Banana production in Ecuador is an important component to the national economy. This country has been a lead banana producer since 1953. The country approximately exports more than 4 million tons of bananas annually. In 2016-2018 Ecuador contributed 36% of the worlds exported bananas. Ecuador is a good place to cultivate bananas due to its warm and wet climate, and abundance of rivers. The country is inexperience at hurricanes or high wind storms which reduces the likelihood of banana crops being destroyed. The provinces of Los Rios and Guayas produce the most bananas out of the country, accounting for 70% of the countries total banana production in 2022. The main commercial banana variety is the Cavendish banana, in the past the dominant variety was the Gros Michel banana, but that variety was retired due to Fusarium wilt disease. Historically large multinational companies have influenced banana production in Latin American countries, however Ecuador remained independent from this influence regarding banana production. The crop is mostly grown on private plantations which sell their crops to national and international companies. Dole Food Company, Chiquita Brands, and Del Monte Fruit are foreign owned multinational companies that export Ecuadorian bananas and do not own any plantations in the country. These foreign companies form contract agreements with local Ecuadorian banana producers.
History
Production of bananas began in Ecuador in 1910. However, the industry did not experience a boom until 1948, when the government of President Galo Plaza began issuing agricultural credits, tariffs, building ports and a highway on the coast, and making efforts towards pest control.
At its peak in the mid-1950s, Ecuador was the largest banana producer in the world. A decade later, there were 3,000 banana farms in the country, each averaging approximately 158 acres in size. As of 1960, bananas exported from Ecuador accounted for 25 percent of the world's production, out-producing all of the Central American countries.
Ecuador remained more independent from multinational companies, like the United Fruit Company and Standard Fruit Company, unlike the countries Central American neighbors. Most banana production was in the hands of medium-scale domestic producers. This resulted in reduced labor issues among banana producers. Ecuador was more intentional about who was allowed to purchase land, who received exporting privileges, and who controlled labor. However, the country went through a cocoa crisis in the 1920s. Cocoa was a primary export at the time, and Ecuador needed to find a new crop to export. Ecuadorian Congress passed a law that opened up an opportunity for multinational companies to come in and help produce and export bananas, and promoted this new law by implementing tax exemptions for the first two years of production. A man by the name of Clarence L. Chester arrived advertising that he would help local banana producers with exporting their crops for a cheap price. He had experience with working with Latin American countries, specifically Peru. He promised that the company that he represented had no intention of monopolizing their services, however he did not disclose which company he represented. Due to the growing fears among the Ecuadorian public that their country would be treated how United Fruit treated Central American countries, there was a lot of public push back regarding the potential deal with Chester. This push back resulted in the revelation that Chester was the vice president of Pacific Fruit Company, located in New York. One of the directors of the company was the Ecuadorian Senator Manuel Navarro. This revelation elicited more information about the potential deal with Chester, the contract was much more generous and would have allowed the Pacific Fruit Company to have much more influence on banana production than just export transportation. Due to public and Congressional opposition to the contract deal, the deal fell throughand was abandoned in 1933.
In the late 1950s, a fungal disease called Panama disease caused huge losses to the banana crop. During the 1960s agrarian reform caused fragmentation of land holdings and multinational companies closed down due to labour trouble. Large landholders lost the advantage and as a result very large numbers of smaller non union plantations came to be established under local producers. During this period Central American countries introduced a new variety known as Cavendish bananas, which was a setback to Ecuador as its banana production was affected. However, Dole ensured that Ecuador's export share in the world market did not fall below 15%.
In 1974, Ecuador became a member of the Union of Banana Exporting Countries in an attempt to bargain for better prices. The UEB proposal of an export tax did not succeed in Ecuador, however. In 1975 the UEB collapsed after what became known as "bananagate", bribery of the banana trade monopoly consisting of the three US companies (United Fruit, Standard Fruit, and the Del Monte Corporation).
Eventually, the Black sigatoka, a banana disease destroying much of banana production in Central American countries and Colombia, as well as a levy of export tax, and political unrest in Central America, came to Ecuador's advantage. The Standard Fruit Company and Del Monte Fresh Produce Company decided to make Ecuador the primary supplier of bananas in the 1970s. Some 147,909 hectares were dedicated to production, 99 percent of which were in the three provinces of Oro, Guayas, and Los Ríos in the lowlands of the Pacific coast, with a tropical climate and rich soil conditions.
During the 1980s and 1990s in Ecuador, the economic policy of foreign trade was modified to comply to the international trade regime. This boosted banana exports, accounting for 21.1 per cent of total exports and 64.7 per cent of all agricultural exports during the decade of the 1990s. In 1998, there were 4,941 banana planters employing a workforce of 98,000. In 1999 Dole established a new loading terminal at Bananapuerto in 1999.
