Analysis of the banana industry in ecuador

Abstract
The banana is the most desired fruit, after citric fruits, in the food market. There are five companies that control this industry most of them being multinational companies. In the case of Ecuador, there are two big national companies that control this industry in this country, that have a substantial market share not only in Ecuador, but also in the world. In today’s world, wherepeople want to eat healthier, they are demanding organic produce and this includes the banana. This has offered an opportunity for small farmers to sell their product without the interference of large banana exporting companies, with the help of Fair Trade who gives them this chance. The most important markets for the banana are Europe and the United States, and are highly competitive markets. Ecuadorrepresents 26% of international trade of banana being the leader of the banana exporting countries. The banana industry in Ecuador may have some problems, but overall, it is an industry that generates more employment for more than 500,000 families in Ecuador and provides an important source of income for the country.
Introduction
The banana is one of the most well sold food products in theworld; it is actually the 4th most important crop after rice, wheat and maize. It is one of the most desired products in a supermarket. This might have different reason like the banana is rich in “good” carbohydrates, phosphorus, calcium, potassium and vitamin C. It is also a very sweet fruit, with a wonderful taste and texture that leaves a sensation of satisfaction and fullness. This is the reasonwhy the supermarkets place the banana at the back, so that people have to look for it and in the way they find other fruits and vegetables that they might be interested in buying. “Bananas are the single biggest profit making item sold in British supermarkets and over the last few years supermarkets have become the most powerful actors along the international banana supply chain” (Banana Link,2004). In 1988 Ecuador exports represented 22% of world trade and that percentage went up to 37% by 1997. Apparent per capita consumption of conventional bananas was recorded as an upward trend; in the 2001 the per capita consumption stood at 11.1 kg versus 9.4 kg in 1992. The European Union has the highest consumption of organic bananas (mainly United Kingdom, Germany, France and Italy), coveringmore than 50% of the market. Other important markets are U.S. whose growth rate has exceeded 20% annually; and Canada, where bananas is the most popular fruit; these countries together account for 90% of global demand. The increase in consumption in the European Union is due to significant investments in distribution for organic food chains in UK supermarkets. Although consumers consider the productas a luxury, the demand far exceeds supply.
Ecuador is the largest exporter of banana in the world, and it is one of most important industries for the country. This industry provides many jobs in this country, “The banana industry now employs over 500,000 families, representing just under 10% of the economically active population” (Hellin & Higman 2001, p.9). After petroleum, the banana isthe second most important source of income in the country. Ecuador was not always such the greatest banana exporter; in fact, the cacao was the number one export before the 1940s. It was during the 1950s that Ecuador gained territory in the industry and started exporting to more countries. Before this, around the 1930s Ecuador was only a support exporter of banana, behind Jamaica, Mexico andHonduras. Luck changed for those countries due to intense hurricane and disease that attacked their plantations and put them behind the race, giving Ecuador a golden opportunity to gain market share and become the world’s leader in this fruit’s export, with Costa Rica and Colombia the main competitor (graph 1.1). By 1955, Ecuador had gained 20% of the world’s trade, solidifying its prime position. The...