2021-22 Season update – October 2021

By Jen Scoular

The avocado industry is a third of the way through a very challenging export season, with a fragile domestic market. From the supply side the industry is looking very good, orchards have produced well with similar volumes to last year, the size profile has returned to normal from a very small size profile last year, and quality is good. Export pack out rates are good and the trees are looking healthy as flowering arrives to set next year’s crop.

But that is nearly the end of the good news. One exporter reported recently that not one vessel they had a container of avocados on has left on schedule so far this season. Late arrivals, changes of schedule and late departures are the daily issues being managed at an exporter level. Avocados are harvested to meet vessel departures so changes to the departure timing, or worse still, changes in destination of the vessel are felt by the exporter, the packer who is clearing orchards to be harvested and of course the grower harvesting their avocados.

The New Zealand market experienced very high supply early in the season, deflating returns for the grower to levels we haven’t seen in a decade. The positive impact is that avocados are very good value for the consumer right now. Nielson data tells us that 69% of kiwi households buy avocados, so this is the year we need to share the message more widely to increase demand and attract the 30% who haven’t until now made avocados part of their weekly shop. Hopefully the warmer sunshine means the start of barbeque weather, and who can have a barbeque without some guac, some avocado on the salad and a trendy avocado moose or cheesecake for dessert?

There is a lot of discussion across the industry – does a much lower return mean we cut investment into the industry, to give growers a break from levies? Our calculations show that a 20% reduction in levies might save the grower $200 per hectare. But if that grower implemented best practice to increase productivity by 20%, they increase their bottom line by $2,000. Those who have been in the industry a while are treating this year as a challenging one, but acknowledge horticulture comes with risks, and they have had a number of very good returns over the past ten years, and are focusing on a healthy crop for 2022-23.

We are hearing blame appointed to different parties around the industry for the significant amount of new avocado plantings which are starting to place additional pressure on markets. Quite simply, strong investment growers have made into the industry over more than twenty years has built the industry into a more attractive option for investors. Grower investment has gone into industry systems, market access and development, research, biosecurity and a collaborative supply chain, with mandatory industry wide systems adds to industry robustness. Packers and marketers have increased capability, invested and innovated to improve the value chain to support the delivery of quality avocados to our consumers. It’s that industry strength and the returns available that has attracted new production. Horticulture isn’t for the risk averse. There are wonderful opportunities but there will always be down years, pests or market issues. The best value we can add right now is to maintain the investment to ensure that all future crops of avocados have willing consumers eagerly awaiting their arrival in a market.