Ecuador has been suffering the worst drought in six decades, along with devastating forests fires, which have affected more than 40,000 hectares of various crops, including the farms producing Abacá fiber located in the town of Monterrey 1 inside Province of Santo Domingo.
The dry summer season in Ecuador has lasted for months longer than usual, creating critical conditions that have restricted the supply of watering and prolonged power outages up to 16 hours a day. During COP16, the UN warns that this will be “the new normal” due to the effects of climate change 2 .
How will this affect global production of Abaca? Ecuador is a producer of Abaca fiber of one third of the world’s production. Low international prices and instability in fiber purchases by factories, added to the fact that Abaca is a crop that demands a significant amount of water for its optimal production, is causing producers to abandon the crop for others such as cocoa due to its good grain prices 3 .
Important facts
Three factors are combining to create a perfect storm: The drought will cause a 25% reduction in the normal production rate of Abacá fiber from January to July due to lack of rain and water for irrigation. On the other hand, power outages cause restrictions in the work day. Several companies are preparing to secure fiber stocks in the event of a shortage of the product and prices are being negotiated above $2,300.00 USD per metric ton of Abacá fiber.
Panama is a nearby country that suffers the same climatic effects of drought as Ecuador and is the main trade route to the Atlantic from the ports of Ecuador in the Pacific Ocean. There is no certainty that the climatic conditions will improve to avoid the restrictions on the passage of ships that will continue until 2025, as predicted by the authorities of the Panama Canal administration, through which all the containers of Abacá fiber pass to the European Atlantic 4 .
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