In 2003 the Food and Agriculture Organization reported that the country's banana workers received lower wages than banana workers in all other Latin American banana-exporting nations. A study conducted three years earlier stated that the country's banana worker's average monthly wage was US$56.
In 2012, Ecuador reported losses of $600 million due to the Black sigatoka fungus, with 40% (85,000 hectares) of the country's banana plantations affected by it.
Economics Bananas are produced by more than 130 different countries across the world. Asia and Latin America host the majority of banana production operations. As of 2019, the main banana exporting countries were Ecuador, the Philippines, and Costa Rica. The main importing countries are the USA, the EU, and Russia. Banana production in Latin America is an economic success as the tropical climate is suitable for banana cultivation. Bananas thrive in climates with lots of rainfall and hot temperatures. Within 2016-2018 Ecuador contributed to 36% of the worlds international banana exports, within the same few years Ecuador produced an annual average of nearly 54 million tons of bananas. Ecuador has been a lead banana producer since 1953.
Due to bananas having a cheap retail price and high caloric value, bananas are among the most popular dessert fruit in the entire world. Low prices and high caloric value make bananas a popular and common food source among minority and impoverished communities across the globe. Around 50 million tons of Cavendish bananas are produced each year, and over 20 million are sold globally. The banana trade is worth about $11 billion, and bananas are considered to be among the top ten agriculture crops.
Banana production in Ecuador is maintained by about 5,200 independent producers. The majority of the exports are controlled by foreign multinational companies, these companies control just under 90% of banana exports. Dole Food Company, Chiquita Brands, Del Monte Fruit, Noboa and Fyffes dominate the global banana trade. Chiquita and Dole are awned by the USA and each company controls 25% of global banana trade. Noboa is owned by Ecuador and controls 8% of the banana trade. Del Monte Fruit is owned by the UAE and Mexico and owns 8% of the banana trade. Fyffes is Irish owned and controls 8% of the banana trade.
Foreign owned multinational companies are not involved in the production of bananas in Ecuador and do not own any plantations. Noboa and Favorita, both Ecuadorian owned companies, own about 7,000 hectares of land for banana production each. The majority of banana production is controlled and maintained by independent and local producers. 60% of these producers are small holder producers and operate on about 30 hectares of land.
Contracts are formed between the exporting companies and the independent farmers, this is called contract farming. The independent farmers are responsible for covering the costs of production and for the transport of their produce to the ports. The exporting companies are responsible for fleshing out factors such as the logistics and paperwork with the importing ports, packing material, and pricing the produce. Producers have little say in the pricing of their produce which impacts how much capital they receive for their produce. Exporting countries know what the importers want in a product, regarding bananas, texture, flavor, color, and general look is crucial. Due to this, exporting companies tell producers how to make these favorable and aesthetic bananas which can influence production costs.
Despite bananas being a large part of the global agricultural economy, bananas are an economic liability due to the high risk of disease. Threats from fungal diseases like Fusarium wilt, also referred to as Panama disease, and Black sigatoka are significant. Fusarium wilt was discovered around the 1890s on the island of Boca del Toro in Panama, hence the nickname "Panama disease." Black sigatoka was discovered in the 1930s, and is even more destructive than Fusarium wilt as it spreads faster. These fungal diseases originate in the soil and effect the root systems of banana plants, they block the xylem vessels and kill the plant. Not much is understood about how these diseases spread and what needs to be done to prevent these diseases from occurring. The first disease epidemic that swept through Latin America destroyed around 15,000-20,000 acres of banana plantations, and there was an estimated loss of $400 million USD. If left untreated, these diseases can wipe out entire plantations in just a few years. The initial epidemics resulted in mass unemployment and the loss of expensive infrastructure such as irrigation, packing, and pesticide application systems. Lots of plantations faced bankruptcy.
The practice of monoculture can make the effects of these banana disease much worse. When there is minimal genetic variety among plants grown on large-scale plantations, when a disease is introduced all the plants have the potential to be destroyed, resulting in huge economic losses. Despite this risk, monoculture practices are economically desirable as it makes plantations easier to manage. One variety of plant has all the same needs in terms of production, harvest, processing, and transportation. In the past, the Gros Michel variety dominated the banana market between the 1890s-1960s, but due to monoculture practices and the introduction of fungal root disease a stronger genetic variety, the Cavendish banana, replaced it. By 1965 the Gros Michel was replaced officially by the Cavendish variety.