2011 09 lombana ecuadors banana act has not ironed out the debate - fresh produce journal -fpj
TRANSCRIPT
-
7/31/2019 2011 09 Lombana Ecuadors Banana Act Has Not Ironed Out the Debate - Fresh Produce Journal -FPJ
1/1
ECUADORS BANANA ACT HASNOT IRONED OUT THE DEBATE
Ecuadors internal revenue service Servicio de RentasInternas made a call to order earlier this year to twosubsidiaries of the banana export giant Noboa Group forthe non-payment of taxes. That move may be a sign of ashift in the governments regulation of the banana sector, achange underpinned by the passing into law of the so-called Banana Act last March. The legislation states that theminimum price paid by exporters must cover the producersaverage cost plus a reasonable profit.
The debate between both sides over the payment of fairprices for bananas to producers continues to rage. Underthe new law, the government is expected to exert greatercontrol, forcing producers and exporters to sign purchasingcontracts in line with a price agreed between the twoparties, thus regulating the market to avoid ongoingdiscussions about a reference price. Until now, thisreference has always been set by the government, sincegrowers and exporters were unable to agree an amount.
It is no surprise that this new law has not ironed out theups and downs of this debate. On one side you have theproducers, who are generally risk-averse and of course, thegovernment. Their main arguments are in favour of industry
regulation to avoid unfair competition. On the other side,there are the defenders of free trade, larger enterprisesthat regulate purchases in Ecuador and adjust demandaccording to international market prices.
One economic argument is to achieve a pricing balanceduring the production year, with a period of good prices forgrowers far above the reference price and a period of lowerprices, which have to be at least equal to the referenceprice that producers receive or should receive. Mostdiscussions centre around what level the lower pricesshould be at, but the Banana Act still includes a referenceprice the law only ensures certainty in terms of time, ascontracts cannot be signed for less than a year.
Among the biggest opponents to Ecuadors Banana Actare producers who dont have contracts. Until they are
regulated, they cannot market their products abroad andhave to sell them on the domestic market. Given thatcontracts must be registered with the government, its fairto say that bureaucracy can be a silent accomplice to theineffectiveness of the law.
The struggle between ideologies is clear. President RafaelCorrea continues to pursue a general policy of regulation,which has even slowed trade agreements that neighbourssuch as Colombia and Peru have tried to forge with majorbuyers such as the EU and US.
Ecuadors banana sector is dependent not only on itsexports and imported inputs from the EU and US, but alsoon the political issues that surround it.
Jahir Lombana lectures in global trade and competitiveness at
Universidad del Norte in Barranquilla, Colombia. I
MOST READ ON FRESHINFO
UU Doug Wicks dies, aged 50(5 September)
UU Total Produce delivers solidperformace (6 September)
UU APS Salads in Kentishexpansion (4 September)
UU Scotty superbrand aims tobe bigger than Rooster(5 September)
THE WEEK IN QUESTION
The proliferation of novelcoloured fruit in thesupermarkets is:
GA PR stuntG An opportunity for growthGA good way to generate
interest in produce
6%
50% 44%
2011 Portobello & Golborne
Road markets will have their
English Apple Festival 21-22 (&maybe 23) October.
@RBKC_Markets
Working on the
#understandingblackberries
campaign today. Why not check it
out www.facebook.com/
berrybuddies
@BerryBuddies
This week on TwitterWhen you step through the doors
of PizzaExpress today you will
notice some changes. An updatedmenu and a cool new design.
@PizzaExpress
BBC filming about fruit and
vegetables in 17th century.
Introduction of new varieties &
new production methods.
Fascinating stuff.
@MarketFood
There was hard evidence last week that at
least three countries are worried about the
overvaluation of their currencies, writes
Moneycorps Chris Redfern. Japans finance
ministry announced that it had sold
4.5 trillion yen (35.4 billion) on 4 August to
depress its currency. It worked, but within a
week the yen was back up to where it had
started. In Switzerland, the economy minister announced an
870 million franc (656m) package to help counter the impact of
the francs massive overvaluation. Brazils central bank cut its
benchmark interest rate from 12.5 per cent to 12 per cent,
despite an inflation rate well above its target range.
But nobody can be heard to complain that their currency is too
weak. Sterling was one of a group of half a dozen currencies thathappily drifted in the wake of the storming Swiss franc. The US
dollar, way back in second place, did better than expected after a
very disappointing set of employment data, which showed zero
jobs growth in August. It was the fourth consecutive month in
which non-farm payrolls grew by less than 100,000 and it raised
anxiety about the global outlook for the economy.
The shortened weeks tail-end Charlie was the euro, where
events are conspiring against resolution of the southern debt
crisis. This means that more than six weeks on from the summit
agreement, the process is bogged down and a successful
outcome looks even further away. I
HOW KEY CURRENCIES ARE PERFORMING AGAINST :
This week on thecurrency markets
1. NZD 0.2%
2. AUD 0.6%
3. NOK 0.2%
4. ZAR 0.7%
5. SEK -0.3%
6. CAD 0.4%
7. EUR -1.2%
8. USD 1.3%
9. JPY 1.3%
10. CHF 5.2%
OpinionJahir
Lombana
COMMENT
8 FPJ 9 SEPTEMBER 2011
p.8 + opinion.indd 8 07/09/2011 16:38