Industry structure
The New Zealand avocado industry is valued at approximately $150m, being $100m in export sales and $50m from sales in the New Zealand market. 1,400 growers are active each season, but there are nearly 2,000 avocado properties registered with NZ Avocado. Approximately 7 million trays of avocados are produced annually from 4,000 planted hectares.
Avocados are exported by licenced exporters to 11 markets, and packed in 13 packing facilities.
NZ Avocado Growers’ Association Inc, NZAGA, is a member organisation for growers. All those growing or intending to grow avocados in New Zealand can become a member of NZAGA. To have voting rights in NZAGA a grower must have either a PPIN, a property identification number, which links to the QV of the property on which you are growing or intend to grow avocados, and/or you must have paid a commodity levy on your avocados, as the designated crop owner. Many orchard owners split the votes so one part of the couple is the “property owner” and gets the ordinary vote, and one party is the crop owner and gets the levy vote.
NZAGA is an incorporated society, agrees rules at its annual AGM and delegates most of its operational activity to NZ Avocado Industry Limited, which it owns outright.
The primary objectives of the NZAGA (as per the NZAGA Rules, 3.1) include:
- Promoting the sale and consumption of avocados, in NZ and overseas;
- Promote production of avocados in NZ and to foster and establish a closer bond of unity and co-operation amongst stakeholders;
- To establish and maintain an association of growers of avocados;
- To acquire knowledge that is of interest or practical service to members and to disseminate the same to all members;
- To collect and administer levies;
- To arrange, in relation to avocado production in NZ, R&D, promotion, market research, training, technology transfer, quality assurance, pest & disease control, planning, administration and any other approved purposes;
- To provide and raise funds for the purpose of the NZAGA
NZAGA is primarily funded via a Commodity Levy under the Commodity Levies Act. The industry is currently operating under the Commodity Levies (Avocados) Order 2019. Every six years avocado growers vote on the implementation of the Order. This sets the maximum levies that can be charged. The maximum levy for fresh fruit sold in NZ is set at 3% of value at first point of sale, the maximum levy for export fruit is set at 35 cents per export tray, 20 cents to be used for promotions and market development and 15 cents for industry systems.
NZ Avocado Industry Ltd was incorporated in 1992. In August 2018 it changed its name from AIC to NZ Avocado Industry Ltd (NZAIL). NZAIL is the operating entity for NZAGA. NZAGA and NZAIL are jointly referred to as NZ Avocado. Under a management policy, NZAGA delegates significant tasks to NZAIL, including the employment of a CEO and staff, the management of industry systems including grade standards, biosecurity, market access and quality. NZ Avocado also carries out market development and promotions activity in export markets and the New Zealand market.
The board approved the business plan for the current year in April. It sets out the activities the NZ Avocado team will focus on in the current year.
Recognised Product Group under the HEA
The avocado industry elected to operate under the Horticulture Export Authority (HEA) Act, which requires all exporters of avocados to have an export licence (which they get from HEA), and requires the industry to operate under an Export Marketing Strategy, EMS. This EMS is reviewed annually by all stakeholders and is the rule book for exporters, packers, NZAIL and growers. The Quality standards and AvoGreen rules are appendixes to the EMS.
NZAIL is also the Recognised Product Group, RPG, for avocados as required under the Horticulture Export Authority Act. The recognised product group has 4 grower members and 2 exporter members and represents both growers and exporters working in partnership to facilitate orderly and co-operative exports of NZ avocados.
NZAIL Limited is funded by an export systems fee and registration fees set out in the Export Management Strategy adopted by NZAIL and approved annually by HEA.
Governance
NZAGA
5 growers are elected by growers on the NZAGA Executive Committee.
NZAIL
All 5 elected growers and 2 exporters nominated by the Exporter council, AVEC become directors of NZAIL while they are on NZAGA. Exporters are appointed for 2-year terms.
The board meets 7 times a year and includes business of both NZAGA and NZAIL. The board are responsible for the governance of the industry and these duties include:
- Governing the organisations by establishing broad policies and objectives
- The development (and periodic review) of the vision and the strategy to deliver on the objectives of the NZ Avocado Growers’ Association Inc., and NZ Avocado Industry Limited
- Selecting, appointing, supporting and reviewing the performance of the CEO
- Ensuring the financial stability and the availability of adequate resources
- Approving annual business plans and budgets
- Accounting to stakeholders for the organisations performance
AVEC
The Avocado Exporter Council, AVEC is an incorporated society for all exporters. Under the export marketing strategy, exporters are required to attend 80% of AVEC meetings, including the fortnightly conference calls they hold during the export season. There are currently 11 exporters with a licence to export avocados from NZ.
Avocado Packers’ Forum
NZAGA has a memorandum of association with the Packer Forum to support the packing of avocados to optimise delivery to the marketer and ensure grade standards meet the needs of the consumer. All packers are encouraged to attend the twice-yearly Packer Forum meetings where NZ Avocado and packers discuss and highlight issues, challenges or improvements in the packing value chain. Packers often have a number of grower reps who provide services to growers which differ across different entities. Exporters may also have grower reps who undertake grower services activities.
Contractual arrangements
Growers sign a commercial relationship with a packer and with an exporter. As well as the commercial arrangements between the two parties, those contracts set out the obligations on both parties have to meet the requirements of the export marketing strategy.
Growers contract with a packer and exporter to pack and market their fruit. The grower receives payment for their avocados under those agreed commercial arrangements, which may differ across different entities.
Levies and fees
The Commodity Levy Order 2019 sets out the maximum levy NZAGA can charge growers. At each AGM of NZAGA (usually help in August) growers vote on the quantum of the commodity levy for the following season. Growers at the AGM also vote on the maximum per tray rate for the export systems fee, currently 25 cents per export tray. Growers, packers and exporters also pay a registration fee to NZAGA.
External funding
NZ Avocado has secured external funding to support industry development. The Primary Growth Partnership was an $11.4m programme over 7 years until December 2021 with over 60% Crown investment, through cash and in-kind. We currently have quality projects funded by Callaghan Innovation and the AvoVantage project funded by the ministry for primary industries.
NZ Avocado has an objective to ensure that growers receive value for the activities undertaken with the investment by growers by way of levies and fees. These activities are set out in the annual plan and include research, industry events including field days and grower forums, communications through AvoScene and AvoConnect, the development and maintenance of industry systems covering spray diaries, biosecurity, AvoGreen, packhouse auditing and market access and development.
The industry review is asking stakeholders whether the structure set out above enables the grower to optimise their investment in avocados, now and into the future.
