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Ecuador’s exports expected to grow market share in 2021

Published on June 08, 2021

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In 2020, several Ecuadorian companies were able to export to the United States for the first time. Non-traditional products such as dragon fruit and ginger performed well in the international market.

Exports of goods and services from Ecuador had a fall of 2.1 percent in 2020. However, bananas, coffee, cocoa and fish presented a positive performance, likewise, certain non-traditional products showed an interesting behavior in different destinations. The Ecuadorian pitahaya, for example, registered an export volume of 13,443 metric tons (MT) last year.

According to data from the Ministry of Agriculture and Livestock (MAG), the main destinations for dragon fruit, as it is also known, were: the United States, Hong Kong and Singapore. From January to April 11 of this year, more than 5,000 MT were exported.

With regard to ginger, the MAG indicates that in 2020 the shipments of the root registered a growth of $3.6 million and at least 35 Ecuadorian exporters took the product to nine countries, the number one destination being the United States, followed by Colombia, the Netherlands and the European Union.

“Ecuador is experiencing great changes and developments in the production, commercialization and export processes in the national and international market, due to the increase in external demand for agricultural products, mainly ginger, which has a great appreciation in the international market for its multiple uses, in the food, cosmetic and medicine sectors,” reported the Ministry.

Finished products also had a space in the country’s exports. That was the case with Scrim fiberglass fabrics from Poligrup, the company focused on the manufacture of plastics and textiles managed to introduce its product in the US market.

Felipe Costa, Commercial Manager, explained that these fabrics present a high degree of innovation and are designed to comply with international standards since the composites industry requires high precision and versatility. Scrim fabrics are laminated directly onto balsa and / or PET / PVC foam panels and conform to various shapes, which is why they are used in the preparation of blades in the construction of windmills.

Currently, Poligrup is working on new developments for the composites industry, for automotive, aeronautical production and assembly lines and other means of transportation. As well as in the creation of products for wind energy and fabrics for light construction.

Dairy products to pick up market share

Another company that targeted the US market was Mondel. This gourmet cheese producer from Carchi exported the first shipment of its Andean Blue cheese in October last year, with a shipment of 190 portions. The pandemic prompted this Ecuadorian industry to turn its gaze to the United States. To get there, it registered with the Food and Drug Administration (FDA), approved the sanitary requirements with APHISUSDA and created an office in Florida to import the product.

Its General Manager, Jaime Erazo, pointed out that currently the blue cheese market in the North American country is very competitive, but he is convinced of the potential and value proposition that Andean Blue offers.

“The milk for our products is obtained from small producers with scarce resources, the cows consume a natural pasture, a forage of ryegrass, clover, plantain and wildflowers that give our product added value,” he said.

Erazo explains that the 2020 export was a pilot plan to ensure the process, start the search for distributors and place the products in certain stores. Mondel subsequently made express shipments of 12 blocks of 32 kilos and 120 servings of Andean Blue to several gourmet restaurants in the United States.

At the moment it is consolidating a large order for the Warehouse Store distributor, for which it is following the certification processes to become a supplier—the first shipment is expected to go out this month.

Today this industry processes about 3,000 liters of milk per day. Exports are expected to triple this volume.

The traditional Helados Salcedo, originally from Cotopaxi, also ventured into the US market. The company PROALBAC Productos Alimenticios made three shipments to the country in 2019 with a total of 162,312 containers of ice cream (130 grams).

In April this year, 47,016 more units were shipped. Its owner, Juan Carlos Balseca, says that the process of bringing the product to the United States began with the contact of a client from New York, who carried out a market study to see the commercial feasibility. Upon seeing the favorable results, the approval procedures for this product began through the Animal and Plant Health Inspection Service (APHIS) and in Ecuador with Agrocalidad.

“The product was initially well received by Ecuadorian New York residents, who relived great emotions by consuming something traditional from our country. The market expanded to include Latino people from other states, providing sources of work for Ecuadorian families that are already marketing it in Chicago and Boston; to enter several supermarkets, a Tri Pack presentation and a mix of flavors were created,” he said.

Helados Salcedo is also in the process of being approved to enter Chile and in negotiations with Spain. Recently, the brand renewed its packaging and will launch new presentations and flavors, as well as implementing certifications to its processes.

Its daily production is variable; national consumption is about 3,000 units, while for export up to 6,000 units are produced.

Ecuador foresees a GDP recovery in 2021 of 2.8%

The Central Bank of Ecuador forecasts that the country’s Gross Domestic Product (GDP) will grow by 2.8% year- on- year this year, after a severe fall in 2020 equivalent to 7.8 points.

“The Gross Domestic Product for the year 2021 is expected to register a year-on-year growth of 2.8%, a GDP of 68,135 million dollars in constant values,” the entity says in a statement.

Among the main positive developments that would boost economic productivity, and that would contribute to this positive performance, are “the continuity of the IMF program” and “the economic growth of the main world economies.”

The main regional and international organizations contributed some $7.5 billion to Ecuador last year and the IMF still has to deliver another $2.5 billion within a 27-month plan.

The ECB also takes into account the reactivation of the main world economies, including China (8.4%) and the United States (6.4%), which in the latter case is expected to encourage growth in the arrival of foreign currency through remittances, as well as from Spain and Italy.

Likewise, its growth prospects are encouraged by the expectation of a “generalized vaccination” of the population against Covid-19, which the new government of Guillermo Lasso considers an unavoidable recipe for solving the country’s economic problems.

Lasso, who began his duties on May 24, aims to have nine million people vaccinated in the first hundred days of government, that is until August 31.

The growth data provided by the ECB are consistent with the latest forecasts by the IMF, which last April revised down its projection on the Ecuadorian economy for 2021, from 4.8% expected in December to 2.5%.

Oil revenue expected to increase

In its statement, the Central Bank also indicates as a favorable factor that after the average export price of Ecuadorian crude in 2020 stood at $35.62 per barrel, about $20 less than in 2019, “by 2021 it presents an expectation of recovery in the international price of oil associated with the OPEC + alliance.”

Regarding internal factors, the Bank expects greater domestic consumption with the execution of various plans to help the family economy, some of which also depend on external cooperation programs, and tourism.

In this way, a positive variation of 2.1% is expected in household consumption compared to 2020.

Ecuador has been one of the countries in the region that has suffered the most from the pandemic because it caught it without reserves and with an unprecedented fiscal hole.

And although a contraction of 11% of GDP was predicted in 2020, it was finally contained to 7.8% thanks to a slight recovery in macroeconomic activity in the last quarter, ending on December 31st at $66 billion dollars.

Imports and exports expected to rise

For 2021, the Central Bank also foresees a recovery of imports, 3.3%, and of exports, 2.8%.

In addition to oil, the main export product, Ecuador hopes to boost the sale of metallic and non-metallic minerals, bananas and plantains, processed shrimp, cocoa beans and other products.

As positive data there is also a reduction of 0.03% in the government’s administrative expenses “mainly due to the cut in wages and salaries, and the purchase of goods and services,” said the Bank.

Regarding investment, on which Ecuador depends to reactivate crucial sectors, a growth of 1% is expected in 2021 compared to the previous period.

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