are given from blaming the traders as speculators to the geopolitical causes of the Iran- Israeli controversy over the nuclear expansion of Iran or the value of the US dollar, what ever the causes nobody seems to be doing much about them and the oil continues to increase its price and affect gravely the economies of all nations bringing them to the point of recession.

To add to this crisis we have the food shortage situation with its many causes as analyzed by many specialists all over the world and that at the end of the day means a more expensive cost of living for all consumers worldwide.

The impact of this phenomenon will  affect the consumption patterns of the industrialized world  as well as many living habits, already the Americans, North Americans that is, are driving less buying smaller cars and thinking about moving closer to work  down town  leaving the suburbs and using mass transportation.

The direct impact in our industry is severe because of the high cost of fuel and the aging of the reefer fleet with inefficient ladies and no new buildings at sight   brings the product to a high CIF cost to a consumer that already has lees buying power for whom the fruits end up being a luxury item prevailing in its buying decisions the purchase of basic foodstuffs such as cereals and protein that are also expensive because of the current world shortage.

Under the prevailing circumstances logistics becomes a key issue in the future business decisions and that is why for instance the purchase of Caribana by Del Monte we think is an intelligent move because it secures the supply closer to the markets.

Colombia and Central America banana producers will have a major advantage vs Ecuador due to the logistics and also to the change in purchasing habits in the consumers because their bananas will have more shelve life to wait for a buyer that will travel less time to the supermarkets to buy anything and even more a perishable product.

At the end in a high cost perishable and expendable product to a low purchasing power consumer there will be little or no profit to be made therefore a very detailed and cost oriented strategic planning must be made where the risk must be calculated to the penny and for that you need a high level of certainty and commitment by all the players of the industry on a long term view.

Unfortunately this is not possible in Ecuador where the producers have become highly speculative and bullish on the market situation due to the high demand created by the loading programs out of Ecuador.
If logic prevails and in the banana business has not, all operators will have to be more conservative on the long run and this generic action should place all the players in the right trend including the Ecuadorian producers only time will tell , if it does not happen  THERE WILL BE BLOOD.