The depression among the upstream operators, caused by the fall in banana rates, contrasts with the fact that there is little change when it comes to investment in production. 2018 will perhaps bring an end to expanding surface areas and increasing yields, but for now Banana World is not about to lay down its arms, with most of the origins setting new export records. Export volume projections for Ecuador show another record year, with nearly 250 million boxes (provisional data). Honduras is actually set for a record year, with more than 500 million USD of export revenue. Nicaragua is also set for a record level. Panama, via Del Monte, announced in late November 2017 the relaunch of its production sector. Costa Rica is on course to set a new record for the second consecutive year: 55 million boxes exported by the end of October. This will doubtless also be the case for Colombia, with more than 92 million boxes exported by the end of November. Phenomenal progress can also be observed for Guatemalan exports, taking the number one spot on the US market, crushing the competition, and increasingly shipping out to Europe. As regards Africa, while Cameroon is off the pace, Côte d’Ivoire and Ghana are setting absolute records month after month. The machine seems to have built up unstoppable momentum. While this phenomenon is largely a headlong rush – telling themselves that if they do not add to the supply, then their neighbour will – there are also more objective reasons.
One of the explanations for this trend is the constant quest for zones with the lowest production costs. That is also often accompanied by social and environmental requirements which we might, to put it politely, deem extremely rudimentary. This is the case with projects in Central America. Another explanation arises from factors outside of the banana sector, such as the exchange rate. Indeed, conversion into national currency of the European import price, minus the customs duty, shows that among the big three suppliers, i.e. Ecuador, Colombia and Costa Rica, there are clearly winners and losers. Solely through the effect of their exchange rate against the euro, in 2017 Colombian exporters earned 25 % more in local currency that their Ecuadorian counterparts and 16 % more than the Costa Ricans. Since 2006 and the abandonment by the EU of the quota regime to move toward a tariff regime (customs duty), Colombia has gone from an index of 100 to 147 in 2017. At the same time, Costa Rica and Ecuador have risen to 126 and 118 respectively. The recent rally by the euro against the dollar should restore some momentum to Ecuador and Costa Rica.
Then again, as in the case of the influence of the inflation rate in Europe on the creation or destruction of added value (see inflation inset), we need to go further and factor in the cost structure, reviewing the production factors exposed to exchange variations, and those produced locally, i.e. in local currency. Inflation in the producer countries also needs to be factored in, thereby reducing the “gain” from the European market. Thus the position of Costa Rica is understandable, a country where production costs are climbing step by step. It is doubtless not far from thinking that an organised European market would be more lucrative for it than a completely deregulated market on which its operators would no longer have any comparative advantages. It would be a funny turnaround in the situation and an interesting switch of alliances for advocates of a still regulated market, who will need to speak out during the revision of the European banana market procurement policy, in 2018 and 2019.
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