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GIEWS Country Brief Ecuador 15-June-2022

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Ecuador
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FAO
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FOOD SECURITY SNAPSHOT

Harvest of 2022 main season maize and paddy crops ongoing

Cereal import requirements forecast slightly above average in 2022/23 marketing year

Cereal prices higher year on year in May 2022

Impacts of high international prices of fertilizers on crop production and food security

Harvest of 2022 main season maize and paddy crops ongoing

Harvesting of the 2022 main season maize and paddy crops is ongoing under favourable weather conditions. Production is anticipated at slightly a below‑average level as high production costs constrained the initial farmers' intention to increase the planted area, which had resulted from higher year-on-year producer prices at planting time. Prices of agricultural inputs rose sharply in the second half of 2021 and continued to rise during the first four months of 2022. In April 2022, prices of fertilizers were more than double compared to a year earlier, while prices of herbicides increased by about 30 percent. Yields are expected to be below average, reflecting low precipitation amounts last February in key producing provinces of Guayas and Los Rios. In addition, a fungal disease called tar spot (mancha de asfalto) reportedly affected maize crops, with negative effects on yields.

Planting operations of the mostly irrigated minor maize and paddy crops are underway. Precipitation amounts are forecast at average levels in the June‑August period, boosting yield prospects. The government decided to increase the purchasing prices of yellow maize and paddy crops by 7 and 8 percent, respectively, year on year. However, given the very high production costs, it is not guaranteed that this measure could prompt an increase in plantings.

Cereal import requirements forecast slightly above average in 2022/23 marketing year

Cereal import requirements, mostly wheat grain, are forecast at a slightly above‑average level of 1.53 million tonnes in the 2022/23 marketing year (July/June). However, high international prices of cereals may constrain the expected increase in imports, which were at above‑average levels between 2019 and 2021. The high import needs mainly reflect strong domestic demand for wheat for food and feed use, especially by shrimp and poultry farming.

Cereal prices higher year on year in May 2022

After being stable during the first four months of 2022, prices of yellow maize rose in May despite the ongoing harvest. They were more than 10 percent higher year on year in the key producing Manabí Province, reflecting elevated production costs.

Prices of wheat flour in May were 20 percent above year‑earlier levels. This is mainly due to high wheat prices in Canada and the United States of America, the country's main wheat suppliers, where the 2021 production was below average on account of unfavourable weather conditions. The conflict in Ukraine has exacerbated the increase in international wheat prices since February 2022.

Wholesale prices of rice have been increasing since last January, following increasing production costs. As of May, they were 20 percent higher than a year earlier, when abundant harvests kept prices at low levels.

Impacts of high international prices of fertilizers on crop production and food security

During the 2019‑2021 period, the country's half of total fertilizers imports originated from the Russian Federation and China (mainland). The upsurge of international prices of fertilizers, stemming from increasing prices of natural gas (the key input for production of fertilizers) and export restrictions introduced by major exporters, contributed to the rise in prices of agricultural inputs in domestic markets. The high prices of fertilizers may induce farmers to reduce their application rates, resulting in low yields of cereal and horticultural crops. As the country is a net food exporter, a decrease in agricultural production could curb farming households' income‑generating opportunities.

Inflation is generally lower than the regional average, with the country's annual inflation rate of food items at 4 percent May. This is due to the government's subsidies on regular gasoline and diesel, which has been fixed at USD 2.55 and USD 1.9/gallon since October 2021 . The expected higher export revenue, supported by elevated international prices of petroleum, are likely to be directed in part to cover subsidies on these products.