The last global crisis appeared in the second half of 2008 and has yet to reach its end. There is a slight recovery in 2010 but negative conditions flare up again in 2011; the world crisis itself has not yet bottomed out in Western Europe. Currently, this continent appears as the "epicentre" of the crisis. Continue reading the full document.

The Ten Main Characteristics of the Trade Relationship between Ecuador and the Netherlands

The trade relationship between Ecuador and the Netherlands has intensified and experienced significant achievements since the end of the Second World War. After several decades, trade between the two countries has been defined by the following ten characteristics:

1. The Netherlands is situated amongst Ecuador’s ten most important trading partners in terms of exports and imports;
2. In terms of exports and imports, the Netherlands is located in the tenth position. However, when the same parameters are observed from the position of the TB, it is possible to see that the Netherlands occupies the sixth position, in general, and the second position in Western Europe;
3. The exports from Ecuador to the Netherlands are continuously increasing during the period of analysis 2007-2011;
4. The imports from the Netherlands to Ecuador appear relatively constant;
5. As a result of the two aforementioned processes, the TB always favours Ecuador, including during the most difficult moments of the crisis that started in 2008;
6. During the period of analysis, the TB, both increasing and favouring Ecuador, passes from the third to the second most important in Western Europe;
7. The Netherlands imports the most cocoa, passion fruit and flowers from Ecuador;
8. Ecuador is the largest exporter of bananas, passion fruit and the second largest exporter of roses in the world;
9. The amount of trade of various Ecuadorian products with the Netherlands is highly significant: cocoa (≃100´ USD), passion fruit (≃80´ USD’, flowers (≃60´ USD), tuna (≃30´ USD), and coffee (≃12´ USD), amongst others. The relevance of this characteristic is the fact that it involves, to a large extent, fair trade with small and medium-sized Ecuadorian producers and, as such, is first in line in the battle against poverty;
10. The world is experiencing a growth in the promotion of fair trade and the Netherlands has become one of its leading promoters. Continue reading the full document.

The Netherlands: Ecuador’s Port of Entry to Europe

Though the research has yet to be completed, it is already possible to come to some important conclusions regarding trade between Ecuador and the Netherlands. The Netherlands, from the point of view of trade with Ecuador, acts in such a way that it imports Ecuadorian goods in order to re-export them with an added-value, more in some cases than in others.

This is visible, for example, in the flower and, more particularly, rose industry. In the trade platforms in which flowers are received in order to be re-sent to other countries or left in the Dutch market, it has been reported that no more than five percent stays in the Netherlands, while the rest go to countries such as Germany, Belgium, France, Switzerland, etc. Trade in cocoa could fall along these same lines; when the exports from Ecuador to the Netherlands are analysed it is possible to see that cocoa imports are re-exported in the form of chocolate and other materials. These trends will be studied further on. Continue reading the full document.

If the Netherlands acts as a port of entry for trade with Europe, this confirms an age-old Dutch tradition that is derived from as far back as the 16th century, in which Amsterdam becomes the hegemonic centre of global trade due to its ability, among other things, to manage international trade (Braudel, 1979). However, this port of entry has mutated in that it has moved from Amsterdam to Rotterdam, constituting the latter as one of the largest modern ports in the world. Continue reading the full document.

The Products that the Netherlands Imports from Ecuador

Close to a dozen Ecuadorian products constitute around 95 percent of all the exports to the Netherlands today. We have divided these into two groups: Refractory Products to the Crisis or Resistant to the Crisis (RPC) and Non-refractory Products to the Crisis (NRPC). Among the first group, the products whose exports have not decreased, despite the crisis in the second half of 2008, such as the cases of cocoa and its derivatives, passion fruit, banana and fruit products.

Among this first group there is also a subgroup composed of fresh and dried flowers and roses, shrimp and palm oil, products whose exports are suffering a decrease, due to other non-crisis related factors, explained further on.

Those products that have been affected by the current crisis have been associated with the second group. In other words, the amount of Ecuadorian exports has decreased significantly in relation to the crisis that began in 2008. Among these products are tuna, cauliflower and broccoli, coffee and crustaceans. Continue reading the full document.

The Refractory Products to the Crisis

Cocoa, passion fruit, banana and other fruit products are located in this first group. In all of these cases, an increase in exports has been noted despite the crisis. Also applicable to this group are flowers, due to the fact that in 2008, despite the crisis, their exports also increased; however, in 2009 their exports dropped, due to other factors to be analysed further on.

