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Technological innovation drives food production industry forward

Article - March 8, 2016

The food export industry has formed the backbone of the economy of Guayaquil, a thriving port town and Ecuador’s trading hub. The most important food products are bananas, cocoa and shrimp

Home to the nation’s largest port, Guayaquil has a long history. Between being the birthplace of the independence of the nation and its status today as an economic powerhouse, the city has always been a bastion of provincial and municipal autonomy and an example of progress for the rest of the country.

The port has had a large role to play in this story. Accounting for almost three-quarters of the country’s imports and half of its exports, it is extremely important to Ecuador’s economy. Three industries which provide the core of trade for the port of Guayaquil – forming part of the economic backbone to the country – are cocoa, shrimp and banana.

Ecuador is the fourth largest producer of cocoa in the world. The cocoa sector in the country has experienced sustained annual growth of 10% over the past decade, and is the third largest sector in the country’s agricultural export system, with a potential value of $700 million.

Guayaquil is where one of the best varieties of cocoa in the world was born, making Ecuador the world’s largest producer of high-quality cocoa. According to President of the National Association for Producers and Exporters of Cocoa (ANECACAO), Iván Ontaneda, the reason behind this is the importance of technology in Ecuadorian cocoa production. “Ecuador is the Silicon Valley of cocoa,” he says.

With the recent Ebola crisis damaging 60% of the largest cocoa plantations in the world, reducing world supply and pushing prices up from $2,800 to $3,500 per ton, Ecuador – which held the Third World Cocoa Summit in September – hopes to leverage these price increases. By 2020 the government plans attract more foreign investment in order to produce 450,000 tons of cocoa each year, which would make Ecuador the third largest producer worldwide, according to Mr. Ontaneda.

Shrimp is another example of Ecuador thriving at the high end of the market. The government recently launched the ‘First-class Shrimp’ campaign, which is based upon a strategy with emphasis on elite quality and green processes.

Thanks to growth mainly fueled in and around Guayaquil, shrimp production is forecasted to be up 25% at the end of this year, compared to year end 2014, according to projections by the National Chamber of Aquaculture (NCA).

“Ecuador has maintained sustained growth in recent years and this year is projected at 25% in production volume compared to 2014, going from 475 million pounds to about 540 million pounds in 2015,” says José Camposano, President of the NCA. Mr. Camposano adds that such growth is despite the fact that Ecuador has had to overcome a plague of white spot (a highly lethal and contagious shrimp virus).

Today, Ecuador’s shrimp is recognized amongst the best in the world, and the country has obtained quality certifications for sound environmental management from international organizations. “Ecuador certified the first shrimp farm in the world under the standards of the WWF (World Wide Fund for Nature) on aquaculture sustainability. We also received recognition that our shrimp output is of the highest quality,” explains Mr. Camposano.

The banana is one of the other symbolic products of Ecuador, with 30% of the world supply originating from the country. As a result, the yellow fruit has a huge role to play in the economic development of the country and will continue to do so for the coming years. Currently, in the whole country there are about 5000 smaller producers, and a total of 7500 producers. This figure does not take into account all the indirect jobs created by the processes of fertilization, fungicides, food, packagers, and all of the other industries that are forged around the banana industry.

The future of the banana trade in Ecuador makes for an interesting read – it is an industry that has recently enjoyed three years of growth, but at the same time, there is a contraction in terms of hectares. Indeed, there are fewer hectares today than there has been at any point in the past decade. However, this fact just shows the strength of technological innovation in the industry, much of which can be attributed to DOLE.

DOLE is one of the biggest food companies in South America. The company is heavily involved in the banana trade, and is one of the flagship companies of Ecuador, with the brand widely recognized as a global benchmark for quality.  In terms of exports, the company is in in several countries, with the United States, Europe and Russia accounting for 60% of total exports. The US is the biggest importer, with 45% of DOLE’s products ending up there, especially on the West Coast.

The only transnational company that has been permanently present in Ecuador, DOLE places high importance on corporate social responsibility within the country and has been the pioneer of the industry for many years. It has been integral in defeating a number of diseases in bananas, which have threatened the entire industry over the past half -entury.   It was also the first major exporter to use boxes to export the product rather than exporting them in bunches (which meant that the product often arrived damaged and bruised), which is now standard practice.

The company employs a very large technical team (indeed, the CEO Patricio Gutiérrez himself has a PHD in crop physiology) that is used to support producers.  As CEO, Mr. Gutiérrez, says, “Our approach has always been to offer our producers not only a contract, but also assistance. In this line of thinking, we have many reports of the progress of an irrigation system we developed, to give one example. Also, we were the first to bring irrigation to the country. There have been a number of technological advances that we have always tried to share with the industry. It is very important that, as the largest exporter, we have also tried to be a good corporate citizen.”

Dole is working closely with The Murdock Research Center of North Carolina, which is dedicated to finding out more about the beneficial effects of fruits and vegetables. One of the interesting things that has come out of the institute is that, based on extensive testing on athletes, bananas are a better source of fuel than energy drinks, with marathon runners consistently performing better after they have eaten the fruit.

As Mr. Gutiérrez explains, “It has been shown that in these conditions, eating a banana is much better than taking a Gatorade, not only because the energy component is higher but because the mix of nutrients that a banana has are unique.”

It is precisely this kind of passion for its product that makes this company stand out. Indeed, such innovative efforts have not gone unnoticed, and last year the company was nominated for a prize for corporate social responsibility from the U.S. Secretary of State John Kerry.

So what does the future hold for one of Ecuador’s flagship companies? “With these crops and the market how it is, five years is a lifetime. In this business you cannot see past six months – the markets are constantly changing,” says Mr. Gutiérrez.

One thing that is certain is that the cocoa, shrimp and banana markets look set to thrive with the help of innovative companies like DOLE, which in turn will enable Guayaquil to not only maintain, but expand its position as one of the most reputable food technology and food export hubs in Latin America.