Ecuador October 2019

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Ecuador October 2019

As many of you have heard, there are strikes going on in Ecuador. In a nutshell the government has been subsidizing the cost of fuel giving a false economy to millions of people and businesses. Politicians will promise anything to get elected and as this always happens (Think Venezuela, Egypt, Greece, etc) the government finally runs out of other peoples money and is forced to stop the giveaway. So now gas goes up 30% effecting taxis, commuters and diesel goes up 50% killing businesses especially truckers and buses. The city is at a standstill. We've seen this a half dozen times since the 90's where workers go on strike and hold the city hostage.

Strikes can last a few days or several weeks. These strikes are not like US strikes, they are much more invasive and include piles of burning tires in the road at strategic intersections to interfere as much as possible with travel patterns and to stop drivers ignoring the strike. There are currently protests at the Presidential palace and protesters are throwing rocks and police are throwing tear gas. It's an ugly situation.

What does this mean for flowers? There are two likely impacts from the strike and removal of government subsidies.

First, the strike. For the short term starting yesterday the flights from Ecuador are going to be few if any. Growers cannot get flowers to the airport because the roads are blocked. The new airport in Quito is outside of town, backed up against a mountain with 2 main roads coming into it from South and North. These are being blocked by protesters in an effort to disrupt business.

I had the pleasure of being a business owner in Ecuador in the 90's and saw several strikes with one extended strike at Valentines of all times. We all expected this to be over before we got to Valentines but as the shipping period began we couldn't move the flowers. Growers banded together and hired helicopters to fly flowers from the different regions directly to the airport flying over all the road blockades and protests. As you can image this was expensive and carried very few boxes compared to trucks. Another week passed and with much lobbying of the government we were able to get the military to bring in tanks and big trucks to escort flower trucks in the middle of the night. The military pushed through to the airport running over burning tires and clearing the way for growers and trucking companies. The alternative was for growers to lose all their Valentines crops and that outcome would have devastated the industry. So this could be over by Monday or could last a few weeks. We will be watching.

The second likely effect of this move by government and protesters will be the massive increase in fuel. Costs will skyrocket and growers will be forced to pass along this expense to it's customers. If you have a standing order on Ecuadorian roses you can expect a fuel surcharge on every invoice to cover this cost. There will be a trickle up effect that will go all the way to the florist and end consumer. Many people will move to Colombian roses but the increased demand will cause Colombians to increase their prices and ultimately there will be nowhere to hide. The cost of doing business IS going up.

The good news is that life will go on, there will likely be some sort of a concession by government in Ecuador to slowly reduce subsidizes which will stop the strikes and slowly introduce the cost increases over time. But, this is Ecuador so who knows? we will wait and see. This is the unfortunate side of working in under developed countries where politicians offer free, free and free benefits to people and business that the country cannot afford. The day of reckoning always comes.

We at Manatee Farms will do our best to work through these challenges as we do everyday and we will do our best to keep you updated as developments arise. It's a great day and age to be in the floral industry, we will just keep bringing smiles to customers faces one flower at a time.

 

 

 

 

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  • Robert Mclaughlin