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A Special International Report Prepared by
The Washington Times Advertising Department - Published on April 21, 1999
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Traditional products
A meal in Ecuador can be a gourmet's fantasy. Working with the freshest ingredients, the best chef can create a masterpiece from soup to dessert - appetizers of blue crab and ceviche, main courses of succulent shrimp and luscious chocolate desserts or a cocktail of fresh fruits, such as bananas, mangos and strawberries. And, at the centerpiece, a dozen beautiful roses. In the international marketplace, Ecuador's traditional products - bananas, shrimp, flowers and cocoa - are readily available and have solid reputations.
Since the 1950's, Ecuador has been the world's leading exporter of bananas. Today, the country is a partner with the United States in a banana dispute against the European Union that has been tarnishing international relations for over five years. The history of the banana dispute goes back to 1993, when the European Union (EU) began to put into place a regime that discriminated against United States and Latin American interests. According to the United States Trade Representative (USTR), during this time the EU converted growing and open markets in the majority of member states to a single, closed market. A lower duty was levied on the former colonies in Africa and the Caribbean (ACP countries) than on Latin American countries, and a quota was enacted that would restrict Latin America access while increasing historical shipments from the ACP countries. The USTR declared that this action violated the basic non-discrimination obligation of the General Agreements on Tariff and Trade (GATT). The Clinton Administration is upset because it says the EU will not comply with a World Trade Organization (WTO) ruling that stated the European system gave unfair market advantages to former colonies at the expense of banana giants, such as Dole and Chiquita, two leading companies who have business arrangements with Ecuadorian companies. As a result, last month the United States enforced 100 percent duties against certain European goods, including truffles and pate de fois gras. This transatlantic dispute worries Ecuadorian banana producers, since the fruit has a major social and economic impact on the country. Bananas account for 27 percent of all the country's exports, will have a total export value of $1.3 billion in 1999, employ 1.2 million people (around 10 percent of total population) and have accelerated the development of other complimentary industries (cardboard boxes, transport). "The EU needs to open its markets and the United States needs to continue to pressure them to avoid a precedent. For social and economic reasons, a country like Ecuador can not be permitted to be shutdown," insists Enrique Gomez, President of Conabam the National Association of Banana Producers.
Ecuador is the world's top exporter of cocoa for beverage and confectionery use. About 837,000 acres are devoted to the growing of cocoa, which is then sold as beans, liquor or powder. Fine chocolate makers around the world crave Ecuador's distinctive aromatic cocoa and use it to make some of the world's best milk and dark chocolate. Cocoa production is a highly technical industry that has experienced a recent upsurge in popularity. "Many years ago, people began to leave cocoa and started growing bananas. One hectare (about two acres) produced only about 600 pounds. Today, new varieties, genetic studies and advanced technology have increased that capacity to two tons per hectare," explains Eduardo Crespo, President of the Association of Producers of Fine and Aromatic Cocoa. The cocoa industry has many challenges ahead as Ecuador's fifth largest income earner, after bananas, shrimp, fish and flowers. First, growth depends on world demand and commodity prices on the New York and London commodity exchanges, explains Crespo. Demand has significantly decreased in Russia because of economic problems. In the meantime, supply remains too high, which has led to the fall of prices from a peak of $4,000 per ton in 1972 to the current $1,300 per ton in 1999. Crespo believes that a price of $1,800 is realistic, as long as new technology continues to improve productivity. "Cocoa can be a long lasting, competitive industry," says Jose Carvajal Candell, President of Anacacao, the National Association of Cocoa Exporters. Not only is it an alternative to the production of coca leaves, but it is important for the many small farmers who are involved in the production of national (non-aromatic) cocoa.
With warm sunlit days, cool nights and rich soil, Ecuador has become a country known for flowers. Competitive advantages that stem from climate and geography, along with technology and good infrastructure assure that Ecuador's roses are highly valued and win prizes in international competitions. According to Expoflores, about 100 varieties of roses are commercially grown in Ecuador. Red, yellow, pink, purple and even black varieties are much sought after. Although roses are the predominant flowers, growth in the industry has led to diversification. About 100 other ornamental flowers, including Baby's Breath, sunflowers, daisies, carnations and other summer bloomers and non-native species, are grown. Galo Montano, Executive President of Expoflores, says that Ecuador is working hard to create new varieties and new presentations. "We want to differentiate ourselves from the competition (mainly Colombia and Holland) by being the best in the world," he says. The Washington, D.C. area can look forward to better access to these flowers. Exploflores is working with the Baltimore Washington International Airport to receive air shipments of these colorful flowers.
Ecuador is the largest source of farmed shrimp and prawns in the Western Hemisphere and ranks as the second largest producer in the world. Most shrimp is exported raw, frozen with the head and tail on. However, the United States and Japanese markets prefer the higher value added tail off, breaded, or peeled and shell-on shrimp that have been cooked and individually quick-frozen. This style is often sold in supermarket shrimp rings, says Antonio Pino Gomez, General Manager of Promarisco, a company that had $75 million in sales last year. As Ecuador shrimp faces the challenge of cheaper shrimp from Asia, it also has to worry about environmental issues. "We have very strong concerns about the environment. In the past mangroves were cut down, but this method has changed. The Chamber of Aquaculture has allocated money to plant mangroves," explains Alberto Maspons, President of El Rosario and former Ambassador from Ecuador to Washington, D.C. Twenty percent of Ecuador's coastal population is involved in the shrimp and aquaculture industry. According to Cristobal Verduga, of Cristobal Verduga, massive investments ($1.5 billion) have been made in this industry. However, without long term loans at lower interest rates, further development will be hampered by a lack of access to high technology, explains Verduga. In the meantime, companies such as Vanoni will continue to compete by improving quality. Verduga plans to study and manage their aquacultures to ensure that production will be environmentally friendly and sustainable. All companies will continue to look at new, value added products that will attract the customer, while promoting the quality of Ecuador shrimp. Ministries improving productivity The Minister of Agriculture and Farming, Emilio Gallardo, is working with small farmers to help them become more competitive. "Without technology we can't run the global marathon. We need to get our products into the marketplace," he says. The Ministry is trying to get farmers and the government to become more entrepreneurial. "We are re-thinking agricultural policy and requesting more private sector participation in the decision-making process." Hector Plaza, Minister of Exterior Commerce, Industrialization and Fishing, sees many opportunities in Ecuador for companies that want to get involved in agroindustry. "Our peninsula has lots of empty space and miraculous illumination which helps us grow a wide variety of products." "We should forget about oil. Our most important structural reforms will be in the productive sector," concludes Gallardo. "Our economy can get stronger." |
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Table of Contents (1) President Mahuad announces new economic plan |
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Bountiful bananas
Choice cocoa
Fantastic flowers
Succulent shrimp