Revealing the trading costs of the ecuatorian banana market

Description: Ecuador is the largest banana exporter in the world. Since the seventies, Ecuadorian banana supply continues to meet demand in Europe, Asia and large portions of North America as well as in its domestic market. Distribution costs vary greatly with fluctuations often benefitting mainly the intermediaries rather than the producers. This study follows Ecuadorian bananas along the production chain, focusing on the trading costs observed in international and domestic environments, aiming to determine the existence of any relation between them as well as the factors that may originate cost disparities. The analysis assumes that price variations are due to market dynamics rather than differences in the quality and the variety of the product. While there is a clear relation between marginal costs and distance, the results suggest that trader and intermediary market power may also play an important role in destination wholesale prices overall.

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