Cocoa and its derivatives lead this group, as can be seen in Figure 5 (RPC). Since 2007, their exports, starting from 50’ USD, have almost doubled, looking to surpass the 100’ USD mark. During the years of the crisis, 2008-2010, this growth remains steady, reflecting the fact that, despite times of crisis, Europeans “will give up many things but not chocolate”.
From the point of view of global supply, a stable production with close to 3.613 million tonnes in 2009/2010 hides different tendencies in the different producer regions. Production decreased by 60.000 tonnes (or more than 2 percent) in Africa, until it reached 2.458 million tonnes, while in the Americas, Asia and Oceania, it increased by 34000, reaching 522000 and 633000 tonnes, respectively. Nevertheless, Africa remains in its position as the primary cocoa-producing region, with a quota of 68 percent of world production in 2009/2010, followed by Asia and Oceania, with 18 percent, and the Americas, with 14 percent of world production, where Ecuador is the primary producer. Continue reading the full document.

 

Relatively new on the world market, passion fruit is a product that is perceived as being exotic in the markets where it has experienced increasing popularity in the last few years, as a result of various characteristics that allow it to compete with other fruits. The fruit is characterized by its intense flavour and high acidity level, which facilitate its use in industrialized drinks.
Passion fruit is used in order to produce pulps, sweets, nectars, jelly, marmalade and concentrates. Its juice can be industrialized in order to produce creams, crystallized sweets, ice cream, liquor, candy, jelly, marmalade, drinks and concentrates. The skin or shell is used in Brazil in order to prepare cattle rations, due to its richness of amino-acids, proteins, carbohydrates and pectin, the latter can also be used in order to give a jelly-like consistency to gelatines. Continue reading the full document.

Globally, around 44000 million dollars are derived from the consumption of flowers and plants. The most cultivated and sold flowers are cut, while flowering plants and potted greens are found in second place (HDT, 2007). The most important flows of flowers, in terms of intercontinental trade, are the routes from South and Central America to North America and Europe, as well as the Middle East and Africa to Europe; in other words, from “developing” countries towards industrialized ones. Nevertheless, markets are increasing in countries like Mexico, South Korea and in Eastern Europe, among others. Continue reading the full document.

The Pre-eminence of the Netherlands within Flower Production and Trade

Only three countries have control of half of global flower production. The main flower producers are the Netherlands, the United States and Japan. The Netherlands is the number one exporter of cut flowers and dominated 85 percent of this export market in the European Union. This tendency is the result of several factors: 1) high investments in research and development, 2) advanced distribution and logistics systems, 3) a system of auctions that concentrates production and sales of flowers at the global level, determining their prices (ibid).

In the European Union, flowers predominately pass through Dutch ports of entry. The Dutch auctions are the epicentre of the European flower market; between 75 and 80 percent of all flowers sold in these auctions are domestically produced (Navas, 2004). Floraholland is the largest auctioneer in the country and one of the most important in the world. Around 2000 million Euros pass through this auction annually, where close to 7800 producers and 4000 buyers meet. Continue reading the full document.

Ecuadorian Roses, First Among the Global Competition

In Ecuador, there are at least 275 rose producers, harvesting a surface of close to 2500 hectares, annually. Globally, Ecuador exports the most roses. Its rose industry employs approximately 76 thousand Ecuadorians. According to the Ministry of Agriculture and Livestock (MAGAP, 2011), during the period from 2005-2008, rose exports increased by 88 percent. Continue reading the full document.

Global Demand for Roses

The most important markets for Ecuadorian roses are the United States, Russia, the Netherlands, Italy and Spain. Continue reading the full document.

Rose Prices

According to MAGAP, “international rose prices, and flowers in general, act in a cyclical manner, the highest recorded month of sales is February, coinciding with Valentine’s Day”. Other indicated factors include annual fluctuations in global demand, exchange rates, rose prices in the United States and the capacity of domestic flower producers. In Ecuador, FOB price cycles, per metric tonne, linked to international price tendencies, have been noted during the period from 2005 to 2009. Continue reading the full document.

Flowers and Roses: Ecuador and the Netherlands

Of all the flowers exported from Ecuador to the Netherlands, roses represent between 40 and 80 percent of the total (see below figure). Though the gypsophila flower represents an increasingly important trade product between both countries, roses remain the most important flower. When the following figures are observed, it is possible to note that rose exports to the Netherlands drop from 2009 until 2010, after which there is a slight increase in 2011. Regardless of the drop in exports during 2010, if the export behaviour witnessed during the first half of 2011 remains steady, total exports for 2011 could surpass those of 2010, reaching up to 80 million USD. Only five percent of the flowers originating from Ecuador are sold in the flower shops of the Netherlands. Ninety-five percent are destined for other European markets. Continue reading the full document.