What does the war in Ukraine have to do with the price of bananas in Ecuador?
It sounds like a joke, but it’s not. Although Ukraine is not a major market for Ecuadorean bananas, Russia is. In 2019, a larger percentage of Ecuadorean banana exports went to Russia than to the United States.
In 2019, Russia accounted for 18.9 percent of Ecuadorean banana exports, with a value of $649 million out of a total of $3.43 billion in exports. The United States, by contrast accounted for 14.1 percent of exports, with a value of $484 million.
Last year’s figures, cited by Bloomberg, were $699 million, a growth of 4 percent in value and 6 percent in volume over the previous year.
This contrasts with the total export figure for the nation in 2021, which was $3.485 billion, 5 percent lower in value and 3 percent lower in volume than in 2020.
As a result, the war is convulsing Ecuador’s banana industry.
Last week, some 765,000 boxes of bananas were at risk of not being transported, not because of sanctions, but because the ruble’s collapse in value means that Russia can no longer pay for them.
Furthermore, many shipments already en route to Russia and Ukraine could not be unloaded.
Interestingly, there is practically no domestic market for bananas in Ecuador, home to about 17 million residents. Practically the entire crop is grown for export.
One proposal for alleviating the situation would be a levy of 5 cents per box of Ecuadorean bananas marketed. This money would be used to buy fruit from small farmers (those with less than 30 hectares) to prevent oversupply.
Last year, before the war had broken out, Ecuador and the Eurasian Economic Union (EAEU) had been pursuing negotiations for improved trade relations.
The EAEU consists of an integrated market including Russia, Armenia, Kazakhstan, Kyrgyzstan, and Belarus.
The war in Ukraine follows upon the coronavirus pandemic, and these two crises have highlighted both the power and intricacy of world trade.
Nations have learned exactly how much their economies depend upon one another. They still have to decide how much they want to do so in the future.